The other day, I was watching a StoryBrand Team video by Donald Miller. He spoke about the definition of “Opportunity Cost”. I’m sure you have heard this phrase before, but Miller’s explanation caused me to pause a bit and think about my clients and prospects.
He described Opportunity Cost like this, “How much am I losing by not taking a better opportunity?” Miller shared that after one of his best-selling books was published, he received many offers to speak which paid around $5,000 each. He found himself traveling often missing time with family and time to continue his work. So he began think. . .he could continue traveling all over chasing $5,000 OR he could stay home and spend time writing another best-selling book making $50,000. His opportunity cost equated to the difference of income generated from another best-selling book and the income generated from the number of speaking engagements in the same amount of time.
This is where my pause came. I’ve watched clients/prospects spend a great amount of time and effort scheduling appointments and creating bids/proposals. There is usually a great amount of variance in the size and revenue these projects will bring their business. And let’s be really honest. . .there are some projects you don’t want to even bid/propose on, let alone do the work. However, we fall into a Business Owner’s trap of feeling we need the work, to generate the revenue, to achieve our goals and so the wheel keeps on turning. Opportunity Cost is not even a concept in the back of our minds.
What I want to leave you with today is to think about calculating your business’ Opportunity Cost:
*Who is my ideal client/customer and what are their characteristics?
*Conversely, who do I not wish to have as a client/customer?
*What projects/activities generate my business the greatest return on investment?
*What is the acceptance rate on the bids/proposals generated and what type of work is getting the most acceptance?
*Based on these answers, how can I do more of the profitable work I enjoy by taking better opportunities?
Parting thoughts. . .How can you spend more time on activities which generate the greatest return for your business and stop losing on the ones that don’t?
Stop leaving money on the table!