Opportunity Cost
Warren Buffet – the world’s richest and most successful investor – has said that he considers this one factor above ALL others when deciding how to invest his money.
* Strength of the company? – no
* High profit margins? -no
* Price of the stock? -no
* Return On Investment? -no
What is?
Opportunity Cost.
What does that mean and how does it apply to us?
Well, opportunity cost means:
What else could you be doing with that money?
What other, possibly more important, opportunities are being missed (the cost) because your resources are tied up with another investment?
This same concept of opportunity cost applies to time and energy because whenever you spend your time on something, you’re making an investment. And if there’s one thing you’ll find that all highly successful marketers or business owners have in common, is that…
They all value their time more than anything else.
When most people think of “assets,” things like real estate, precious metals, bonds and stock portfolios come to mind.
Time is usually left completely out of the picture.
But the truth is, time is more valuable than all of these and smart business owners are more careful and selective about how they spend this asset than anything else!
Why?
Because it’s the ONE thing you can’t get any more of.
Unlike money and other “physical” assets which can literally be had in any quantity once you learn HOW to invest your time and WHAT to invest it in. Now the reason this idea of “opportunity cost” is so significant is because when you choose to do something, by default, that means you choose NOT to do something else.
And if the stuff that you choose to do falls under the category of low value activities, you’ve got a serious problem.
Not only is your time being spent on things that do little or nothing to advance your business, but it also means you have that much LESS time to spend on the things that do.
Have you ever had a day where you literally did 100 things and yet when you looked back on it, you had absolutely no idea what you got done?
This is called being busy without being productive and it’s a result of not knowing what the core money-making activities of your business are.
Here’s a great tip for you I learned that virtually guarantees every single day you have is highly productive:
Always take care of the high value activities FIRST THING every day – or as close to first thing as you can get – no matter what.
That way, regardless of what else you do after that, it’s already been a good day.
If you don’t take care of the most important things right off the bat… life will get in the way. Guaranteed.
Due to the inherent craziness of life, it’s inevitable that some things aren’t going to get done. It’s your job to make sure that when you do run out of time in the day, the core money-making activities are not on the list of things that got pushed off until tomorrow.
Okay, so what ARE the high value activities you should be focused on? Here’s how I’ve broken things down for my business:
Zero/Negative Value Activities.
Worry
Figuring out excuses/”reasons” why something won’t work
Idle chatter
Surfing the internet
Checking email
Instant messaging
Low Value Activities.
Prospecting
Cold-calling
Errands for business
Repetitive/Administrative work
High Value Activities.
Positioning yourself so that people seek you out
Setting up sales and marketing systems that simplify the grunt work for you and set out all but the best prospects
Simplifying up your follow up systems that build relationships with prospects and customers
Developing relationships with mentors and people you can learn from
Studying copywriting and direct response marketing.
-First and foremost, the heavy hitters only bothered with the people who were already looking for what they had.
-Secondly, they understood what people were really looking for in the first place. And so they offered more than an opportunity, which was just one puzzle piece in the overall picture. They offered their customers something of much greater value, something their companies could never provide:
Themselves and their expertise.
-They learned about sales and marketing techniques from sources other than their company. Because what they were doing was not taught by any company in the industry.
-They invested in their customers first before they asked for money or any kind of commitment. This might sound corny, but it is the formula that every great marketer has used to build enormously profitable businesses.
-They gave people a true marketing system with which to build their business. They gave them the “how” rather than the “what.”
Good marketing is about delivering the right message, to the right person, at the right time.
