If you own a car, rent an apartment, own a house, washer/dryer unit, bike, stove, deep freezer, office space, conference room, parking spot, or even a garage……you have idle capital and should be converting it into a revenue generating source.
Unfortunately, very few people truly understand the meaning of what idle capital is. So let’s briefly define idle capital from 3 key vantage points;
Idle capital In Finance
A firm’s unused money and property, the money and assets of a business that are not being invested productively. This could be cash in the bank, stocks, bonds, warehouse space, office space, interests, shares etc. If it’s not being spent, it’s an idle asset and hence it’s idle capital.
Idle capital In Physics
An Idle Wheel is a gearwheel interposed between two others to transmit torque without changing the direction of rotation to the velocity ratio
Idle capital In Society
Idle assets such as extra bedrooms, garage space, vehicle, vacation home, parking spot in the city, beach house, washer/dryer, food, land, truck or utility vehicle. ANy asset that site idle without at least 50% utilization will fall under this category as idle capital.
However, the focus on idle capital has been purely from a big business commercial stand point. This propagates the view that a fancy term such as “idle Capital” is one for MBA’s and Wall streeters and beyond the average person. This is simply a myth, if anything, the masses hold the largest idle capital asset base on the planet. Just ask airbnb, uber, or phlatbed. If you’ve ever heard about the new economy or the sharing economy then you’re talking about turning idle capital into revenue sources.
To quote the former Canadian Prime Minister Kim Campbell:
“Businesses need to spend their cash on investments that upgrade their U.S. plants and hire American workers. There is an enormous amount of capital sitting idle that could be a powerful economic stimulus. In the short term, government stimulus policies can be quick responses to downturns, but government has done a lot to get the economy going and now the private sector needs to act.”
Kim Campbell (@AKimCampbell) served as Canada’s 19th prime minister.