Opportunity cost can be defined in many ways. One definition describes it as understanding what you are giving up when you make a choice to do something else. Even writing this article has had a cost!
For me, as a founder, it meant letting go of my salary and a fulltime job to start my own business. Initially, I focused on these obvious sacrifices. However, after reading a recent LinkedIn article on the same topic, I realised the lens could be altered.
Over the past six weeks, I have spent a lot of time developing our business plan. While this is crucial for our future, it has taken my time away from other important activities, such as reaching out and connecting with potential partners and building our network.
The business plan, which holds my vision for the company, needed my personal time and insight. Yet, in reality, this focus has felt like I have been missing growth opportunities for our business.
In building a company, opportunity cost is closely tied to decision-making. While we make many operational decisions, only a few critical choices significantly impact our long-term success. Often, the emphasis on moving the business forward can overshadow the importance of setting a firm foundation. It is not just about moving fast but about making decisions that will pay off in the long run.
Reflecting on this period, I recognised something else. I am fortunate and deeply grateful for the support of my family, our team, my mentors, peers, industry supporters, colleagues, and friends. Your support represents an investment in our success, for which I am most thankful!
The business plan is now complete, the foundations are laid, and we are looking forward to the next exciting phase of our plans in preparation for launch in 2025!
And finally, thank you for taking the time to read this article!
Suggested reading:
Cost and choice: An inquiry in economic theory
The concept of opportunity cost (or alternative cost) expresses the basic relationship between scarcity and choice. If no object or activity that is valued by anyone is scarce, all demands for all persons and in all periods can be satisfied.
There is no need to choose among separately valued options; there is no need for social coordination processes that will effectively determine which demands have priority.
In this fantasized setting without scarcity, there are no opportunities or alternatives that are missed, foregone, or sacrificed.
