8 Mobilising resources
8.1 Introduction
Entrepreneurial ventures involve a lot of work. A product or service is developed, marketed and sold. Many kinds of resources are needed for this. Many of these resources, and sometimes all, are directly available to the entrepreneur, or are accessible via social networks or partnerships (see below the box Further Reading [1]]). Every entrepreneur has, to a greater or lesser extent, but always to some extent, knowledge, skills, motivation and experience (human capital), financial resources (financial capital) and networks (social capital). Sometimes this will be sufficient, but in many cases the entrepreneur will try to expand his or her human, financial and social capital. An enterprising person will have to be resourceful: creative as well as frugal in the use of existing resources and clever in finding additional resources. Having a good network plays a key role in this.
8.2 Insights
As stated above, an entrepreneur has knowledge, skills, motivation and experience (human capital), financial capital and networks (social capital).
Human capital
First of all, 'human capital'. Human capital comprises education and experience, and includes the competences of the EntreComp framework! Research shows that human capital, in particular attitude, knowledge and skills, is important for success, especially of new companies [2]. Although many entrepreneurs are generalists (people who are capable of doing a wide variety of tasks [3]), they may want to expand the human capital of the venture in specific instances. They do this by bringing in new team members, employees, consultants, mentors, or by forming networks with other entrepreneurs.
Furthermore, in many respects the Internet is making it increasingly easy to find the knowledge you need. It plays an enormously positive role in making entrepreneurship accessible. First of all, the Internet offers a wealth of information, much of which is free. From product development to marketing to tax law; all kinds of experts and websites provide information and advice free of charge. There are also countless forums and discussion boards where entrepreneurs can get answers to their questions. ‘Software as a service' (SAAS) also offers great opportunities for starting entrepreneurs. Whereas in the past expensive software packages had to be purchased, or expensive experts had to be hired, cloud computing makes it possible to have subscriptions to software packages for a relatively low sum compared to owning the tools, from administrative software to customer relationship management systems to website builders with payment options.
Financial resources
The entrepreneurship literature devotes a great deal of attention to obtaining financial capital, or financial resources, although most entrepreneurial projects require very little, if any, financial capital, contrary to what is sometimes thought. Especially where there is no collateral for a loan from the bank, the three F's come into play: Family (relatives), Friends (friends), and Fools (idiots), who may be willing to lend the entrepreneur money or become co-owners [see: Financial and economic literacy].
The Internet is again playing a positive role in making entrepreneurship accessible, in part by facilitating crowdfunding: on platforms such as Kickstarter or Kiva, entrepreneurs can obtain funding in the form of small amounts from large numbers of people, mostly strangers. There are platforms for loans or ownership, but especially 'reward' based crowdfunding platforms like Kickstarter are hugely popular [4]. There, for example, a new restaurant can offer future diners as a reward for a small contribution to the start-up capital. This form of raising finance also provides marketing information [for further discussion of obtaining financial capital, see: Financial and economic literacy].
Networks
Particularly when one's own human and financial resources are insufficient, and when the entrepreneur is unwilling or unable to buy help at market prices, having social networks plays an important role. This brings us to the third form of capital: social capital. A network helps you to tap into the knowledge, skills and experience of others. It also makes fundraising easier and cheaper. Even the success of crowdfunding campaigns is dependent on one's own network, because research shows that if one's own network steps in, the chances are higher that the crowd will subsequently contribute as well [4].
Successful network utilisation comes down to the ability to convince people in your network to make their resources available. As a starting entrepreneur, you have to convince your network of the legitimacy of your product or service, your company, or perhaps even of yourself [see: Financial and economic literacy and Mobilising others]. People have to trust you and be convinced of your integrity [see: Ethical and sustainable thinking and Mobilising others]. However, even there a network can help, if people in your network vouch for you and recommend you positively.
