“Social capital” is a phrase that gets tossed around frequently in the small business and solopreneur world, but what exactly is “social capital,” and how can you grow yours and use it to leverage business?
Social capital, at its simplest, is the connections and relationships you build between you and others in your community. In the business context, social capital represents the social networks you create that then support your business. This article explains how to measure, grow and use your social capital to promote what matters to you.
How do I measure my social capital?
There are no hard numbers to measure the extent of your social capital, but think of your social capital as a spider web. In this web, think of all the people that are in your social networks — in real life or through online presence — and then think of all the people who your connections know who would be influenced by your connections opinions. Social capital is fast spreading and influential. When people in your social network know they can trust you and your business, they begin to recommend you, try your new products with less hesitation and see your brand as integral to their lifestyle.
So, social capital is just about feelings and trust?
Not exactly. Social capital in the business world encompasses the benefits that flow from the networks you’ve created. These include new partnerships or collaborations, access to new information, and reciprocal exchange of benefits within your network. Social capital is the value that is created through these relationships. These benefits extend to all those connected through the network.
Social capital can come in various forms, for example:
1. Mutual Support: creating networks between similar people (i.e. your target demographic, or companies in the same industry) can lead to “mutual aid,” wherein you seek to help those in your network knowing that your relationship and connection to them are important and valued. In return, your connection value your priorities and seek to help you when you need it.
2. Connections: As they say, “it’s not what you know, but who you know,” and that is one of the major benefits of having social capital. By creating a network, you are more likely to hear about opportunities to grow, promote and improve your business than if you are going it alone.
3. Creating your Collective: collective action can be the best way to get things done. This is especially true when it comes to things like lobbying for your industry or supporting particular political ideals that impact your bottom line. By creating networks, you are also creating collectives of like-minded individuals who will be able to act on your calls to action.
The idea of social capital can seem a little amorphous, but it can help to think about it in terms of a specific situation. Take, for example, a realtor named Tory. Tory works for a small real estate agency that can’t afford to invest much in advertising. Through her years working as a real estate agent, Tory has gotten to know a lot of professionals who offer home-related services. Over the last year, Tory has begun referring her clients to the handymen, cleaners, locksmiths, and roofers she has worked with before. In return, those handymen, cleaners, locksmiths, and roofers have been referring potential buyers and sellers to Tory. Tory’s business increased because she created more social capital. Not only did her clients trust her opinions and appreciate how much knowledge she had about home repair experts they could work with, but the businesses Tory referred clients to began to trust Tory and recommend her for people in the real estate industry.
Remember, social capital exists everywhere: in your neighborhood, your child’s school, your local dive bar, and your extended family. Creating connections is something humans naturally do.
Okay now I understand what social capital is, but why should I focus on growing my social capital?
1. It’s only human.
With most of us spending more and more time focused on our careers, it is important to remember that you can’t live a full life if you’re only focused on one thing. It’s natural and important to have social networks to supplement your work life.
2. It’s all about connections.
We all have that friend who only reaches out to say hello when he needs something from us. Creating social capital keeps you from being that friend. When you’re in need, whether it be for a professional referral or for a new job, you will have a stronger advantage and a greater chance of success if you’ve taken time to cultivate real relationships with your connections.
3. People matter.
Investing in social capital, while it may sound like business jargon, is actually about connecting with the people that matter to you. That includes family. For example, I have a large family that is spread out throughout the country and even throughout the world. Before social media, I barely knew what was happening with any of them. Now, because of social media, I feel like we’re neighbors. The same idea is true for your clients. I have clients that I have digital conversations with daily, and I never miss their birthdays.
4. It’s easier to give.
Putting out a call to action on media calls for an immediate response online. In the same way you reach out to a friend who has lost a loved one after you read their status update, when your business is in a rut and you ask for help, your supporters can rally behind you and give you new ideas.
5. You bring people together.
I’ve always enjoyed introducing friends who I know would hit it off and this is easily accomplished through social networking. Sometimes, 1+1 = 200, especially when it comes to followers on social media. Twitter, Facebook, and LinkedIn all make it easy to see how our connections might connect with each other. By facilitating these connections, you are furthering your social capital.
6. You might just meet “the one.”
We all know how popular online dating is, and for good reason — most of us are just too busy to invest substantial time into meeting a mate, but “the one” I’m talking about isn’t a romantic partner, it is that one person who can tip you over the edge into massive success. For example, a few years ago, I posted on LinkedIn asking for help planning a charity event for autistic children. A LinkedIn connection responded and offered to help from over 1,000 miles away. We jumped on a planning phone call that ended up stretching four hours, during which we learned that our oldest sons were born on the exact same day, our husbands had similar values, and that our individually enormous databases were complimentary but did not overlap. We instantly became “business besties,” because we had too much to offer each other, but we also became best friends.
