Why Ignoring These Opportunity Costs Will Destroy Your Balance Sheet

CEOs make tough financial choices every day.   Every capital expense requires a combination of fact finding and polishing the crystal ball.  On the one hand, CEOs need to know the acquisition cost, the operating cost, depreciation cost, useful life and so on for every asset purchased.  On the other hand they need to look into their crystal ball and make some educated guesses and intuitive leaps as to what the future may hold.

Award winning entrepreneur, Bill Douglas helps his customers uncover high opportunity cost that typically get missed. He put it this way. “I see it every day.  C-Level managers get so focused on external drivers and cost cutting; they often overlook the high opportunity cost of a seemingly simple cost reduction.”

Mr. Douglas identified these very expensive cost cutting mistakes:

• Assigning routine computer/network maintenance tasks to professionals that should be working on billable projects.
• Overstaffing of highly paid IT employees for general maintenance and security tasks that their competitors have learned to outsource at reduced cost.
• Tying up working capital in computer hardware and software purchases when they could leverage the assets of a managed services provider and have scalable hardware and software to meet current demand.
• Directing highly paid purchasing staff to waste time trying to save a few bucks on non-strategic consumable items when they should be putting all their energy into reducing the cost of production supplies.

Bill Douglas is the founder and CEO of EssentiaLink and specializes in delivering managed IT and procurement BPO services to Small and Medium Businesses.  EssentiaLink has earned 13 growth awards for providing exceptional services and support.

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