How can you get into a position to successfully call on your network? Research on how the very best networkers behave, shows that they built their network well before they call upon it. And in building and maintaining a network it is important to give first, and only then take. In other words, if you want to go south (get something), you must first go north (give something) (see box Further Reading [5] [6]). The basis of the idea that giving precedes taking is reciprocity. By giving first, you create trust, appreciation, sympathy, and you build up ‘credits’. Most people find it natural that when they have received something from another, they give something back to that other, whether spontaneously or by request, whether immediately or much later [7].
Give and take
However, this does not mean that you only give in order to be able to ask something in return. In the vast majority of instances you give without any such expectation, and in practice this usually happens automatically. Most of our networks you have built without seeing this as networking. You have your family, your school, your sports club, your church, synagogue or mosque, and many other avenues through which you know people. With your best friends you see that there is a continuous exchange of information, material possessions, emotional support and any other form of help. There is a cycle of giving and taking. If either one of them only takes, this cycle stops. You cannot build a good network with someone who only takes and never gives, or if you only give and never ask anything. So it is important to both give and take [6].
But what can you give? Perhaps your students feel that they must have work experience, financial resources, and/or some social status before they are in a position to give something. However, this is a misconception. Fortunately, giving is something they can start doing today as a student. Because giving can be in very small things. Think about showing interest, making a joke, smiling, having a positive attitude, passing on information, or helping someone out when you see that help is needed. It is important that what you give is also experienced as a gift by the receiver. Therefore, it is necessary to show interest and find out how you can help someone. Conversely, it is important that you yourself let others know how they can help you. Because by making your wishes known, you offer others the possibility to give to you, and thus strengthen the ties.
Diversity
The very best networkers have a second quality, besides the fact that they understand that you build networks by giving. The very best networkers have a diverse network. They do not only engage with people like themselves, but they also actively try to connect to people who are different than themselves. 'Other' can mean anything: age, ethnicity, country, social class, profession, views, attitude to life. Being engaged with people who are like you is fine: you have a click with these people, you can trust them, you understand each other quickly. But the best networkers are also able to deal with people who are different from themselves [5].
The fastest way to expand your network is by building a bond with the very best networkers. These people are called 'bridges’ or ‘linchpins’ by network researchers. Because they understand the game of give and take, these people are usually accessible and open to getting to know you, and willing to give to you, for example in terms of access to their extensive networks [6].
Human capital
First of all, 'human capital'. Human capital comprises education and experience, and includes the competences of the EntreComp framework! Research shows that human capital, in particular attitude, knowledge and skills, is important for success, especially of new companies [2]. Although many entrepreneurs are generalists (people who are capable of doing a wide variety of tasks [3]), they may want to expand the human capital of the venture in specific instances. They do this by bringing in new team members, employees, consultants, mentors, or by forming networks with other entrepreneurs.
Furthermore, in many respects the Internet is making it increasingly easy to find the knowledge you need. It plays an enormously positive role in making entrepreneurship accessible. First of all, the Internet offers a wealth of information, much of which is free. From product development to marketing to tax law; all kinds of experts and websites provide information and advice free of charge. There are also countless forums and discussion boards where entrepreneurs can get answers to their questions. ‘Software as a service' (SAAS) also offers great opportunities for starting entrepreneurs. Whereas in the past expensive software packages had to be purchased, or expensive experts had to be hired, cloud computing makes it possible to have subscriptions to software packages for a relatively low sum compared to owning the tools, from administrative software to customer relationship management systems to website builders with payment options.
Financial resources
The entrepreneurship literature devotes a great deal of attention to obtaining financial capital, or financial resources, although most entrepreneurial projects require very little, if any, financial capital, contrary to what is sometimes thought. Especially where there is no collateral for a loan from the bank, the three F's come into play: Family (relatives), Friends (friends), and Fools (idiots), who may be willing to lend the entrepreneur money or become co-owners [see: Financial and economic literacy].
