Knowledge Capital

CHRIS EGBU, CMC, MBA, MIMC,MITD,FCA
Director General

What Does Knowledge Capital Mean?


An intangible asset comprises the information and skills of a person, his experience with business processes, group work and on-the-job learning. Knowledge capital is not like the physical factors of production - land, labor and capital - in that it is based on skills that a person  share with each other in order to improve efficiencies, rather than on physical items. A person with skills and access to knowledge capital puts his start up business at a comparative advantage to its competitors due to the knowledge advantage.
How Businesses Develop Knowledge Capital


An entrepreneur develop knowledge capital through past experiences in life, past jobs, training and education.

Businesses develop knowledge capital by encouraging employees to share information through memorandum, reports, seminars and person-to-person communication. Knowledge capital is important because it reduces the odds that a start up business will have to "reinvent the wheel" each time a particular process is undertaken because its employees have access to documents detailing the necessary steps, by personnel who have undertaken similar activities.


A business coach Leanne Hoagland-Smith who offered her advice on Avoiding The 7 Mistakes Most Entrepreneurs Make -. Said  “Business people do not buy for many reasons. Usually the resistance also called stalls and objections to buying something begins with the simple word of No. However, behind this no are numerous reasons. These No's are not in a ranking order as individuals are unique as  their reasons for not buying.


No Knowledge - Knowledge is critical to understanding the value of the product or service specific to the buyer. Also, the seller's knowledge must be credible to ensure his or her expertise to the buyer.


No time - Time is a precious commodity. Many people simply lack the time to go out and make good buying decisions. Just think how many times you had to call your prospect before you even schedule your first meeting?


No relationship - People buy from people they know. If the relationship has not been established, then the hope for a sales strategy takes over. And we all know that hope is not the best sales strategy.


No budget - People in business just as in their own personal lives want a lot of stuff from products to services. However a business runs on a budget and sometimes the dollars are not available at that moment in time.


No desire - The old age goes No one wants to be sold, but everyone loves to buy. If there is no desire, then why would I want to buy anything?
No reason - People buy for a reason or a need. If there is no reason to buy services, there is potentially no sale unless the salesperson can find a reason.
No faith - Even with an established relationship, faith must be present within that relationship. We know many people , but would we do business with all of them? I think not.
There are probably several more Nos that could be added to this list. However from my experience as a business coach helping struggling businesses to increase sales, these are the main ones that I have heard.


If you wish to increase sales, then make sure you can overcome most of these Nos if not all of them. Even if there is no budget, are you sure and if so, if the client has enough value, then stay in contact with him or her. Do not let the Nos keep you from business success.”


If you have a knowledge of the seven reasons why people or businesses will not buy from you and find countermeasures to them you are putting yourself in advantage, that advantage can be knowledge capital since it gives you an advantage which money cannot. Many people have started business with little capital and succeeded where others with more capital fail due to knowledge capital.


Knowledge capital plays a role when deciding on the business we are to engage on. Wrong business decision can make us fail before we open door of our business.

Clued from Entrepreneurial Finance by Chris Egbu