Transaction costs occur when you do something, opportunity costs, even harder to measure, occur when you do nothing.
Transaction costs are well hidden inside the activities that take place in your business, and short of introducing activity costing, are usually hard to determine with certainty. However, what is certain in every business I have ever seen is that they can be reduced, usually significantly.
It takes common sense, determination, leadership, and a willingness to break open the status quo to reduce transaction costs, none of which are easy, which is why it can be such a powerful competitive tool, your competitors will find it just as hard, and will often shy away.
Opportunity costs are even harder to measure, and usually it is only with hindsight that any measurement is possible, but then almost nobody wants to point out what could have happened if you had done something differently, and that is exactly why it is such a powerful concept to consider.
Ask yourself: “If we…………., what might happen?” as a part of your planning processes.
