Reducing Opportunity Costs in Small Business Operations

Opportunity Cost is the benefit that could have been gained from an alternative use of the same resource.

So

1. Prioritize tasks: Delegating low-priority tasks ensures that a business does not waste its valuable time and resources. Delegation gives the team the required extra hours to focus firmly on higher-priority tasks. While going through their own digital transformation journey, Cameron Gough of Australia Post also believed an organisation’s success comes with creating an environment where the staff’s creative capacity can thrive.

2. Invest in technology:  Automation software streamlines business processes and reduces the opportunity cost of time-consuming tasks. Technological investment reduces the opportunity cost of performing these tasks manually.

3. Outsource: Outsourcing non-core business tasks to specialized providers can reduce the opportunity cost of performing these tasks in-house. According to CPA Australia for every hour consumed by producing the good or service, there is some other higher-value activity the business could perform. Hence outsourcing low-value goods and services even if it can produce them more efficiently in-house.

4. Measure results: Regularly measuring results and adjusting processes accordingly can help reduce the opportunity cost of inefficiencies in business processes. This helps to ensure that resources are being used effectively and that the business is making the most of every opportunity.