Consider the Opportunity Costs

Woman with bandage on foot

In mid-August, I fell down some stairs and badly sprained my ankle. Thankfully I didn’t need surgery, however the doctors were adamant that I shouldn’t put weight on my foot for three weeks. Truthfully those three unexpected weeks on the couch were pretty miserable. I was angry (like most accidents, this could have been prevented) and in pain.

The experience got me thinking about opportunity costs – a term that I learned decades ago when I was studying economics. In layman’s terms, an opportunity cost is what you have to give up to get what you want.  According to Investopedia, “opportunity costs represent the potential benefits an individual, investor, or misses out on when choosing one alternative over another.” (Source)

Below are some examples of opportunity costs:

  • You have $1,000 to invest in the stock market. If you purchase $1,000 worth of shares in Apple, you won’t have any money to invest in Microsoft (or your own business).
  • You have three hours free on Saturday and decide to clean up your yard. Although your yard looks awesome, you don’t have time for laundry and grocery shopping.
  • You sprain your ankle and follow doctor’s orders to rest. Although your ankle heals without needing surgery, you lose muscle tone and balance due to your inactivity.
  • You spend 30 minutes every morning scrolling through Facebook. This adds up to 182 hours per year – or more than four 40-hour workweeks. What else could you be doing with that time?
  • You are excited that Fall has arrived. Your lunchtime treat is a 20-ounce Starbucks Pumpkin Spice latte with 2% milk and whipped cream. That cup of deliciousness comes with 470 calories, 64 grams of sugar and 66 grams of carbs. Although it tastes yummy, you need to cut calories elsewhere if you want to maintain your weight.

Consider Opportunity Costs to When You’re Making Choices

Life is about making conscious and unconscious choices. No matter what choice you make, you are giving up something to get what you want. Imagine how much your choices would improve if you looked at the opportunity costs — what you are giving up instead of just what you are getting — when you are making decisions.

Below are some opportunity costs for you to consider:

Screen Time. How much time do you spend scrolling through social media, surfing the Internet, watching TV or Netflix, or watching YouTube videos? A lot! According to TechJury.net, an average user spends 2 hours and 24 minutes per day on social media in 2020. That’s almost 900 hours of social media watching – or more than 22 forty-hour weeks. (Source) In addition, Netflix reports that the average Netflix subscriber spends two hours a day on the service. (Source) Think of what you could be doing if you weren’t watching a screen!

Beliefs. Many of us start businesses with unhelpful mental baggage. Two of the beliefs I hear most often are: “I can’t write” and “I’m not good with numbers.” These beliefs are generally formed in school and are not relevant to running a business. It’s my experience that most business owners can write conversational emails and perform basic arithmetic – which are the only skills you need. Think about the opportunity costs of the beliefs that are holding you back in your business. What are these beliefs keeping you from doing? Is your perceived lack of writing ability holding you back from writing a newsletter? Is your fear of math keeping you from sending quotes to customers? It’s time to re-evaluate your beliefs to create a more positive outcome.

Health. What choices are you making with diet and exercise? Is sitting at your desk for 12 hours per day and relying on caffeine for energy the right choice? The opportunity cost is that you may be mortgaging your future health. As I learned with my ankle injury, solo businesses don’t function well when the owners are sick or injured. Exercise and good nutrition are essential for long-term success.

Relationships. Are you hanging out with people (in person or online) who are unsupportive or critical? Think about the opportunity cost of these negative relationships. Is it time to spend your time with people who are supportive and uplifting? How would that impact your life?

Perfectionism. Most solopreneurs I know spend a lot of time and effort reducing risk. If you’re like me, you don’t like making mistakes and want everything you create to be perfect. So what’s wrong with this? Once again, it’s opportunity costs. How many times must you proofread your blog for errors? How critical is selecting the perfect font to your Instagram post? What could you be doing instead that would have a positive impact on your business?

News. Recently I’ve seen the word “apocalyptic” being used to describe news in the United States. Over the last couple of weeks we’ve had unprecedented natural disasters with wildfires, hurricanes, and tornadoes. Our president is fueling the flames of hatred and keeping us off balance. The covid-19 pandemic has killed 200,000 Americans and it looks like that number could double by the new year. And then there’s an election, Supreme Court nominee, and a lot of corruption to fill the news cycle. While I heartily support being informed, the news is depressing. What is the opportunity cost to spending hours consuming news? Could you be building your business, engaging in a hobby, or hanging out with your loved ones and still stay informed?

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