The Internet is again playing a positive role in making entrepreneurship accessible, in part by facilitating crowdfunding: on platforms such as Kickstarter or Kiva, entrepreneurs can obtain funding in the form of small amounts from large numbers of people, mostly strangers. There are platforms for loans or ownership, but especially 'reward' based crowdfunding platforms like Kickstarter are hugely popular [4]. There, for example, a new restaurant can offer future diners as a reward for a small contribution to the start-up capital. This form of raising finance also provides marketing information [for further discussion of obtaining financial capital, see: Financial and economic literacy].
Networks
Particularly when one's own human and financial resources are insufficient, and when the entrepreneur is unwilling or unable to buy help at market prices, having social networks plays an important role. This brings us to the third form of capital: social capital. A network helps you to tap into the knowledge, skills and experience of others. It also makes fundraising easier and cheaper. Even the success of crowdfunding campaigns is dependent on one's own network, because research shows that if one's own network steps in, the chances are higher that the crowd will subsequently contribute as well [4].
Successful network utilisation comes down to the ability to convince people in your network to make their resources available. As a starting entrepreneur, you have to convince your network of the legitimacy of your product or service, your company, or perhaps even of yourself [see: Financial and economic literacy and Mobilising others]. People have to trust you and be convinced of your integrity [see: Ethical and sustainable thinking and Mobilising others]. However, even there a network can help, if people in your network vouch for you and recommend you positively.
How can you get into a position to successfully call on your network? Research on how the very best networkers behave, shows that they built their network well before they call upon it. And in building and maintaining a network it is important to give first, and only then take. In other words, if you want to go south (get something), you must first go north (give something) (see box Further Reading [5] [6]). The basis of the idea that giving precedes taking is reciprocity. By giving first, you create trust, appreciation, sympathy, and you build up ‘credits’. Most people find it natural that when they have received something from another, they give something back to that other, whether spontaneously or by request, whether immediately or much later [7].
Give and take
However, this does not mean that you only give in order to be able to ask something in return. In the vast majority of instances you give without any such expectation, and in practice this usually happens automatically. Most of our networks you have built without seeing this as networking. You have your family, your school, your sports club, your church, synagogue or mosque, and many other avenues through which you know people. With your best friends you see that there is a continuous exchange of information, material possessions, emotional support and any other form of help. There is a cycle of giving and taking. If either one of them only takes, this cycle stops. You cannot build a good network with someone who only takes and never gives, or if you only give and never ask anything. So it is important to both give and take [6].
But what can you give? Perhaps your students feel that they must have work experience, financial resources, and/or some social status before they are in a position to give something. However, this is a misconception. Fortunately, giving is something they can start doing today as a student. Because giving can be in very small things. Think about showing interest, making a joke, smiling, having a positive attitude, passing on information, or helping someone out when you see that help is needed. It is important that what you give is also experienced as a gift by the receiver. Therefore, it is necessary to show interest and find out how you can help someone. Conversely, it is important that you yourself let others know how they can help you. Because by making your wishes known, you offer others the possibility to give to you, and thus strengthen the ties.
Diversity
The very best networkers have a second quality, besides the fact that they understand that you build networks by giving. The very best networkers have a diverse network. They do not only engage with people like themselves, but they also actively try to connect to people who are different than themselves. 'Other' can mean anything: age, ethnicity, country, social class, profession, views, attitude to life. Being engaged with people who are like you is fine: you have a click with these people, you can trust them, you understand each other quickly. But the best networkers are also able to deal with people who are different from themselves [5].
The fastest way to expand your network is by building a bond with the very best networkers. These people are called 'bridges’ or ‘linchpins’ by network researchers. Because they understand the game of give and take, these people are usually accessible and open to getting to know you, and willing to give to you, for example in terms of access to their extensive networks [6].
8.3 Further reading
[1] Recent review article on how entrepreneurs seek resources, gain access to them, and how they are managed (e.g., through contracts, and/or based on trust). Clough, D.R., Fang, T.P., Vissa, B., & Wu, A. (2019). Turning lead into gold: How do entrepreneurs mobilize resources to exploit opportunities? Academy of Management Annals, 13(1), 240-271.
