prioritization

Everything Comes At A Price

Everything Comes At A Price

Turns out, lots of things cost lots of money. 

Millennial griping aside, it's not revenue that matters. It's costs. We face them in our daily lives:

  • Fixed costs you would incur no matter what for your business. Imagine a Starbucks without their coffee machines! They have to have them or there isn't a business.
  • Variable costs change based on the amount you're producing. You only need so much organic cacao and whipped cream for cappuccinos based on your output.
  • Opportunity costs hide behind all of your decisions like buyer's remorse. It's the cost of what you could have done with that asset--like instead of paying rent, renting it out to someone else. If you don't have your coffee, your opportunity cost is being a complete zombie, even though your absolute monetary cost might be lower. You're giving up functioning like a human being, so most people say it's worth it to make the purchase.

Know What's Most Important

Know What's Most Important

We make thousands of decisions, big and small, every day. Do I want milk in my coffee? Do I take the highway or the back way? Should we move forward with this big proposal, or play it safe? 

When we look at business decisions, it's essential to know exactly what we have, and what we owe. This is where accounting principles come in, whether or not you're the one doing the numbers.

This is part of a series of reflections inspired by my courses at HBX, an online business school cohort powered by Harvard Business School. With Business Analytics, Economics for Managers, and Financial Accounting, I'm learning the fundamentals of business. Find the whole series here.