Opportunity Cost: How to Dig Up and Seize the Best Opportunities

When you nod your head to do something, you automatically rule out other possibilities and potential boons. We call this "opportunity cost."

Most of us have heard of this concept or have subconsciously realized it. We know we can't do everything we want simultaneously, but the opportunity cost is more important to your life and career than you think. In recent years, I've grown more conscious of this concept, and as a result, my career has become ahead of the curve.

In this article, I'll share how you can use the concept of opportunity cost to make better decisions, but first, let's talk about what opportunity cost means.

A simple definition of opportunity cost

It's a key concept in economics, and it simply means the potential benefits that we miss by choosing one option over another. Opportunity cost comes in two flavors: explicit and implicit. Explicit costs, also called accounting costs, are often used in business and economic terms.

Implicit costs are often invisible. Time, for example, is an intangible cost.

Risks of shutting eyes to opportunity cost:

In the absence of actual consequences, it can sometimes be easy to turn a blind eye to the costs associated with theoretical opportunities, but we’re up against these costs every single day, even if we’re not aware of them. But if we choose to ignore them, the costs of alternative opportunities will backfire in terms of our lives, jobs, and relationships as well.

There are two major risks

1. Working with no clear purpose

This means working to no avail. I've been there once, and this has left me down and out. For example, you might come to work, spend those many hours, go home, get the cash, and then rewind. But in the end, you're left empty-handed, with no information or experience of great value.

We all need to pay our bills, so it can be tempting to work without apparent purpose, but if you want a job that makes you feel tingly inside, you can't afford it.

When I need a reminder of the pressing business, I always refer to the Austrian-American author Peter Drucker's book, Managing Oneself: "There is surely nothing quite so useless as doing with great efficiency what should not be done at all."

2. Missed ROI

Could you possibly spend your time on something more effective now? There are many things we do that don't provide us with a return on our investment. Our time and resources are investments.

Everything we do, from reading the news to browsing social media to checking emails and checking website statistics for no specific reason, takes time. You may get out of bed and have the hour go by without getting anything done.

Prioritize your options

If you want to be clearer about the opportunity costs in your career, start prioritizing the essentials for your business.

On my website, I always put content before design, which is vital. A random blog casts a long shadow on the reading experience, and content beside the point attracts no one at all. So, one is more crucial than the other, but that doesn't mean I should neglect my website's design. Since the content of my blog is my top priority, I simply have to put in more energy to work on the content.

Prioritizing is as simple as making a list. Here's the list I made for my blog:

1. Post one high-quality article every week

This is the most important thing for my blog. I won't have a blog if I don't have any articles.

2. Provide five-star products

My blog generates income by offering courses and books. I won't have a blog if I don't make money.

3. Getting new information

I'm constantly blazing new trails. Otherwise, I won't be able to post new articles, books, and courses.

4. Listening to readers

This helps me stay in touch with people who read my blog. The feedback and inspiration I receive from readers help me step up my game.

5. Some other things

My list goes on for days, but after the first four items, the order doesn't matter as much because prioritizing is knowing what matters most.

You can list your top five priorities if it makes more sense for your career, but I don't recommend making a long list of 10 items or more. Realistically, we can't focus on many things at once, and to be clear, the example above only applies to my professional life, not my whole life.

Do you want to try it? Make a list, put it where you'll see it all the time, live by it, and don't waste your time looking for opportunities that don't support your top priorities.

Personal example: Don't overplay your hand

I'll demonstrate with an example how challenging it is to ace the opportunity cost. Despite being fully aware of my priorities, I still develop new ideas and jump right into working on them. Later on, I realized that they didn't align with my top priorities and that I could've done something else at the time.

When the COVID-19 pandemic started, I came up with the idea of creating an online course related to remote work. I asked some people what they thought about it, and everyone gave the nod. So, I started designing the course right away, but I didn't lend a good ear to my readers.

I've also been working on another online course for business startups in parallel for about a year. Most of my readers have already expressed interest in this course. Still, since I got ahead of myself (and forgot my priorities), I've put the online business startup course on hold for about three months to finish the remote business course, launch it, and make more profit.

It was an opportunity cost when I decided to take a small course instead, which didn't yield the same results. The course I put on hold got better reviews than the remote working course.

Eliminating Options

Our initial thoughts are not always the best, just like my decision to design a course. Although I worked on another course, I had to assess my options more strategically before getting involved. Here, the casting vote was my priority: "listening to readers," which I turned a deaf ear to when I designed the remote work course.

We have millions of options at all times when it comes to spending our time. For example, should you stay at home or go out with your friends? Should you write in your journal or check your inbox first thing in the morning? Should you cut down on your expenses and spend more time taking the bus to work, or should you buy a car?

Winding It Up

We can't do everything we want at once. We have to make a choice. According to the paradox of choice, having more options isn't always better. Today, there are more possibilities than we can shake a stick at, but setting our priorities clearly will help us rule out many options. This is the key to making better decisions.

We always have different ideas that can stir the blood in us or new opportunities knocking on our doors, but it's up to us to properly assess them. Always ask yourself: “Does it fall in line with my top priorities?” before you make any decision. If it's a confident “yes," roll the dice.