Opportunity cost is an economic term that means the cost of passing up the next best choice when making a decision. For example, if you choose to marry Helen, the cost would be losing Clara (your unrequited love)… Or something like that.
What I want to do today is to relate opportunity cost with how we spend our time.
That 24 Hours
Time is the same for everyone, it’s limited. Assuming that you work for 8 hours a day, plus minus sleep time, dinner, etc, normally you would be left with at least 6 hours to do whatever you want.
The question is – do you maximize your output (making money) with the extra time, or do you waste it instead?
Since it’s not necessarily a bad thing to catch up on the latest Glee or American Idol, I won’t be focusing on the latter, nor am I going to persuade you to give up on your personal entertainment.
How To Learn Your Opportunity Cost
If you’re still reading, I’m going to assume that you’re the former. In this case, you want to learn your opportunity cost since we are dealing with money. These are questions that you should ask yourself.
- Is your business model effective?
- Is your business model efficient?
- What else can you do besides x (x refers to the project you are currently working on)?
- Do you have a backup plan?
- Have you set a time limit?
My Story
I have been pondering on my opportunity cost for awhile now. Although my passion has always been about personal development, my blogging intention has always been about making money online. Sad to say, this is the main reason why I started this blog. So the first question I asked myself is, is my business model efficient, or even effective? No, it’s not.
Therefore, the next question would be, what else can I do during my free time, besides writing for PDPro. Build websites to try out different business models (at least for me).
I think what really help is the fact that I have set myself a time limit the moment I started this blog. Now I’m not saying that I gave up this blog (I will continue writing), nor am I suggesting that you should give up on your business model. What I’m saying is, one must know when to quit and seek other opportunities that are available.
The Mindset Of A Businessman
Here’s what I think - a good businessman must know when to quit.
Yep, I said it. Being a personal development blogger, I’m aware that the word “quit” is a taboo that I should be avoiding, but hear me out.
My field of study is accounting, and this is what have been ingrained in me. A business that is making a loss is a liability, not an asset. If you’re building a business, I think we all can agree that it’s all about making profit, in the end of the day.
Sure success doesn’t come to those who give up half way through, but that doesn’t mean you shouldn’t give up on what’s not working for you either.
I think what’s important is to rethink your business strategy from time to time.
What’s your opinion? Am I right? Perhaps you can prove me wrong? Please share it in the comment section below.
{ 6 comments }
