Opportunity Cost

The Very Real Opportunity Cost of Not Getting a Business Loan

Opportunities are everywhere when it comes to business. Even though we sometimes see opportunities, we fail to act on them. This can result in what is referred to in economic circles as opportunity cost. Opportunity cost is basically the cost that results from missed opportunities. One of the most profound missed opportunities many businesses face is not take advantage of new ideas and concepts that sometimes come your way. Upgrading your business and improving your advertising methods are just two areas where this sometimes occurs.

The Cost of Missed Opportunities

Opportunity cost may be one of the biggest challenges that a business may face over time, especially if they end up facing any type of financial challenge. Once a business has proven itself by establishing a positive credit history, lending institutions will sometimes offer lines of working capital credit that can be used in case of emergencies. Choosing not to accept these loan offers can result in missed opportunities or opportunity costs that can adversely affect your business.

Examples of Missed Opportunity Costs

Opportunity cost takes many forms. If you had taken the loan, there are many things you could have accomplished, including:

  • Lost profit due to not expanding your product or service line
  • Not delegating tasks to other qualified members of your team
  • Lost dividends from not being able to invest in the right marketing and advertising tools

Trying to do too much on your own or not taking a loan to expand or promote your business can have a negative impact on your business. Understanding what it means to not take advantage of a financial opportunity is a lesson learned after the fact.

The Value of Competition

When you are offered a commercial loan, you receive the financial means to remain in competition with your rivals. If you are just starting out, you may not have the financial resources within your company to expand your products and services. It’s also important to have the money to invest in your brand. Marketing and advertising tools are extremely valuable and will determine how effective you are at reaching your target audience. If you want to be competitive in any market, you need to be seen and you need to be able to meet your customers’ needs.

Opportunity Cost and Profit

When dealing with opportunity cost, there are ways you can turn the cost of those missed opportunities back into profit. Applying for a small business commercial loan will allow you to convert many of those missed opportunities into valuable returns. Having that type of line of credit available to you will help you take advantage of opportunities you may have otherwise had to turn down due to the lack of financial resources. Instead of choosing to not take advantage of an opportunity, you can find the financial resources you need to assist you in making a more profitable choice. Applying for a line of working capital credit before you need it will help you take advantage of new opportunities as soon as they arise. Don’t risk opportunity cost! You can have the financial resources you need to make wise business decisions.