[2] Meta-analysis of 30 years of research on linkages between human capital and firm success. Unger, J.M., Rauch, A., Frese, M., & Rosenbusch, N. (2011). Human capital and entrepreneurial success: A meta-analytical review. Journal of Business Venturing, 26(3), 341-358.
[3] As Lazear (2005, p. 676) states: 'Not necessarily superb at anything, entrepreneurs have to be sufficiently skilled in a variety of areas to put together the many ingredients required to create a successful business.' Lazear, E.P. (2005). Entrepreneurship. Journal of Labor Economics, 23(4), 649-680.
[4] Classic and comprehensive research on crowdfunding, which shows in part that when one's own network steps in, the 'crowd' begins to move. Mollick, E. (2014). The dynamics of crowdfunding: An exploratory study. Journal of Business Venturing, 29(1), 1-16.
[5] Accessible article describing the qualities of the best networkers, including that they both give and take, putting giving before taking. Anand, N., & Conger, J.A. (2006). Capabilities of the consummate networker. Organizational Dynamics, 36(1), 13-27.
[6] Book that distinguishes between givers, takers and matchers (matchers give back exactly what they get) and shows that givers are significantly more successful in a variety of domains. Grant, A.M. (2013). Give and take: A revolutionary approach to success. New York: Penguin.
[7] Classic article explaining the idea of generalized reciprocity: you help others because you expect that still different others would help you too. Trivers, R.L. (1971). The evolution of reciprocal altruism. Quarterly Review of Biology, 46, 35-57.
[2] Meta-analysis of 30 years of research on linkages between human capital and firm success. Unger, J.M., Rauch, A., Frese, M., & Rosenbusch, N. (2011). Human capital and entrepreneurial success: A meta-analytical review. Journal of Business Venturing, 26(3), 341-358.
[3] As Lazear (2005, p. 676) states: 'Not necessarily superb at anything, entrepreneurs have to be sufficiently skilled in a variety of areas to put together the many ingredients required to create a successful business.' Lazear, E.P. (2005). Entrepreneurship. Journal of Labor Economics, 23(4), 649-680.
[4] Classic and comprehensive research on crowdfunding, which shows in part that when one's own network steps in, the 'crowd' begins to move. Mollick, E. (2014). The dynamics of crowdfunding: An exploratory study. Journal of Business Venturing, 29(1), 1-16.
[5] Accessible article describing the qualities of the best networkers, including that they both give and take, putting giving before taking. Anand, N., & Conger, J.A. (2006). Capabilities of the consummate networker. Organizational Dynamics, 36(1), 13-27.
[6] Book that distinguishes between givers, takers and matchers (matchers give back exactly what they get) and shows that givers are significantly more successful in a variety of domains. Grant, A.M. (2013). Give and take: A revolutionary approach to success. New York: Penguin.
[7] Classic article explaining the idea of generalized reciprocity: you help others because you expect that still different others would help you too. Trivers, R.L. (1971). The evolution of reciprocal altruism. Quarterly Review of Biology, 46, 35-57.
8.4 Exercises for students
1) Information and software on the internet
The internet is full of practical information and useful tools for entrepreneurial people.
Give your students the following assignment:
Form groups of three, four, or five students. The task for each individual group member is to give a short information session to the other group members. Each group member will individually choose one topic. Spend 30-60 minutes looking for informative websites, tools, platforms, and/or software related to (1) crowdfunding; 2) accounting and taxes; 3) marketing and sales; 4) creating and managing a website and/or social media; 5) starting your own business.
Explanation: The internet offers a wealth of knowledge, skills and facilities for free or for little money. By consciously looking for this, students become aware of all the help available on the internet.
2) Strengthen your bonds: an exercise in giving
A good networker builds and strengthens ties by giving first. If you look carefully, you will see that you actually already know a lot of people. Many of them are acquaintances: people you greet when you meet them on the street, but who you don't know very well, or at least not nearly as well as you know your best friends.Give your students the following assignments:
Clarification: If networking (building and strengthening new and existing ties) is an activity of give and take, it is important to become aware of the different moments and ways you can add value to the lives of those in your network.
