It’s an old cliche, but one that over and over again I find to ring true: “It’s not WHAT you know, it’s WHO you know”.

While the phrase is sometimes used in a derogatory manner, to imply that a person might not have earned their way to success, it still has been proven time and time again that as humans we need each other – for a variety of reasons, and in a variety of ways – and this is also true in the realm of starting a business. Even a master of their trade can only go so far by themselves, at some point a need will arise that requires outside help – whether that be a business partner, an advisor, or skilled experts in marketing, accounting, and a myriad of other resources that a business might need. It truly might not matter WHAT you know about your business and its needs, if you don’t actually know WHO can help you with those needs.

“Social capital is the durable network of social and professional relationships through which founders can identify and access resources”
–Noam Wasserman, The Founders Diemma

In The Founder’s Dilemma, Wasserman suggests that a founder should begin building this “social capital” (aka, professional relationships) before their business is even launched, to create smooth transitions once a need arises, and to help avoid a lack of resources as the business grows. He admits that this does put younger founders at a bit of a disadvantage, as social capital is not something you can build overnight – many of these professional relationships need time to be built and trust must be established between each party. Much like building a friendship, a professional relationship – especially one such as a business partner or investor, requires a certain amount of effort, time, and energy to ensure that all parties are on the same page with their vision of the business and how they might collaborate to strive for it’s future success.

Additionally, Wasserman discusses financial capital (aka the money “cushion” needed to fund the startup), as something that can also be built before beginning a new business venture, but also highlights the benefit of focusing on the social capital first, as the right relationships can create more opportunities to build the financial capital later on. In fact, waiting to start a business until you reach a certain financial goal can put you as a business owner at more of a disadvantage – building your own finances requires time and energy being spent at your “day job” instead of focusing on the startup. In fact, the longer you staying in said “day job” the more likely you are to take on more responsibilities in that position, as well as mold your own life around that routine; making it difficult to transition into the role of Entrepreneur even once you become financially ready.

As I read this chapter, a theme that stands out to me is the balancing game of being prepared vs taking risks. There are many steps to take that can help to set yourself up for success in the world of entrepreneurship – building social and financial capital, having a well thought out and comprehensive business plan, and even thinking through what your eventual exit strategy may be. However, there will always be aspects of founding and running a business that you cannot foresee, whether it’s due to naivete and inexperience, or just the luck of the draw as life twist and turns. So you need to be ready to take some risks, to try something you’ve never done before, and jump in even if you don’t feel ready yet.

In some way, every decision you make as a founder is a risk, even if it’s just a small one – choosing who you trust to work with is a risk, seeking funding is a risk, hiring employees is a risk, even building your clientele can have risks associated. You cannot control everything, and you may never be able to be as prepared as you want to. Starting a business is a risk.

To end with another cliche – No risk, no reward.