What 3 words would you say best describe your brand? For me, I’d say rebelliousness, innovative, and contrary. My brand is definitely a good partner for any professionals who constantly say “no” to the standard and want to raise the bar. That is definitely how I want my customer experience to be.
What Is Opportunity Cost?
Today, we’re going to look at something called “opportunity cost”. This phrase is actually from microeconomics, but we’re not exactly looking at it from that standpoint. The opportunity cost is the benefit from an option not chosen. So opportunity cost is what you are forecasting going in favor of a different choice.
I want you to think of it like this. Imagine you are the gentleman in the image below, and you have an option to your left and an option to your right. We like to keep our options open, but there’s actually no such thing.
Let’s say this guy here is choosing between two potential partners. He thinks that he’s still got both of his options open, even if he chooses to take one. This is actually really far from the truth. At this moment, you have 2 options. Once you pick, you cannot revisit this moment exactly the way that it was because time continues on.
Could he break up with that one partner and be with the other one? Sure. However, he’s not rewinding back to that same moment to experience it all over again, just with a different choice.
So when he makes a choice to be with one partner to the exclusion of other partners, that’s the opportunity cost.
Making the Most of Your Resources
As business owners, this means we always want to choose the option that has the most benefit for our business. So it’s not that you’re necessarily choosing one option, and everything else sucks. You have to choose the options that make the most of your resources.
When they think of resources, most people think of money, but that’s not your only resource. It’s not even your most important resource. Money is typically a representation of our time. When someone has paid us for our time and skills, money is stored energy. You can lose money, but you can earn more too. But what you can’t do is get more time.
In terms of looking at entrepreneurs and entrepreneurship, this is where most go into debt. People say an entrepreneur is somebody who will work 80-hour weeks for themselves to avoid working 40-hour weeks for someone else.
We all chuckle and we think it’s funny, but the fact of the matter is that working 80-hour weeks isn’t the problem. Are you calculating the opportunity cost of every single one of those hours properly and making the most of them?
The Marketing Hamster Wheel
That’s something I tend to run into with my clients, because they’re experiencing marketing overwhelm. I like to call it the marketing hamster wheel. You think, “I’m doing all the things! I’m on social media, I’m blogging. I’m making videos. I’m doing everything right!” The wheel spins super fast, but you’re not going anywhere.
How Opportunity Cost Applies to Your Marketing
There are 2 easy examples, which are your time and your marketing budget. Most solopreneurs or brand new companies do not spend as much on marketing as a more mature business would. But newer businesses are also setting up client fulfillment operations and things like that, so they have to spend the money there as well.
Investing Your Time
First of all, you can’t use that time for something else once you’ve already promised it. A few weeks ago, I was talking about marketing consistency and how important it was to be consistent.
But you can also consistently go in the wrong direction. You can consistently do the wrong things. And if you are consistently doing the wrong things, you aren’t going to get the result that you’re aiming for. You are going to get the result that you invested in with your time and your money.
Blogging and Your Time
Let’s apply this to blogging. How long does it take to write a blog post? Let’s say it’s 2000 words. You’re going to smash whatever topic you’re writing about. If you’ve only ever written 1000-word posts, just double that. Let’s say it’s a topic you know really well, so you don’t even have to do an extensive amount of research.
According to studies, it takes professionals about 4 hours to write a blog post. And the studies that I saw weren’t really showing how long the blog post was.
I think writing up to 2000 words, creating graphics, uploading it into your CMS, making sure the SEO is tight, formatting it, and then coming up with your promotion and distribution for that blog post can easily take up 8 hours per blog post.
Learn more about Blogging For Business and our Blogging For Business Toolkit.
If you don’t do all those things, you’re choosing not to do everything that you could do to make that blog post effective. You may be saving some time by not doing all of the things that I just listed, but how is that impacting the ROI of your blogging efforts?
The Numbers of Money, Time, and Blogging
Let’s say you’re blogging weekly and you’ve calculated your internal hourly rate at $300/hr. If it takes you 4 hours to create a blog post, that’s $1,200 a week. If it’s 8 hours, that’s $2,400 a week.
But what if you spend a year or five blogging about the wrong things?
Your blogging efforts were solid, but if you had chosen different topics to blog about, your payoff would be much more substantial. As I said, you can consistently do the wrong things. You can consistently do low-ROI activities because you thought the most important thing was being consistent. And that’s just not the case.
What if you had outsourced it? I’m at $1000/hr. I outsource it and I can pay someone else whatever their project rate is. Depending on the topic and the things you want them to do, you can expect to pay somewhere between $500 – $2,000 for a 2000-word blog post.
And I know some of you think that’s way too much. But if you’ve seen my content, I would say you’d probably be hard-pressed to find somebody who writes my content for less. Because I don’t write for less, so the content that I’ve produced for clients does not come for less.
I can find somebody to write that for $200, if I wanted to do extensive amounts of editing. And we’re back to opportunity cost. You may have paid them $200, but if you spend hours fixing it well, we’re back at you being $1000/hr. You didn’t invest the money for a professional to produce the high-quality content that’s supposed to generate you leads. Well, you’re paying it now on the backend when you have to fix it
Investing Your Money
We talked about time and how else could you have used that time. Maybe instead of writing a blog post, you could have been doing puzzles with your kids, or playing catch outside, going for a walk, exercising, etc. That was time. What about money?
Well, once you spend that money, can you make more money? Sure. But not those particular dollars. Let’s say that in my hand I have a few dollars with unique serial numbers. I cannot spend this another way because I already spent it the way that I did.
So when you invest in tactics ahead of your strategy, you have spent that money. You may make more money, but you’ve already spent those dollars. You cannot re-spend them unless you get a refund. But even if you get a refund, you’ve also spent time and that person can’t refund your time.
How valuable is your time? How much of it do you have to waste? These are the types of questions you have to ask when you’re looking at your marketing strategy, as many people are doing during this season. Much like how people think, “Oh, I’ll lose weight in January. That’s when I’m going to start.” A lot of people like to do marketing strategy development in the months leading up to the new year, because that’s just a really good time for it.
You have to consider your time and money as a resource, and keep in mind that you cannot get that time back. And unless you get a refund, you’re not getting that money back either. By choosing one opportunity, you lose other opportunities.
You may say, “What if I just keep doing what I’m doing?” Let’s go back to the picture below. Just imagine that this picture is the same, but eventually, the stairwells disappear when you choose to do nothing.
That’s a choice. Eventually, those opportunities move on. They pass you by. This is why I’m very amped up about marketing strategy. Because I see business owners who are engaging in certain tactics and then throwing their hands up like, “Oh, video doesn’t work! LinkedIn doesn’t work! Blogging doesn’t work. Instagram doesn’t work! I post every day, and I’ve seen no results.”
Well, did you approach Instagram with a strategy? Did you approach Instagram with key performance indicators in mind? Did you approach anything with a marketing goal in mind, or did you expect the tactic to produce business for you?
These are the questions you have to answer. Your strategy is not just the sum of its tactics. Your strategy drives your tactics, and that is what you have to consider as you move forward.
If you read this whole thing, don’t forget to comment 3 words that you feel describe your brand or that you want people to feel when they think of your brand.
Also, feel free to ask me any questions you have – especially if you’re in The Defiant Business Group, and I will answer them to the best of my knowledge.
Let’s go ahead into our week, and thank you so much for reading! And I look forward to getting back to you in the comments.