Oh, he was so lucky – he was in the right pace at the right time!
Absolute nonsense! Count the number of times lady luck visits you in any week and you will realise that you create your own luck! The difference between ‘he’ and you is that ‘he’ acted upon one of the opportunities lady luck presented to him. Put a monetary value on all the opportunities you have passed up to date and you will be astonished by the cost.
For some bizarre reason we do not look at opportunity cost in business because we think it is not real … maybe it is about time we sit up and smell the roses because your business, and it doesn’t matter what business it is, could be making profits at least 50% higher than they are at present. All you need to do is start mining your opportunities.
In the terminology of economists, opportunity cost is defined as ‘The value of that which must be given up to acquire or achieve something else’. To most people, the fear of loss is far greater than the promise of gain – and we have the audacity to wallow in self-pity at the poor hand life keeps dealing us?
Let’s look at a practical example to demonstrate. If I were to come to you and say, ‘I will guarantee that I will, through you, mine increased profitability, and cash resources, from your business by at least 30% within eighteen months, but for this I will charge you a fee of R5,000 per month plus 20% of the incremental cash inflow over the 18 month period’, most people would instinctively jump at the opportunity. BUT this is the real world and following our instinct has been schooled out of us. We end up paying dearly by following the rational mind in isolation.
What then is the process we force ourselves to follow, and what is the cost?
- Procrastination: By far most people will procrastinate and thereby allow the opportunity to pass them by. This is, in effect, a self-protection mechanism and results in the decision to do nothing. If this decision is made, no gain can be realised. You will keep your R5,000 per month, but you will have lost the opportunity to increase your wealth by 30% per month. If the cost of the R5,000 per month exceeds the 30% increase in wealth, the opportunity cost of doing nothing worked in your favour. If, however, the reverse applied – calculate the opportunity cost for yourself!
- Rationalisation: The rational mind kicks in, and we start the justification process.
- Scepticism rises to the fore. Because we have not been able to increase our profits by 30% through our own actions, we do not believe that anyone else would be able to help us do so. This response is justification for two fears. The fear of Success and the fear of Failure. The sceptic pays a high price indeed for his ego, paid in terms of all the opportunities he passes up.
- Risk/Reward Analysis: Here we focus purely upon the financial side of the equation. Is the risk of spending R5,000 per month higher or lower that the potential reward we will reap? Either way, the decision becomes easy, but the point is that we act and will reap a reward. We have assessed our opportunity cost and have acted to either conserve our existing resources (cash) or to earn a healthy return on our investment.
- Compromise: Very often we view the opportunity as definitive and do not explore the positions around it by looking for the compromise situation. This failure is the bedfellow of procrastination.
In many cases people are just too emotionally immature to take a decision for themselves. They consult family and friends as to the decision they should take and it is these very people who would, often, counsel against any decision, which may result in elevating the ‘seeker of advice’ above both their financial and societal status.
Keep the counsel of people who have your own best interests at heart – those who will profit by your success. Surround yourself with people who are objective and are continually looking for, and identifying, opportunities for you to examine – very often opportunities that you do not even recognise.
There is opportunity in all things we do but it takes a person with vision, initiative, imagination, and enthusiasm to recognise where the opportunities lie. It is through the recognition of these opportunities, and acting on them, that we develop our ‘luck’.
Success in business is all about getting the business fundamentals right … and the actions you take!
QUOTATION:
No man can rise to fame and fortune without carrying others along with him. It simply cannot be done! (Unknown)
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