Your Greatest Cost is Lost Opportunity Cost
Lost Opportunity Cost is typically the lost revenue while doing one thing as opposed to earning cash someplace else. The cash that would have been earned someplace else is the Lost Opportunity Cost.
I’m not saying that we should respond to every opportunity. I believe in quite the opposite. Pick your focus and move fast.
It’s becoming clearer and clearer to me that Pace is imperative and not acting with a sense of urgency causes you to lose out. Particularly as a small company on a growth path, you need to act fast when you see a relevant opportunity.
The core of the problem is this:
When we estimate the time to complete a task, we rarely try to do it faster, thus losing that time forever.
Completing the task faster is reducing your lost opportunity costs.
This is why I’m becoming a big fan of Eli Goldratt’s “The Theory of Constraints”. Part of which is about estimating individual tasks to be completed under ideal conditions with 50% certainty and manage the uncertainty at a more all encompassing level.
The term is “Opportunity Cost” not “Lost Opportunity Cost”.
Got it?
http://www.economist.com/research/Economics/alphabetic.cfm?letter=O#opportunitycost
Same difference. “Lost Opportunity Cost” is more descriptive of what I’m talking about.