Why You Need to Consider Opportunity Cost in Your Business

Why You Need to Consider Opportunity Cost in Your Business

How much could you make if you were selling X instead of Y? How much could you make if you worked a day job? Would you prefer to be compensated in another way (like having more time with your kids)? How much time do you want to devote to the causes you love? Maybe you’ve been in business for years already and you’re leveling up. Or perhaps you’re just starting out. Either way, the struggle to price your products or services properly — while also keeping your larger, philanthropic goals in mind — is a constant companion, am I right? The only thing you can actually profit from in your business venture is to price your offerings properly. To do so, you’ll run a lot of numbers like the cost of supplies, overhead, etc. But one thing that often gets left out of the equation is opportunity cost. Opportunity cost accounts for what you’re giving up by foregoing the next best thing you could be doing with your time or talents to operate your business. It can also account for pursuing one type of offer over another, whatever the next best option would be for you to sell. As business owners who are trying to make a difference, opportunity cost can get a bit sticky because we have so much freedom to determine how we want to be compensated. Plus, we are really passionate about the causes we support — it’s not always about money! So I’ve broken opportunity cost for entrepreneurs down into three main frameworks. You should have these concepts in mind as you restructure your business model, pivot into a new venture, create new products or services for your audience, and, of course, whenever you’re analyzing your pricing. How much would you make if you had a …

Common Pitfalls of Making the Journey from Penniless to Profitable

Common Pitfalls of Making the Journey from Penniless to Profitable

Do you check in on your numbers regularly? And by numbers I don’t mean social media followers, unsubscribes, or anything like that. I mean the real numbers… the ones that show you if your business even makes you money. The ones you can dig into and find out if your business model is healthy or doomed. Yeah, those numbers. Oftentimes, it can feel like digging into your numbers lands you in a dark, scary hole… and even worse, it’s one that you dug for yourself! And if you’re trying to make a difference in the world, a lack of funds could also mean a lack of impact. But it doesn’t have to be that way. You can go from penniless to profitable by understanding your business by the numbers. Sure, you could start making more money today by doing things like cutting expenses or getting your marketing ducks back into a nice, neat row. However, if you want your marketing and sales machine to actually make you profitable, you’ve got to fix your pricing. You can have dozens of new leads in a month, but if your pricing is off then you can actually LOSE money for every new customer you bring in the door. Crazy, but true! Here’s the even scarier thing, though. There are three big pricing pitfalls you can easily fall into right when you finally manage to climb out of the numbers hole. You see, when you realize that you’ve got to get this pricing thing figured out right now, three things start to happen: Under the guise of market research, you start comparing yourself to others. You think you’re just going to spend some time researching the competition to figure out what can charge for your work within the market. But instead of learning anything …