In the business world, there is a term called “startup capital.” Start-up capital is the money you invest to start your business. This may be money you already have, but for most people it is money they have to borrow.
Let’s say you are starting a water pistol company; you are going to sell that staple of summer vacations that every kid under 10 just cannot do without. You would need startup money to lease or buy a building, purchase equipment and vehicles, buy inventory and pay licenses and government fees.
In direct sales, you do not need the building, the equipment and the large inventory. But, you still need startup capital. In this case, your capital is relationship capital, your stream of contacts.
You have years—decades, even—of relationship capital invested in your family, friends, fellow employees and others. You have even more relationships through the clubs, civic groups, professional and trade associations, churches and other organizations to which you belong.
Studies show that each of us has an average of 750 people in our personal network. That’s 750 people we know well, people we used to know well and people we see or talk to occasionally. What this tells us is that we all have the ability to share our opportunity with literally hundreds of people we already know.
The value of these relationships, in terms of potential growth for your business, is immeasurable.
Think about it for a moment. You are a good person, you’re honest and trustworthy, you work hard, are respectful of other people, have a genuine interest in helping others and are fun to be around. Because of that, people value their relationship with you.
What is any one of those relationships worth to your business? You cannot know for sure in the beginning, but each of them can mean tens of thousands of dollars (or more) for your business! The value of relationship capital is often overlooked because our traditional view of investments and capital is focused on money, not people.
A realty company can easily measure the amount of money invested in its building, office computers and licenses. But, the relationship capital that its agents possess—their personal stream of contacts that are potential buyers and sellers of real estate—can hardly be measured. Yet it is priceless, much more valuable than any amount of money invested in the company.
There is another term called “business equity.” Business equity is a company’s assets minus its liabilities (or debts) and is stated as a monetary value. The manufacturing machinery, fleet vehicles, inventory, office equipment and furniture are your business equity, tangible assets that have a value. Your customer base and other business relationships, often called “a book of business,” also have a monetary value and are factored into your equity.
In your direct sales business, your network of people is your equity.
The people you enroll and help and the people they enroll and help, and so on, form a strong downline that provides the financial freedom and security you desire.
Likewise, your upline has equity in you. The investment they make in you—the knowledge, wisdom and mentoring they provide—has a value. It is their equity.
The double blessing is that you will make many new friends, people you would have never met if not for your business. Some of these people will become your most trusted friends and confidants.
Remember that the value of your business is in your list of contacts and the people who make up your organization. It always comes back to relationships, human capital. When you understand and embrace this concept of valuing people above all else, you will have the correct mindset for building a profitable and stable business.