What’s the opportunity cost? When I did my business management degree a few years ago I learned a lot of stuff that really helped me to understand business. We covered marketing, law, HR, and ethics along with my least favourite subject, Economics.
Economics, still not 100% sure what use it has been for me but I clearly remember one very interesting session we had on, ‘Opportunity Cost‘. I think of it often as I am weighing up possibilities. What do I have to give up in order to achieve that? The essence of opportunity cost is just that, the bargaining in order to achieve.
As a business owner the opportunity to succeed can be costed in terms of the time, money and effort I have to put into my business activity. Nothing is free right?
Take everyday life. The opportunity to stay warm this winter can be costed in terms of how much you spend on your heating bills. So the opportunity cost of warmth is financial expenditure. The opportunity to have a fun family holiday in Florida can be costed in terms of spending less on other stuff like eating out so that you can save up. So the opportunity cost of a holiday equals sacrificing other fun stuff. You make opportunity cost choices every day.
So let’s get back to business. We have already established that the opportunity for success is costed in terms of time and effort as well as money. So what are you spending in order to grow your business to bring in more money. Hopefully you are spending less than you are making but actually, in the first couple of years that’s unlikely.
The opportunity cost of making money very often is to spend money and time. So in this New Year let’s get smart on what we are spending on our business, so we can maybe reduce those costs. Here are a few pointers for you:
Have you checked all your subscriptions recently? Website fees, domain fees, insurances, networking groups, association memberships, virus protection license, cloud solution costs . . . I could go on.
I checked mine before Christmas and realised, shockingly, that I was spending over £2k a year and some of the stuff I was just not making use of. So I have moved both my websites to a new hosting service and saved a shed load (I used www.hipposerve.co.uk to switch and host me, Jason is absolutely brilliant)
How much time are you spending on activity that makes you money and how much on just goofing around with the stuff you enjoy?
I love networking and it is my most successful way of gaining new clients and work opportunities yet I know that I need to take a closer look at what I am actually doing there. Firstly, am I networking in the right places? How much am I spending (time and money) v’s business achieved from each group? Is my business most likely to find opportunities through networking live or online? Does the networking group I run still achieve it’s purpose? So many questions but to save time and money, the opportunity cost is to spend some on analysing my networking strategy.
Continuous Professional Development (CPD). I cannot state strongly enough the importance of investing in CPD.
Would you go to a doctor for health advice if he hadn’t done any kind of training in the 30 years since he qualified, no, I don’t think so! Would you use a coach who a) wasn’t a member of an accredited body or b) who hadn’t trained properly in the first place, or c) wasn’t continually growing their skill set? No, I don’t think so. Why would people come to you if you haven’t been growing your skills and knowledge?
It is vital to always make sure you are always the best you can be, the opportunity cost of that is investing time and money in good continual training. This year I am undertaking a Coach on Stage course to improve my speaking skills, I am a member of a social media club which keeps me updated with bitesize weekly training, I am also a member of the Business Support Organisation, where I get online group training, networking and one to one business mastery support. Those three alone are costing me @£1k this year plus many hours of my time but by golly they are worth it. They will enable me to serve you better, the opportunity to do that costs time and money.
Continuous Personal Care (CPC). Even more important than CPD, because if you’re not healthy in mind and body then your business will really suffer too.
CPC is different things to different people. For some it might be regularly working out at the gym, for others making sure they get a good walk in the fresh air every day, for others eating well. For some all three. All great for physical wellbeing. But what about your mental wellbeing. I know everyone is talking about it, mental health, mindfulness, yadda yadda but there is a really good reason for that. Mental wellbeing supports physical wellbeing, supports good health, supports you in being able to bring energy and drive to your business. So the opportunity of being 100% fit for work and play can be costed in terms of time and money and effort spent on making sure you are both physically and mentally well. And it is worth it.
As part of my business I run live events through the year based in emotional wellness. As a Master Geographer of Emotions I use geo-emotional mapping techniques to develop your self-awareness, of your strengths and weaknesses, of your successes and failures, and use that understanding to plan for a healthier and more productive you, both physically and mentally, in business and in life. I have invested over two years of time and a great deal of money in being able to do this for you and I’d like to show you how you can take advantage of this to make 2023 your best year yet.
Meanwhile what are you doing to ensure that the opportunity cost of your business isn’t more than you can afford this year and is actually making a positive difference to you and your business growth?
