I am happy to be the one who makes it plain for you even though you may accuse me of heresy and conspiring to limit your friend base. I’ll say it anyway because it’s a truth that will impact your financial future: If your friends are not making you money, they are costing you money. My hope is that they are not also disrupting your growth and limiting your wealth potential. You can predict a person’s financial future from an assessment of their network. As the saying goes,
Your network determines your net worth.
This is true because resource development and sustainability may be expressed in monetary terms, but they have many more moving parts. If you want to create and sustain wealth, you will want to know about these moving parts. You will also do well to learn how your friends could be contributing to your bottom line, and give them that opportunity. Or, show them the door…to opportunity. 🙂
Wealth Mechanism: the Moving Parts
Defining Resources. Beyond money, information, people, and time are resources. Taken individually, you know their value even if you haven’t been the best steward of that value. What you may not have mentally articulated is the combinations of these resources and what the combinations mean go capital creation and leverage. Individually, they are powerful supports for riches. In combination, we’re talking wealth.
Social capital development takes time. The development of a strong relationship can be immediate. But, it takes some time and intentionality to overcome the barriers of ego and self-protection on your way to a shared financial future. Contracts secure these relationships, but even then contracts are rarely signed without some initial assurances and basic trust. This means that your investment of time is important. It should have the expectation of return.
Strength of association is the measure of success. That strength is demonstrated in the extent to which your network supports your endeavors. It is reciprocated in the level to which you support theirs. Think of it as your available assets. If you have 100 friends, how much money do you have available? How much in-kind (non-money) goods do you have. My rule is that every friend should be worth $100. Reciprocally, if you are my friend, you can expect $100 just for the asking. My goal is to be a $10,000 level friend.
Influence and reach in social groups defines the value of the network. Influence is the amount of people you can influence to a certain action. Giving is a popular one, but likes, attendance, call-ins, and sign-ups are others. Reach is the ultimate number you can get a message to utilizing your channels & friends, the network of your friends and their friends, and their friend’s friends. The more influence membership in the group garners and the greater the reach, the more valuable the network. Associations would do well to cultivate and analyze these regularly.
Wealth Mechanism: the Economic Exchange
Consider that your friends can provide tremendous value even if they do not have money to trade. The very act of friendship suggests creativity born out of an intimate understanding and willingness to give. Following are some options for the exchange. They also express levels of value because the later options increase in resource, social capital, association, and group influence and reach.
- Barter. You have a skill, service, or good that you could potentially provide to market. You provide that skill, service, or good to your friend in return for a valued skill, service or good.
- Loans. You have a good, means of access, or ability that can be borrowed for a time by a friend. You allow the friend to borrow for a limited amount of time with the expectation of an equal or greater return on the loan.
- Investment. These are friends who give of their time or money to your cause with the expectation of a return that may be different than the original investment. The return is usually significantly higher than the investment.
- Friend Access. Beyond time and money, friends at this level provide you with access to their friends allowing you to leverage their influence. This is typically done with the expectation that you return the same level of access.
- Network Access. This ultimate level of access is when the friend allows you to use their name and influence to extend your reach to their friends of friends. Most often, friends require a level of reciprocity commensurate with the profitability or other benefit you gain from the access.