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The Opportunity Cost of Operations

The Opportunity Cost of Operations

Creating processes for your operations is essential for generating larger margins.  The larger the margins the better. Unfortunately, the problem with margins is that they are always shrinking. Thus, processes are not a one time thing.

Processes Must Evolve

Daily as you analyze your current operations it is essential to ask yourself what could be done differently and how you can improve your margins. For Directive Consulting, we have an issue that many business owners also experience. We are in the service industries. We constantly are looking into how we can deliver more value to our clients and yet still make a profit.

Increasing value and margins is no easy task. We try to do this in a variety of ways. We will provide one of our thought processes for increasing value and margins. We deem this to be a key for sustainability and success.

The Opportunity Cost of Operations


Get yourself, the business owner, out of operations. We often consult with business owners and they deem this impossible. It often is, however, there is a solution. The solution can be found in opportunity cost. Opportunity cost is the cost of doing what you are doing now compared to something else you could be doing. For example, the opportunity cost of starting your own business would be the amount of revenue you would’ve been making if you stayed at the corporate firm.  Sometimes we ignore opportunity costs because we deem other things more valuable than a salary: free time, being your own boss, making your own hours, etc.

As a business owner, opportunity cost is how much more you could be making if you weren’t doing operations; but instead, you were focused on development and the growth of your business model. If you can make more money for your business doing something outside of operations let go. Take a deep breath and walk away from operations, train someone and focus your efforts on systems and scaling. It can be done.