Quite often at Clare Associates we find ourselves picking up the pieces of previous attempts to solve business problems, especially with the company website. Usually these problems can be traced back to the decisions taken when this website was first developed.
The first type of business has money to spend, but no time. They say to their expensive web designer “We need a website. Here’s lots of money, go and make it happen.” The expensive web designer goes away and creates a fantastic looking website. It’s got everything – fancy effects, beautiful photography, even the buttons have that lovely rounded feel. For some reason, expensive web designers often come from an art and design background rather than an IT background, so they do what they know best.
The second type of business has rather more time than the first. They’ve done a little research and they don’t think they can afford an expensive web designer. But they can afford that son of a friend who knows how to “do websites” and who won’t be very expensive. And in any case, he’ll have the time to keep improving the site, adding more content and generally keeping it up to date.
To be honest, neither of these approaches is likely to get the business the website it needs. The first, expensive, website will look good, but it is going to be difficult to keep it up to date with new products and news about the company. It might not show up in search engines as well as it should. The second, cheap, website will be cheap, but it might look clunky and old-fashioned. And the company may still depend on this son of a friend to make occasional updates.
There is a third way. Continue reading
This is the third in a series of articles on Opportunity Cost and why it matters in business.
Opportunity cost is one of the most important concepts in all of economics. If you understand it, you can start to see the world in a slightly different way. It’s also one of the most relevant economic concepts to simple business decisions. Continue reading
If you didn’t see the first post on opportunity cost, you need to read that first. It is here.
For those of you who have read that post, let’s continue…
If you remember, in part 1 of this article, I asked you to consider this scenario:
You’ve just won a ticket to see Eric Clapton in concert tonight. You can’t resell the ticket. The only other thing you might want to do tonight is see Bob Dylan in concert. Assume that both concerts are the only gigs each performer is playing that you could get to in the foreseeable future.
The Dylan ticket costs £40. You quite like Bob Dylan, and normally, you would be prepared to spend up to £50 to see a Dylan concert. If Dylan tickets cost more than £50 you would think that too expensive and you wouldn’t go even if you had nothing else to do.
What is the opportunity cost of attending the Clapton concert? Continue reading
Let’s say you pay your office cleaners £20 to clean the office each night. You could actually clean the entire office yourself and you wouldn’t have to pay anyone £20, just a few quid on cleaning consumables, dusters etc. Now you know that the reason you don’t is because it would take you a couple of hours to do it, and if you were to spend an extra two hours a day at work, there are far more useful and lucrative things you could be doing with your time. So while the cost of you doing the cleaning should take into account the £20 you’re saving by not paying the cleaners, it also needs to take into account the profit the company would have made but now won’t see on the extra sales that you would have made with an extra couple of hours in the office. That, in a nutshell, is what opportunity cost is all about. Continue reading