Capital — the Forgotten Currency

Capital is a safety net that allows you to take risk or go through perilous times and survive

From both a business and personal perspective, of everything that comes to mind when analysing and trying to put 2020 into some sort of order, the concept of “Capital” sums up the year for me; in every sense of the word.

From a business perspective — those who had accrued financial capital to fall back on during the toughest times, were able to continue to do business — paying bills, paying staff. That in itself — ensuring timely payments of salaries, is a social bond, and part of an employer’s social [and professional] capital. Furthermore, from my own observations and interactions, I also noted that much of the social capital accrued between individuals and businesses during this time, came to fruition; those who did need support, or an extension for payment of invoices, supplier credit or an extension of delivery times, were able to pool the social and professional capital they had with their counterparts, so they could still function, in some form. Or perhaps even to grow. Those who had earned or indeed lost professional capital in pre-COVID times, were unlikely to have any reserves to call upon during COVID.

Capital exists across all sectors; it’s a form of insurance. Without it, how do you get by when things take a turn for the worse? If I was going to invest in a business today, especially a small business, one of my first questions would be to enquire on the sustainability of the business. What capital do you, and your team, have? How much health capital do you have? How resilient are you and how will your capital [in every form] support you?

Of course, capital isn’t simply financial or social capital; as a business, experiential capital is also critical. If you, as a business, can provide great returns and deliver a great service — this helps to build your capital — and will keep customers coming back, through the good times and the tough times. If you can deliver great experiences during COVID — amidst all the challenges that are thrown at you and your enterprise? Even better. Your capital stock rises even higher. People choose who they do business with, just like they choose which businesses they patronise. Customers have long memories and value great service.

The reverse of this is the fact that businesses often choose their customers. At Sparkle we make the onboarding of new tribe members as pain free as possible, but it is still essentially a selection process by us and our algorithms as we take our potential Sparklers through identity and fraud management processes. They select us and then we select them. But making that initial process seamless and stress free is the beginning of Sparkle building capital with new customers.

As a Catholic boy, this concept of capital and how it’s accrued got me thinking about the Old Testament; Genesis, to be precise, and the seven years of famine in Egypt.

Genesis 41:29 — Seven years of great abundance are coming throughout the land of Egypt,

Genesis 41:30 — but seven years of famine will follow them. Then all the abundance in Egypt will be forgotten, and the famine will ravage the land.

Joseph’s reputation for interpreting dreams had given him enough social capital with Pharaoh, who then gave him a platform where he could share his idea for storing grain away in the good times [seven years of abundance], to prepare for the bad times [seven years of famine]. These lessons still ring true today; during the good times, we should also be thinking ahead and planning for the bad times. Or in the case of 2020, the terrible times. We need to invest in and build our capital all day, every day, with every interaction — personal or professional.

Looking back at the businesses and individuals who weathered 2020, the vast majority of them had capital reserves across all areas; financial, personal, professional network and social. And if this isn’t something you had previously considered, let us hope that 2020 was the adrenaline shot, straight into your heart, that you needed. We need to think long term and assess our own capital stock. This year should really have focussed everyone’s attention on not only the immediate challenges, but also the longer road ahead and what the priorities are further down the line. This is a long journey; and like any journey, you have to decide what you’re going to pack. What’s important? If you only have cabin-only baggage allowance, you really think hard about what goes into the case. If you hadn’t thought about capital, in all its guises, and only operate on a superficial and transactory basis — now is the time to reconsider your MO.

Capital is built through trust and credibility; and there’s an obvious link in terms of capital and financials when it comes to Sparkle, but perhaps a less obvious link in terms of our company ethos — that we were built on transparency, trust and freedom and we are focussed also on social capital. We are building a long-term business, and going on a journey with our tribe. Starting with the basics, our trust and transparency brings them into the fold through social capital — but then delivering an amazing product and service helps us grow our experiential capital. As we build our tribe, we also hope to grow a network capital.

As I reflect on the year we’ve had, and what has helped me to be resilient, and also those businesses and individuals who I believe have been resilient, I see that a common denominator is planning, strong networks and an abundance of capital — in all its forms. And I continue to think about Joseph and his example of preparing for the future, as we move into 2021. I wish you all a sparkling new year.