Opportunity Costs
One of the biggest inconveniences we are faced with is the innate inability to be in multiple places at the same time. How wonderful it would be to be earning money at the office while being out on the boat with our family, or spending time with good friends, while finishing off that presentation due next week. Every time we make a decision to do one thing instead of another, there exists a cost. Whether it is sacrificing time with your family so you can pay the mortgage, or spending money on dinner so you don’t have to cook, one thing is being exchanged for another.
Recently, I had a friend ask me whether or not I would be able to show a benefit to the bottom line earnings of a company if they hired me. I responded that it would all depend on the business owner.
Why would it depend?
Simple! I gave him an example using his own company. He works long hours, which prevents him from spending a lot of time with his wife and child. He would love to spend more time with them, but cannot because he needs to make money. He bills clients at $50 per hour, and spends 5 hours per week doing his own bookkeeping. A company approaches him and offers to do this bookkeeping for $200 per week. As a business owner he declines the offer, because why would he want to pay $200 a week to someone for something he can do? He agreed with this so far.
I then explained that if he spent those five hours working for his clients instead of balancing his books, he would net $50 more than the cost, or he could work for four hours, break even, and buy another hour of his life back to spend with his family. This news came as a surprise, because he had never taken that approach. I then asked him, how can I show that as a bottom line increase if he were to opt for the hour of family time?
Anytime you are able to make more money doing what it is that you do, than the cost of paying someone else to do another task, it is generally a good idea. There are instances that this is not the case, but that is for each individual to decide for themselves.
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