Opportunity Costs

Did you ever look back at a situation and wish you had done something differently? Why? What went wrong? What should you have done instead?

What about losing an opportunity because you weren’t ready for it? What could you have done better to prepare yourself?

If you’re like the rest of us, hindsight is 20/20. Nobody gets through life without having some regrets about the way something worked out, and real estate investing is no exception. You have to think ahead and then think backward about what it will take to reach your goal. You have to find that balance between working your tail off and not wasting your time and energy. Time is money, right?

People talk about opportunity cost when they’re trying to teach economics. I like to talk about opportunity cost in the smaller arena of running a business. We get excited about real estate investing because of the money, the chance to help people, and the rush of doing deals, but almost nobody gets excited about this business because they love the day-to-day grind.

Opportunity cost is what you’re giving up versus what you’re getting. In other words, what are you missing because your head is in the middle of something else? Ask yourself that question every day, especially when you’re setting up your business model and the systems that make that day-to-day grind a little easier. You have to be ready to handle that big deal or that big marketing opportunity when it falls in your lap.

How do you know up front when something you’re doing won’t be profitable?
Think about the cost of doing one thing over another. Think about what you’re giving up when you’re spinning your wheels. What’s the best use of your time and energy? Here are a few ideas of what to think about as you’re evaluating your business process.

Too little profit. Take the time to run the numbers before you draw up your option contract. You can find out ahead of time if you’re going to lose your tail on the deal. Then find an answer to the sentence, “I can’t help you on this, but...” You can avoid a financial headache and still help someone at the same time.

Too much time in the car. Unless you have something profitable to do during long drives (listening to educational CDs, filming yourself talking for a YouTube video, etc.), you may want to set physical boundaries for that sweet spot of yours.

Too little creative marketing. What’s the best way to spend money on marketing when you don’t have any? Get creative. Don’t let limited funds stop you from getting the word out. Need ideas? Click here. You’ll get some really amazing tips, and it won’t cost you a dime.

Too many time-wasters. You might think this wouldn’t need mentioning, but how much time do you really spend playing on Facebook or taking long lunches or talking about yesterday’s football game during business hours? You’ll find me and Strategic Real Estate Coach on Facebook, but we’re there for you and not for ourselves. Set some time limits for keeping in touch. If you’re taking your vacations 20 minutes at a time, I’ll bet you’re missing some great opportunities.

Failure to explain your message. This is huge, and it may be one of the biggest business mistakes that you can make. Think about the people that can throw deals your way.

• Do they really know what you do?
• When you speak, do you sound like you know what you can do for people?
• Is this reflected in your marketing materials?
• Would you respond to your sales letters if you were a homeowner in trouble?
• Do you have your elevator speech down cold?

If the answer to any of these questions is “no,” you may have a bigger problem than you realize. You’re missing out on lucrative deals from referrals - the cheapest form of marketing ever - if the people who know about the good deals either don’t know you or they have the wrong idea about what you do. That’s not my opinion. That’s a fact.

A lost opportunity is bad, but what’s worse is a lost opportunity that you had to actually watch as it blew past you. It’s pretty depressing, isn’t it? If you want to make good use of your time, make sure you don’t have to go through that again. Keep your opportunity costs as low as possible. Be positive and stay productive!