Title: Why Is Opportunity Cost So Important in Business? | SB
Headings: Why Is Opportunity Cost So Important In Business?
Why Is Opportunity Cost So Important In Business?
The Importance of Opportunity Cost
The Implications for Small Businesses
Measuring the Most Effective Way to Spend
Widening Your Knowledge and Making Better Decisions
Enabling Better Management and Ownership
Enabling Better Leadership
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Content: As a business owner, you may ask yourself: should I spend x amount now on this new piece of equipment? Or should I save it and wait until costs depreciate and go down? Questions such as these are important to answer, as they can have a significant impact on the operational success of your organisation. Indeed, such queries are so essential that there is a term given to this particular dilemma: opportunity cost. When you make a choice, it automatically means that you are foregoing something else in its place. For instance, in the example quoted above, if you spend more on buying new equipment, the opportunity cost would be the extra money you could have saved by waiting. On the flip side, if you took the second option, then you are invoking an opportunity cost of a different sort. Maybe the new equipment in question offers superior efficiency or productivity to your organisation;