Opportunity costs for physician business owners

Our lives are made up of a mish-mash of decisions -- roads not taken, choices made long ago, options that face us every day (and sometimes even every hour).

I'm often asked by clients how to make the best decision, and quite frankly I have no idea how to say with conviction "this is how good decisions are made". Even though I read and liked Don Maruska's "How Great Decisions Get Made".

One framework I find helpful is to think of the opportunity costs involved in a decision -- when making one choice, you typically have to forgo many other opportunities. Think of this idea as a trade-off.

A simple example: if I were to be watching my monthly expenditures, I might decide to use my hourly assistant less. This means that I would have to send out my newsletter and set up my teleclass for the month myself. In doing so, I'd lose out on the opportunity to take on one more client, do a bit more marketing or create a new product (both of these latter two are the key activities of Entrepreneurs, according to Michael Gerber of "E-Myth Revisited" fame).

What this means is that with every decision you make, you not only have the choices around that decision to consider, but you need to also look at what opportunities you are missing out on, by not making other choices.

Overwhelming, confusing, I hear you say!

Here's a simple set of questions to help you decide on which opportunities to grab, and which to leave alone (from Lori Alden of Econoclass.com):

1. What alternative opportunities are there? (Alternatives to staying in a full-time practice are 1. quit 2. go part-time)
2. Which is the best of these alternative opportunities? (Personal preference and practical reality rule!)
3. What would I gain if I selected my best alternative opportunity instead of the choice I'm considering? (If I chose "quit" as my best alternative opportunity, then I'd gain my freedom, time to explore a new career, increased time to be with my family etc)

The answer to the third question is the opportunity cost of the choice - what I'd be missing out on by sticking with this choice under consideration.

There are time, money and energy opportunity costs.

Time: If I take an hour to do this task, what else could I be doing with this time (and is it worth it)? To answer this you need to know the value of your time.
Money: If I spend $100 on clothes, what else could I have used this $100 for?
Energy: If I party hard and late and wake up tired, what else could could I have used my energy for?

Where can you apply this "opportunity cost" decision-making in your business and life? And is it even useful? How do you make your decisions?