How our small business has found an edge with compound interest

For over 30 years, the success of our small business has been driven by a powerful concept known as compound interest.

You may be familiar with the term as a method for building financial wealth, but compound interest is not just limited to money. Take the perspective of entrepreneur and investor Naval Ravikant, who wisely said, "All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest." As Naval stated, the true benefits of compound interest are the result of playing long-term games with long-term people.

For many small businesses, this can be a major competitive advantage. Since my husband, Jim Platania Sr., founded Platania Financial in 1991, our firm has benefitted from compound interest in more ways than one. Being in the financial industry, our investment advisers manage client portfolios with the goal of growing and compounding over time. This helps our clients pursue their retirement and financial goals. But also important, we benefit from the long-term compounding of our relationships, reputation and knowledge.

Take relationships for example. We believe great relationships are built on trust, and trust comes from being dependable over time. Doing the right things for others over years and decades can compound into meaningful and prosperous relationships.

This can lead to a strong social group and/or professional network to have in your corner. For our business, it's led to amazing relationships with clients, many of whom feel like family. That comes from 30 years of working alongside clients as they go through the ups and downs of life. We're proud to have client households spanning multiple generations, with some of those clients having been with us since the start.

The same goes for reputation. Having integrity and demonstrating character to others compounds over time.

One of our favorite sayings around the office is "people don't care how much you know until they know how much you care." Reputation is earned when individuals and businesses show up time after time for those around them.

It can also come from being active in the community, whether serving on the local school board or volunteering at the community food shelter.

Reputation is priceless and often can be more valuable than any type of traditional marketing or branding. It extends beyond the office and is one intangible that can go a long way for a small business.

And then there's knowledge. We believe being trustworthy is important, but a small business needs to be competent. That comes from building professional knowledge over time.

For example, a wealth management team should be well-versed in tax planning, retirement planning, investments, insurance and estate planning. That comes largely through experience. More encounters and situations often lead to new observations and learning lessons along the path of continuous improvement.

This matters not only for client-facing team members but for a business's internal operations too. Successful businesses require thoughtful, well laid-out plans that can be executed and tracked to completion. Over time, knowledge and competence improves operations and the client experience.

As you can see, there's more to compound interest than accumulating capital. But similar to being a long-term investor, the longer you stick with it, the larger the returns in relationships, reputation, and knowledge.

• Bridget Platania is the Director of Operations at Platania Financial Inc., located at 2 W. Northwest Highway, Arlington Heights, IL 60004. She can be reached at info@plataniafinancial.com or by phone at (847) 870-7526. Securities and advisory services offered through LPL Financial, a registered investment adviser. Member FINRA/SIPC.