Product & Startup Builder

Opportunity Cost Is Not Soft Or Abstract - It's Expensive

Added on by Chris Saad.

Opportunity Cost might be hard to measure, but it is not a theory or a soft abstract idea.

On Google it is defined as "the loss of potential gain from other alternatives when one alternative is chosen.

The example they give is "idle cash balances represent an opportunity cost in terms of lost interest"

So, in simple terms, the money you leave in savings cost you whatever additional profits you could have made by investing it more cleverly in stocks or property etc.

Opportunity cost, however, is not just found in clearly defined scenarios where you can measure the alternative route retrospectively and do a calculation to figure out how much you lost. It's also felt in an infinite number of small decisions and procrastinations you might make every day.

Pushing a meeting to tomorrow. Passing on some hard work due to laziness or emotionality. Not following up with someone when they offer to introduce you to someone that could be helpful. Not following up when an introduction is made. Not taking or making a key investment. Staying in a small town when a different geography might suit your needs better.

On and on

I've been guilty of this many times. Most weeks. In fact.

My constant struggle, though, is to recognize the countless opportunities to optimize my costs and maximize my effective execution through life.

Originally Posted On Facebook