This week I wanted to talk about opportunity costs.
If you’re not familiar with this term, it’s essentially where you are giving up in one place to focus on something else. For example, let’s say you need to knock out your workout but you also haven’t checked your Facebook account in 8 hours and you know you have some DMs piling up you need to answer.You can do one or the other….or try to do both at the same time. Here’s what will likely happen in the scenario…
1. Workout only
maybe you listen to music and you probably get a great workout,distraction-free.
2. Social media only
you feel better clearing out your DMs but you feel like crap and now you need to run errands so you missed your workout for today. BLAH
3. Workout and check social media
periodically during the workout. Your workout suffers and it isn’t your best workout in awhile. Both sides get 50/50 effort.
This is an example of opportunity cost. Every decision in your day and in your life means you have to choose something over something else. Literally everything you do – every meeting, message or conversation is taking away from your time and attention.When you say YES to one thing, you say NO to something else.Studies have proven that there’s no such thing as multitasking…there’s only task switching. And the more you switch tasks, the less effective you become. That’s an opportunity cost.Here’s another example from my business history. You may have heard that I went on a rampage and opened 7 gyms in 7 years. Here’s the real financial situation that occurred with the first 3….
- 1 Gym = $50,000/mo EFT
- 2 Gyms = $42,000/mo EFT (Gym 1) and $25,000/mo EFT (Gym 2)
- 3 Gyms = $20,000/mo – $25,000/mo EFT at all 3 gyms
Here’s what’s crazy…when you do the math. We basically made MORE WORK for ourselves to achieve the same outcome. We were literally bringing in the same EFT across 3 gyms rather than focusing on the original one. My ego was in my ear saying we can duplicate this and take this “magic formula” to multiple locations. That’s a real life example of opportunity cost.
This lesson has taken me a while to learn but more is not better, better is better.
There’s a ton of factors that go into making a business successful – the leadership, talent of team members, location / market, cost to acquire leads, proximity to get support, investment capital, culture and so much more.I’m sharing this with you because I want you to be aware of where you are trading time and attention. It’s a depleting energy throughout the day and you have to be EXTREMELY choosey where you place it. More stuff is just distractions, busy work and less production.
When people ask me why I’ve closed gyms in the past – opportunity cost.
Why did we stop doing online coaching – opportunity cost.
Why did we change our service to serve less people, paying more – opportunity cost.
If you have skills and a strong work ethic, you must eliminate the non-essential and reduce it down to the items that produce the most fruit in energy, income and joy. I know that sounds super selfish but I’m happier and less stressed while making a bigger impact on our clients.
What are some things you’ve cut out that have allowed you to focus on bigger
opportunities?