7. Your numbers matter.
Gone are the days of tweeting random pictures of your lunch and hoping that counts as enough of a social media presence. These days, you practically need to provide your Twitter follower numbers with your resume. In fact, some businesses in New York require a certain Klout score to get in. When looking for commentators, television and radio shows look for guests who can deliver not just an outstanding performance, but a robust social following.
8. Social Capital = $$$.
There is almost a direct correlation between your social capital and your potential revenue. In many businesses, your value is only as big as your client base. If a competing company is trying to poach you, it might just be your client list they are really after. The same is true when companies are looking for independent contractors to partner with — they might want access to your hundreds of engaged Twitter followers as part of their advertising platform.
9. People pay attention.
Gone are the days of having to “know the right person” to get your foot in the door. Just look at millennials…they don’t follow the traditional route, but they are demanding attention through their social media, and they are getting it! Putting yourself out there can have huge payouts.
10. You’re building your reputation.
People do business with those they like and those they trust. But people make snap decisions about who exactly they should like, and who they should trust. If you’re having an off day, you might just lose a customer for life, but if you have strong social capital, you can build that relationship day in and day out, without alienating potential customers with one bad interaction.
11. You exist!
You know what you’re capable of, but others might not even know you exist, and that matters. Someone can’t do business with you if they don’t know you exist. It doesn’t matter how good of a financial advisor I am — if no one knows I exist, I don’t. People can’t hire me if they don’t even know I’m here. It is crucial for your business, your employees, and you client base to grow. One of the best ways to introduce yourself and your product is through social media. That way, you give people a choice about when and where to interact with you.
12. It is already part of your lifestyle.
You can tweet from 35,000ft in an airplane or in your pj’s at home. Either way, you are building and maintaining relationships. Cultivating connections used to mean that each year I had to book plane tickets and hotel rooms to meet with producers and build important relationships. Now I can reach out via social media, retweet their shares, direct message them, and set-up meaningful connections without that same gargantuan effort. It’s polite, easy, and sincere.
13. It’s not a time-waster.
Using your social capital, you can elevate your database utilizing the connections you already have. You never know who you are going to meet, and you never know who they already know. When I moved to a new city, I knew it was important for me to meet the proverbial “popular kid in school,” so I reached out to a local blogger. I connected with her on social media, and before I knew it, I was connected with everyone I needed to know in my new city. I knew she could help connect me, but I also knew that I brought value to her in our relationship. Using social capital, I made an opportunity a reality for us both.
Investing in your social capital can be one of your most important strategies, but remember, it can be as easy as building relationships and making sure you offer value to others and let them offer value to you. You never know who you might meet, and what doors might open. When I first started in the industry, I cold-called Mr. Murphy (name changed) and continued to call him for nearly 13 months before he felt comfortable having me manage his millions. We had long discussions about his favorite sector – muni bonds, and heated discussions about stocks, mutual funds, and fees! He always kept me on my toes, and nothing came easy with this client. At the time, my office was 15 minutes from his home, so he would stop by often. He and his wife were one of my first clients through the 15 years we worked together we went to numerous lunches, dinners, and he and his wife even attended my wedding. He didn’t love the brokerage firm I was with at the time, but he stayed with me because of our friendship and trust. He even referred friends, who referred their friends. As he became older, his health started deteriorating, I had moved on to start our own firm (hybrid RIA), but he was so happy to hear that I had moved on, he was proud like a father-figure. When my previous firm tried to retain him as a client, he swore at them and was one of the first to sign transfer forms. He later had to be admitted into a hospice. His wife was away with family, and his son lived in Europe and wasn’t arriving for another week or so, so I knew what I needed to do. I drove the hour to the hospice, met his doctor, and brought his favorite Hagen Daz vanilla ice cream. He couldn’t feed himself, so I spooned ice cream and served him. He grabbed my hand, tearing up, and said, “I knew I made the right decision in choosing you, but now I really know. Thank you Winnie.” This experience will stay with me forever. Now, I manage his children’s money and his referrals as well.
This week, focus on growing your social capital, and I guarantee your bottom line will see growth, too.
Winnie Sun is a registered representative with, and securities offered through LPL Financial, member FINRA/SIPC. Investment advice offered through Sun Group Wealth Partners, a registered investment advisor and a separate entity from LPL Financial.