Opportunity Costs, Risk and Your Why by Rhonda Peterson

RKP Business Advisors

3 Feb 201502:16

Summary

TLDRThe script discusses risk as a pivotal factor in the continuum between potential danger or loss and opportunity. It emphasizes the importance of understanding 'why' you take risks in business, which informs strategic decisions and goals. Opportunity costs are highlighted as a key consideration, involving trade-offs in choosing the best path to reach objectives. The speaker shares a personal example of choosing to work with small business leaders over large corporations, illustrating the concept of opportunity cost. The script encourages business owners to know their 'why,' weigh all opportunities, and confidently choose the best path for their business.

Takeaways

🔍 Risk is defined as the factor that influences your positioning on a continuum between danger or loss and opportunity.
🚀 Knowing your 'why' is crucial for understanding the reasons behind taking risks in business.
📈 Risks are closely related to the strategies you employ in achieving your business goals.
💼 Opportunity costs are the costs of the next best alternative not chosen, involving trade-offs in decision-making.
💡 Every decision involves opportunity costs, as choosing one option means forgoing others that could potentially be faster or easier.
🤝 The speaker focuses on working with small business leaders, recognizing the opportunity cost of not working with large corporations.
🎯 The best fit for the speaker is business owners and leaders in small companies, despite the opportunity cost of not engaging with larger businesses.
📉 Understanding opportunity costs is essential for making strategic decisions that align with your business goals.
💼 Weighing the opportunity costs and choosing the best option for your business can lead to increased confidence in your chosen path.
🌐 For more leadership tips and resources, or to learn more about the company, visit the website rkpbuusadvisors.com.

Q & A

What is the definition of risk as described in the script?
-Risk is defined as the factor considered in deciding where one stands on a continuum between danger or loss and opportunity.
Why is it important to know your 'why' when taking risks in business?
-Knowing your 'why' provides clarity on the reason behind taking risks, which influences the decisions made and helps in achieving the envisioned future.
How are risks related to the strategies utilized in a business?
-Risks are inherent in the strategies employed in a business, as they involve weighing potential dangers or losses against the opportunities for growth and success.
What are opportunity costs and why are they important in decision-making?
-Opportunity costs refer to the benefits or value of the next best alternative that is foregone when making a decision. They are important because they involve tradeoffs and help in choosing the best opportunity to reach goals.
Can you provide an example of an opportunity cost from the script?
-An example of an opportunity cost given in the script is choosing one method or means to achieve a goal over others, risking that another option might be faster or easier.
Who does the speaker primarily work with, and why is this a strategic choice?
-The speaker primarily works with small business leaders and those in small companies and ministries. This is a strategic choice because it aligns with their expertise and where they believe they can make the best fit.
What is the opportunity cost mentioned in the script regarding the speaker's choice of clientele?
-The opportunity cost mentioned is the decision not to pursue work with leaders in large corporations, choosing instead to focus on small businesses and ministries.
How does knowing your 'why' help in considering opportunity costs?
-Knowing your 'why' provides a clear purpose and direction, which aids in strategically considering all opportunities, weighing the options, and understanding the opportunity costs before making decisions.
What advice does the script offer for gaining confidence in considering opportunity costs?
-The script advises knowing your 'why,' strategically considering all opportunities, weighing the options, and choosing the opportunity that best aligns with your business goals to gain confidence in considering opportunity costs.
Where can one find more leadership tips and resources similar to the content in the script?
-For more leadership tips and resources, or to learn more about the company, one can visit the website rkp buus advisors.com.

Outlines

00:00

📈 Understanding Risk and Opportunity

This paragraph discusses the concept of risk as a factor that influences decision-making on a continuum between danger or loss and opportunity. It emphasizes the importance of knowing one's 'why' in business, which is crucial for understanding the reason behind taking risks. The paragraph also introduces the idea of opportunity costs, which are the tradeoffs involved in choosing one opportunity over another to achieve business goals. The speaker shares their personal decision to work with small business leaders instead of large corporations, highlighting the opportunity cost of not working with the latter. The paragraph concludes with advice on gaining confidence in considering opportunity costs and encourages the audience to visit the website for more leadership tips and resources.

Mindmap

Keywords

💡Risk

Risk, in the context of the video, is defined as the potential for danger or loss, but also the possibility of gain or opportunity. It is a factor considered when making decisions that can impact the future of a business. The video emphasizes understanding the 'why' behind taking risks, which means being clear about the reasons for embracing potential dangers or losses for the sake of achieving a desired outcome. Risk is intrinsically linked to the strategies and goals of a business, as it involves weighing the potential costs and benefits of different actions.