3) Make your network more diverse
The best networkers interact with people outside their bubble, with people who are different from themselves. However, this is not easy. You know and understand the people who are like you very well; with the people who are different from you, you have to make an extra effort. It can be tempting, for example, to stay within your own group of friends at a meeting or party, instead of talking to someone who is different from you. However, the benefits of being able to deal with a diverse group of people are large: they usually have different information, insights, resources and networks. In addition, you will come to understand people who are different from yourself better when you hang out with them.Have your students do the following two exercises to make their network more diverse:
Explanation: The best networkers are able to step outside their comfort zone and interact meaningfully with people who are different from themselves. This exercise encourages students to make their contacts more diverse and to become more familiar with dealing with people who are 'different' from them (and often that 'differentness' turns out to be much smaller than initially thought).
The internet is full of practical information and useful tools for entrepreneurial people.
Give your students the following assignment:
Form groups of three, four, or five students. The task for each individual group member is to give a short information session to the other group members. Each group member will individually choose one topic. Spend 30-60 minutes looking for informative websites, tools, platforms, and/or software related to (1) crowdfunding; 2) accounting and taxes; 3) marketing and sales; 4) creating and managing a website and/or social media; 5) starting your own business.
Explanation: The internet offers a wealth of knowledge, skills and facilities for free or for little money. By consciously looking for this, students become aware of all the help available on the internet.
2) Strengthen your bonds: an exercise in giving
A good networker builds and strengthens ties by giving first. If you look carefully, you will see that you actually already know a lot of people. Many of them are acquaintances: people you greet when you meet them on the street, but who you don't know very well, or at least not nearly as well as you know your best friends.Give your students the following assignments:
- In the next week, think of something that you could give to five of these people, and do it. For example, if you know your neighbour loves to cook, app her a recipe (or throw it in the mailbox, if you have the address but not the phone number). If you know an acquaintance loves going out and you've heard about a party or festival, give him or her this tip. Start by making a list of acquaintances and try to guess for these people what they would like to receive.
- Over the next week, do the same for another five people, but then reverse the order: you find the gift first, and then figure out who to give it to. Say you read an interesting post on a news site or app, then forward it to an acquaintance who you think might be interested. Or you see a poster in town for an event that will take place soon. Take a picture of the poster and send it to the person you think will like it.
Clarification: If networking (building and strengthening new and existing ties) is an activity of give and take, it is important to become aware of the different moments and ways you can add value to the lives of those in your network.
3) Make your network more diverse
The best networkers interact with people outside their bubble, with people who are different from themselves. However, this is not easy. You know and understand the people who are like you very well; with the people who are different from you, you have to make an extra effort. It can be tempting, for example, to stay within your own group of friends at a meeting or party, instead of talking to someone who is different from you. However, the benefits of being able to deal with a diverse group of people are large: they usually have different information, insights, resources and networks. In addition, you will come to understand people who are different from yourself better when you hang out with them.Have your students do the following two exercises to make their network more diverse:
- Over the next two weeks, visit five places or events you would not normally go to, and connect with at least two people there. Tell them you are interested in their event, place, or culture, and ask if they can tell you more. The places or events can be anything, as long as there are people there who are different from you. You can think of different kinds of differences: age (e.g. a nursing home), political views, religion (attend a service of a completely different religion), knowledge (go to a lecture on a subject you normally wouldn't go to), lifestyle (different subcultures), or any other form of difference.
- If you're in a place you visit regularly (your school, your sports club, your coffee shop), make contact five times over the next two weeks with someone different from yourself, who you normally would not talk to. Explain that you would like to learn more and find out more about that person. Ask how they are doing and what they are doing.
Explanation: The best networkers are able to step outside their comfort zone and interact meaningfully with people who are different from themselves. This exercise encourages students to make their contacts more diverse and to become more familiar with dealing with people who are 'different' from them (and often that 'differentness' turns out to be much smaller than initially thought).