Business and Opportunity Cost

I’ve been musing on Opportunity Costs lately.  Opportunity Cost is a term that I learned in my high school economy class.  Opportunity Cost basically means that anything you get requires you to give up something else.  The Opportunity Cost of buying a new stereo is that you are unable to buy a new computer.  The Opportunity Cost of watching a movie is that you’re unable to spend the time playing with kids, or reading a book, or anything else with that time.

I’m pretty convinced that the simplest way to have a happy life is to make sure that the value of the things you choose to do, buy, have, be, outweighs the accompanying opportunity costs. Unfortunately that isn’t always easy to do.  Sometimes the thing we get isn’t happy even though the opportunity cost is much worse.  Getting to stay at an unpleasant job doesn’t make us happy even though unemployment is worse.

This has been on my brain as Howard and I make plans to get from where we are (Employed by Novell, frequently stressed, Schlock barely paying for itself) to where we want to be (Schlock paying for the family, Howard home more, actual free time).  There are large, carefully laid plans for getting us from here to there.  We don’t talk about these plans much because sometimes talking about them would break them.  People ask why there isn’t more merchandise, they ask why don’t we do this thing, or why on earth we did that thing.  Mostly I don’t answer because the answer involves a treatise on economics and Good Business Practice which they didn’t ask for and probably don’t want to listen to anyway.

Howard and I have been running a business for over 10 years.  It has never been a profitable business and the goals of the business have changed significantly, but we’ve learned a lot.  We’ve learned how to be professional.  We’ve learned how to properly account for the money and inventory.  We’ve learned what things we can do for ourselves and when the best solution is to develop relationships with other businesses.  Schlock is building slowly and merchandise is coming slowly because we are making sure that we don’t go running out on a limb and swamp the business with expenses that will kill it.  We went down that road before when we were doing music.  I don’t want to go there again.

It’s all about opportunity costs.  Every penny that goes into shirt production can’t go into book productions.  Which will sell better?  Probably books.  But to prep the book takes time.  Time to find a publisher and distributor.  Time to put the book together.  Every slice of time that goes into Schlock production doesn’t go into Novell, or Family, or relaxation.  Time must be parcelled out carefully or things fall apart.  It is all pretty delecately balanced and trying to move faster will send things crashing and breaking.

Moving slowly when I want to run is incredibly frustrating.  I’m here and I want to be there.  I want to be there right now

4 thoughts on “Business and Opportunity Cost”

  1. I’m going to answer this question before anybody even asks it. NO we do not want to self publish and do our own distribution. That is what KILLED our record production business. We ended up with piles of inventory in our garage and no way to get them out to people.

    Granted the situations are not totally analogous because Schlock has a built in advertising venue. However having me manage inventory and mail books to fans is a poor use of my time. It takes me away from managing kids and house and only adds to the level of stress around the house. Not helpful.

    I would much rather give a slice of the money to a publisher and distributor than give up huge chunks of my time and effort.

    No I don’t feel bad about giving money to “fat cat” corporations. I’ve been in distribution (records) and I know exactly how small the profit margin is on small runs (1000 books is a very small run). Their chunk of money per book will be larger than our chunk of money per book AND IT SHOULD BE. They will be putting up the money to have the book printed. They will warehouse the book. They will take orders and fulfill orders. They will deal with overseas orders. They will deal with unhappy customers. Look at all that stuff that I’m HAPPY to pay someone else to deal with so that it doesn’t add stress to my home.

    If we want more money for the work that Howard is doing, we’ll try to make the pie bigger so everyone gets more money, not try to get a bigger slice of the small pie.

    Okay, rant done. Sorry.

  2. I’m glad that something I said was helpful.

    I hope my words on book distribution weren’t discouraging you and Dave about his decision to self-publish. Self-publishing can work, you just have to be realistic about how much leg work and discouragement you are in for. Dave and I have exchanged messages about it a couple of times and his plan seems pretty sound.

    Best of luck with your re-prioritizing.

  3. Not discouraging at all – realistic! We know we are in for a bit of a hard go, but we realized a long time ago that the goal of self-publishing is not to make a profit. It is to share the work (and pray that you break even!).

    The opportunity costs of life decisions was the part that really stuck with me. I’ve never thought of things that way before, and I think I need to start doing so…

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