Opportunity Cost: Making a choice means sacrificing something else at the same time because we can’t have everything. If the value of what is given up is significant, then the choice incurs a relative loss, and it is up to the CEO to recognize this as a cost. In reality, whether I am aware of the opportunity cost or not, it still impacts my current financial situation. However, to calculate profit or loss as an opportunity cost, there must be a future opportunity to forgo the current choice and select an alternative. No one should keep repeating the cycle of giving up and choosing without knowing whether the next decision will be beneficial or not. Giving up is worthwhile only when the next option is good. - Joseph’s “just my thoughts”
Founders often start a business without understanding their profit model . People are more likely to fail because they only think, “I have to work!” and don’t truly grasp how and why they can make money from it. They don’t understand the concept of capital , meaning the basic funds, nor do they understand the founder’s equity . They have heard the terms often but don’t really know their meaning or importance. They don’t recognize it, although they may have heard of it a lot. You start a business and partner with others without knowing whether your return is the reward for taking risks, giving up current interests, or sacrificing competitors. Understanding this is a fundamental part of entrepreneurship . Yet, in reality, they run their business without considering these issues simply because they need to work and can do so at the moment. - Joseph’s “just my thoughts”