In this article you’ll find tips on how to save time, money, and your sanity by reducing your opportunity costs.
I’m sitting on a lawn chair in my garage hosting our annual community garage sale, when an old Ford truck pulls into our driveway.
Out comes a tall slender gentleman, about seventy years old, with a face almost as weathered as his truck.
He’s wearing old jeans, boots, and yes, a cowboy hat.
He saunters over and slowly peruses our household wares.
He picks up a white tea cup, sets it down, and says, “You know, there are consequences for the things we don’t do,” and leaves.
I was stunned.
Was it a message from the Universe? Or was he simply thinking out loud about the “either/or” kinds of decisions we are all faced with every day… decision’s that could be creating very expensive opportunity costs.
According to Bing, an opportunity cost, “…is the cost of any activity measured in terms of the value of the next best alternative not chosen.”
And one of the biggest opportunity costs I know of for small business owners is the indecisiveness that arises from working in a committee.
So for example, your website could have been done a year ago and generating a steady flow of client leads for you, but the marketing team can’t nail down the content.
Or you’re a solo-entrepreneur and the committee that consists of your husband, mother, sister, and best friend can’t agree on the best headline for your homepage.
What happens is that the committee members continue to talk about theories instead of making a plan, creating a deadline, and sticking to it.
This happens for three reasons:
1. Conflicting priorities.
2. Long deadline.
3. The team does not have the authority to make a decision.
Here are three solutions that will increase productivity and eliminate opportunity costs.
1. Keep your eye on the prize: Conflicting priorities can be quickly resolved by keeping the focus on the customer and not on assuaging the committee member’s feelings or department priorities.
In the case of developing a homepage for your website, you would have a clear picture of who your customer is and what action you want the customer to take, like booking an appointment or making a purchase.
Essentially, every idea from usability to content creation is tested against these two criteria.
2. Pressure is a good thing: Nothing spurs creativity like a short deadline.
In Tim Ferris’s bestselling book, “The Four Hour Work Week,” he talks about Parkinson’s Law. That is, “… a task will swell in complexity in relation to the time allotted for its completion. It is the magic of the imminent deadline.”
Give a committee too much time to deliberate and deliberate they will.
For solo-entrepreneurs who are having a difficult time deciding what services or products to highlight, I recommend that you book yourself a speaking engagement or offer a seminar. The deadline works magic in helping you to get your priorities in order.
3. Decisions, decisions, decisions: Lastly, having a committee that does not have the authority to act is a waste of time…and talk about opportunity costs! There is no point to having a committee that cannot act on a decision.
There is also a hidden reason that we allow decisions to languish on the committee table, and that is fear of failure.
Whether you’re a solo-entrepreneur or a small business owner with 50 employees, bad decisions cost money, and usually it’s money that you can’t afford to lose. Which is why you need to have good research behind your decisions.
Most successful campaigns don’t happen because of a fluke, they are the result of hard work and good research.
But once the research is done, the resulting campaign, website, newsletter, or whatever your project is, has to be put to the test.
There’s a famous saying by Ilka Chase, “Those people who never fail, are those who never try.”
Have I missed anything? Don’t be shy, leave a comment.