Lost Opportunity Costs and Business Risk
From an accounting and business point of view – losses are not considered favorable.
However, sitting on the fence may, in fact, be a costly alternative.
What is a lost opportunity cost?
A business or an individual may have a sum of money to invest. They have several opportunities to choose from, but in choosing one, they lose out on the other opportunities.
Also, each of the opportunities may have different risks and rewards.
For example, in choosing to:
1. Buy or rent a property for a factory
2. Buy a new machine or keep an existing machine
3. Outsource manufacturing
4. Invest in the stock market
5. Save for a child’s education
In deciding on one of these five options, the other four become lost opportunities.
The cost of these loses could be estimated by considering different rates of return.
Analysis paralysis (doing absolutely nothing) may be much more costly than lost opportunities.
Time is limited to twenty-four hours per day. Wasting time is an opportunity cost as these hours cannot be recovered.
Another consideration is to let your money work for you instead of working for your money!
A financial advisor will evaluate your personal and business position. This will be done, taking into account an overview from a financial perspective, and consideration will be based on age, family needs, goals, dreams, and liabilities.
A financial advisor will look at your taxes and possible passive income investment opportunities.
The door to opportunity awaits. How it is approached will depend on what actions you take.
When it comes down to sitting on the fence are you:
1 A serial entrepreneur who sees the fence as something to leap over and conquer
2 A young family sold on a white picket fence
3 An astute business person choosing to ring-fence, to protect some assets against higher-risk investments
The door to opportunity awaits. On which fence will you be sitting?
Diversification can make sure that all the eggs are not in the same investment basket.
Don’t delay the call name of the company today!