Capital represents wealth or the means for producing wealth.
explains that it comes in three forms:
physical, financial, and human.
business enterprise, large or small, is a “machine” that consumes capital to generate more
Consequently, one would expect that a large proportion of the problems and
decisions confronting business operators would be related to the acquisition, allocation, and
disposition of capital.
confirm that the primary concerns for SMEs seeking business advice are capital-related.
Seventy-three percent of those in the NFIB study solicited help on “accounting, bookkeeping,
and tax” issues, 46% on “loans, financial analysis, or cash management,” and 45% on
“prospective purchases or business investments.” Issues for which they were least likely to
solicit advice were government regulations, human resource and personnel issues, and
business layout and design.
Chrisman and McMullan (2000) distinguish
“counseling” from “consulting” by the
former being more programmatic and focusing on direction, mentoring, and feedback,
whereas the latter is more task-specific and project-oriented.
In the NFIB study, the vast
majority of solicited advice appeared to be in the form of counsel with the primary source
being a family member.
When the business operators sought consulting, 58.7% used
accountants, 39.1% attorneys, 30.3% insurance agents and brokers, 28.2% talked to a banker,
and 12.8% to a business consultant.
Larger enterprises (20-249 employees) were more likely
to pay for and use professional advice than were smaller firms (1-20 employees), suggesting
that consultation was perceived as more valuable as enterprise complexity and, thus, the
economic consequence of error increased.
The focus of small business operators on their physical and financial,
wellbeing is not surprising. Tangible assets are the threads from which financial statements
are woven and everyone from the tax collector to the potential lender or investor wants to see
Physical assets produce the product or service; financial assets pay the bills
and fuel growth.
and the intangibles,
, do not seem to receive the