Don’t miss the real costs

The final step in this part of the game, kind of involves look­ing back­wards. See, the venues and the details required to turn them into win­ners is not free, and I’m not just talkin’ about money either. There is some­thing equally impor­tant as money here, in eco­nom­ics it is called “oppor­tu­nity Cost” or the cost of choos­ing a course of action that when added to the mon­e­tary cost tells you the actual cost of what you chose to do.

The Mcgiver syndrome

In our quest to suc­ceed as busi­ness peo­ple we often decide to be Mcgiver and con­sider our time and energy to be free as we take hours to  fig­ure out some­thing that could have been done eas­ily another way. And why is that? With­out going into a whole lot of detail it seems to built into our DNA. Research done by folks work­ing in the field of behav­ioral eco­nom­ics have dis­cov­ered we are hard wired some­times espe­cially around money to do things that are not exactly in our own best inter­est. So instead of sav­ing our­selves the time and turn our taxes over to some­one who knows what they are doing, we brag proudly about our sav­ings by doing it our­selves. Of course con­ve­niently leav­ing out the fact that we spent the bet­ter part of a week try­ing to deci­pher the tax form and find­ing all of our receipts…but hey we did save our­selves a hun­dred bucks by burn­ing up all those days. And that my friends is an oppor­tu­nity cost.

Back to our programing

As I was say­ing, when you look back at the path you have decided to take make sure you actu­ally see the path and all the bumps, and holes along the way. While you don’t need patch every hole or smooth over every  bump right away you will need to find the path of least resis­tance and make sure it is smooth. Then you can go back and grad­u­ally fix the rest as you have time.

Where is the money going to come from to sup­port this habit?

Set­ting up your sys­tem is impor­tant and your income streams are also key ele­ments as well. In fact it is a key ele­ment of why I write what I write…the time of rely­ing on one source of income as an artist is gone replaced by diver­sity. That’s the rea­son for the lit­tle diver­sion above, your cost are going to increase as you develop other avenues to sell your stuff but don’t be seduced by think­ing you are sav­ing by buy­ing cheap or dis­count­ing your own time because it’ll just give you a false sense of security.

After you have your sys­tem sketched out, step back and take a look at the costs includ­ing the oppor­tu­nity costs of each stream, then and only then add up your costs. Now, bal­ance those costs against your income and don’t just focus on the short term and think you have a han­dle on things but also don’t leave out the short term. Once you have every­thing listed take out your mag­nif­ing glass and look closer at each from the point of view of return on invest­ment (ROI) and remem­ber to look at real costs. As you do this match these against your goals for short term and long term growth.

A sim­ple exam­ple would be a reluc­tance to to use on-line shop­ping sys­tems like Pay­pal because of their fees. Los­ing sales because you don’t want to absorb the small per­cent­age fees asso­ci­ated with such a ser­vice or for any credit ser­vice is an oppor­tu­nity cost. Includ­ing that oppor­tu­nity cost gives you a clearer view of your total costs so you can make a bet­ter decision.

So, instead of say­ing you’re going to start sell­ing on-line and then jump­ing into it, take the time to look at it as an invest­ment. Look at both the long and short term impli­ca­tions of every­thing. Let’s say your pri­mary income stream has been art fairs and we all know how dicy that can be from both a cost vs income point of view. So before you apply for those shows scat­tered about the nether parts of the coun­try sit down and look at all your pos­si­ble show venues from the point of view of income poten­tial (some­thing you should be able to do if you have done your home­work). Now bal­ance the costs of that show in East Tim­buktu with its poten­tial income, if you’re never done that show you may have to esti­mate, in any event don’t short cut the costs. If you come up short look at your other shows and income sources and see how they mea­sure up both against poten­tial income from the Tim­buktu show or their abil­ity to absorb any losses such a venue might produce.

At this point you’ll end up with a pic­ture of how you’ll be able to pay for your deci­sions and bet­ter yet you’ll be armed with infor­ma­tion to make entry decisions.

One last thing…

Look at the ben­e­fits of your choices in the same man­ner as you did you costs because ben­e­fits also have their “invis­i­ble” side. For exam­ple, send­ing out e-mail announce­ments using a good auto-responder is a ben­e­fit because it gives you the time you’d nor­mally use lick­ing an stick­ing stamps onto post­cards. Time you can use for doing what you really would rather be doing.