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Over Twenty-Five Years Ago
I managed a Children’s shoe store full-time during my undergraduate days. I found a way to introduce information technology (IT) to optimize routine tasks like calculating sales forecasts, goals, inventory control, etc.
I was anxious to pivot from retail management to the IT world. In fact, I was inspired by my microeconomics professor. His day job was owning and managing a local bar. He exuded a feverish entrepreneurial spirit in each class. One day, the lecture focused on the concept of opportunity cost. This resonated with me as I couldn’t stop thinking about it even when I wasn’t in class.
Juxtaposition
Eventually, I was faced with a fork in the road. Keep doing what I’m doing or consider a significant change. I called an old friend, Tom — like a big brother figure — for advice on what I had been contemplating. The proposed change was risky and came with a lot of unknowns. You see, opportunity cost is what you forego. It could be the cost of doing nothing vs. maneuvering towards something new.
Opportunity cost is a concept in economics that measures the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. It’s the road not taken, the path not explored, and the choices that profoundly shape our lives and careers.
What was the opportunity? If I resigned from my full-time job, I could accelerate my college timeline, graduating sooner and making the career change sooner than anticipated.
Risk
It was a tough choice for me at the time. My day job was stable, with predictable income, great benefits, and minimal travel. Mike, a friend I previously helped get into IT, contacted me excited about his new role at a telco. He asked if I might be interested in interviewing as they grew quickly shortly after the dot com boom.
I reluctantly declined immediately, and my friend deserved an explanation. I advised that I recently resigned from my job and increased my credit hours at the school. Mike had an incredulous look on his face.
I didn’t expect to face a second fork so quickly after deciding to go all in on school. The new opportunity could accelerate my career pivot sooner than speeding up school. Once again, I forwent money for investing (spending) in a different potential future finishing school, for the potential telco opportunity was a two-hour drive.
Opportunity Cost Context
Businesses strategically work hard to quantify each viable alternative. What’s the cost of doing alternative 1? The more alternatives considered, the more challenging it becomes to calculate the cost of making no change.
In the context of individuals, opportunity cost can equate to more than just money; instead, intrinsic value. For instance, someone is settling down to get married vs. taking a 100% travel job out of college. An aspiring artist struggling to make ends meet is approached with a new job opportunity that doesn’t leverage the art talent. These significant life decisions are often indelible.
My Advisor
What was Tom’s advice? Go with your gut instincts… some opportunities only come around once. Weigh the pros and cons, but use measurements that align with your long-term goals. What are the consequences? Do the potential consequences affect others besides me directly? After careful consideration, I knew it would get tough sabotaging my primary income; however, would it indeed be game over, so detrimental, unrecoverable?
Growth: Risk vs. Reward
Based on the context, it requires a different pallet of assessing risk, and the same goes for the risk appetite. Family and close friends are often not the best sounding boards in personal opportunity decisions because they want what is best for you. Their perception of your best interests commonly aligns with the most stable move; what’s the safest course of action? This, of course, conflicts with riskier personal growth opportunities.
What ample opportunities do you have to cross your path? How did you navigate these life-altering decisions? Be sure to leave a comment and share your experiences and feedback.
Learn more about Opportunity Cost on the go with these audiobook selections.
FAQ: Navigating Opportunity
What is Opportunity Cost in career decisions?
Opportunity cost in career decisions refers to the benefits one foregoes by choosing one path over another, crucial for making informed choices at career crossroads.
How can understanding Opportunity Cost help in career growth?
Grasping opportunity cost aids in evaluating potential risks and rewards, guiding towards strategic decisions that align with long-term personal and professional objectives.
Can Opportunity Cost influence a career pivot?
Yes, recognizing opportunity costs can significantly influence the decision to pivot careers by highlighting the value of potential opportunities against the status quo.
Who can benefit from learning about Opportunity Cost?
Anyone at a career crossroads, aspiring professionals, and entrepreneurs can benefit from understanding Opportunity cost to navigate life-changing decisions effectively.
Compliance, Guidelines, and Acknowledgements
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