💡Continuum

The Continuum mentioned in the video refers to the spectrum or range between two extremes, in this case, danger or loss and opportunity. It illustrates the idea that risk assessment is not binary but rather a matter of degree, where one must decide their position based on the potential outcomes and the strategies employed. The Continuum is a tool for visualizing the balance that business leaders must strike when considering risks.

💡Opportunity Cost

Opportunity cost is a key economic concept discussed in the video, which refers to the potential benefit an individual, investor, or business misses out on when choosing one action over another. In the script, it is used to explain the trade-offs involved in decision-making, where choosing one path means forgoing another that could potentially be more beneficial. The example given is the decision to work with small business leaders over large corporations, which has its own set of opportunity costs.

💡Strategies

Strategies in the video are the plans and actions a business employs to achieve its goals. They are directly related to risk because they determine how risks are managed and mitigated. The video suggests that understanding the strategies used in a business is crucial for assessing risks and making informed decisions that align with the company's vision and objectives.

💡Business Goals

Business goals are the objectives that a company sets out to achieve. The video highlights the importance of being aware of these goals when considering risks, as they help in evaluating whether the potential risks align with the desired outcomes. Goals provide a framework for decision-making and risk assessment, ensuring that risks are taken in service of achieving these objectives.

💡Tradeoffs

Tradeoffs, as discussed in the video, are the sacrifices or compromises made when choosing between multiple alternatives, each with its own set of benefits and drawbacks. They are an inherent part of decision-making, especially when considering opportunity costs. The video uses tradeoffs to illustrate how every decision involves giving up something in order to gain another, which is a fundamental aspect of risk management.

💡Decisions

Decisions are the choices made in response to a situation or problem. In the video, decisions are portrayed as the actions that lead to the future envisioned for a business. They are closely tied to risk, as each decision carries with it the potential for risk and reward. The video emphasizes the importance of making decisions that are informed by a clear understanding of one's goals and the strategies to achieve them.

💡Small Business Leaders

Small Business Leaders are a specific target audience mentioned in the video. The speaker chooses to focus on working with these leaders, which implies a strategic decision based on a clear understanding of their target market and the type of clients they wish to serve. This decision involves opportunity costs, as it means not working with leaders of larger corporations, but it is justified by the speaker's alignment with the needs and goals of small businesses.

💡Confidence

Confidence in the video is discussed in the context of having certainty and assurance in the decisions made, particularly when considering opportunity costs. It suggests that by understanding the 'why' behind taking risks and strategically evaluating all opportunities, business leaders can make decisions that they feel confident about. Confidence is portrayed as a result of a well-thought-out approach to risk assessment and decision-making.

💡Leadership Tips

Leadership Tips are guidance or advice given to help improve leadership skills. The video mentions providing leadership tips as part of the services offered by the company, suggesting that understanding and managing risk is a critical skill for leaders. These tips likely include strategies for evaluating risks, understanding opportunity costs, and making decisions that align with business goals.

💡RKP Business Advisors

RKP Business Advisors is the company mentioned in the video, which presumably specializes in advising business leaders, particularly those in small businesses. The company's services are related to the themes of risk management, strategic decision-making, and understanding opportunity costs, as these are the topics discussed in the video script.

Highlights

Risk is defined as the factor that influences the balance between danger or loss and opportunity.

Understanding 'why' is crucial for taking risks in business.

Risks are tied to the strategies utilized in business.

Business goals require awareness of both financial costs and opportunity costs.

Opportunity costs involve tradeoffs in choosing the best path to reach goals.

Every decision involves opportunity costs, as there is always another way to accomplish a goal.

Choosing one option over others presents the risk that another may be more efficient.

The speaker focuses on working with small business leaders.

There is an opportunity cost in not pursuing work with leaders in large corporations.

The best match for the speaker is business owners and those leading in small companies and Ministries.

Not working with leaders of large businesses is a calculated opportunity cost.

Knowing your 'why' is essential for strategically considering all opportunities.

Weighing the options and considering opportunity costs is key to making the best choice for your business.

Confidence in the chosen path is increased by considering opportunity costs.

Leadership tips and resources are available for those interested in learning more.

RKP Business Advisors is the company offering these insights.

Visiting the website rkpbuusadvisors.com provides more information on leadership and the company.