Written on August 19, 2009 at 6:35 am, by Eric Cressey
I’m sure a lot of you took economics back in the day – either in college or high school (or both). I don’t know about you, but one concept that stuck in my mind – besides the fact that one of my professors was a ridiculously annoying Yankees fan – was that of opportunity cost. Rather than define it myself and risk missing an important component, I’ll defer to Wikipedia:
“Opportunity cost or economic opportunity loss is the value of the next best alternative forgone as the result of making a decision. Opportunity cost analysis is an important part of a company’s decision-making processes but is not treated as an actual cost in any financial statement. The next best thing that a person can engage in is referred to as the opportunity cost of doing the best thing and ignoring the next best thing to be done.
“Opportunity cost is a key concept in economic because it implies the choice between desirable, yet mutually exclusive results. It is a calculating factor used in mixed markets which favour social change in favour of purely individualistic economics. It has been described as expressing ‘the basic relationship between scarcity and choice.’ The notion of opportunity cost plays a crucial part in ensuring that scarce resources are used efficiently. Thus, opportunity costs are not restricted to monetary or financial costs: the real cost of output forgone, lost time, swag, pleasure or any other benefit that provides utility should also be considered opportunity costs.”
I see opportunity cost all the time in the world of training – both in clients/athletes and their trainers/coaches.
On the fitness side of things, we know there are certainly exercise modalities that yield more effective results than others in the least amount of time. In fact, this was the entire premise behind Alwyn Cosgrove’s Hierarchy of Fat Loss article.
If you want to get stronger, bigger, and more athletic, you’re better off doing squats than you are leg extensions.
If you only have an hour to exercise and your goal is to get stronger, drop body fat, and improve your overall fitness, then you’re probably better off skipping the Hip-Hop class and instead going to the gym to do:
All of these modalities can be individualized, whereas a group exercise class is more one-size-fits-all. So, if you have imbalances or injury concerns, the individualization is a major benefit.
Plus, the added benefit is that you’re much less likely to get tortured on by your friends if you lift heavy stuff and push the sled than you are with Hip-Hop class. Just throwing it out there. That’s just a purely hypothetical example, though…
You’ll see a lot of really business-savvy trainers who are always reading personal development books, but never actually pick up a book or attend a seminar to learn how to train people. They are really just good salespeople in revealing and/or tight workout clothes. In fact, if you search Google Images for “personal trainer,” photos like this are just about all that you get!
The opportunity cost of their time is that they could have spent time becoming better trainers instead of just prioritizing something at which they’re already effective. Or, perhaps they’re better off hiring a good trainer to take that duty over so that they can best leverage their selling.
Likewise, you’ll see some trainers who are great at assessment, programming, coaching, and getting results, but clueless on the business side of things. These people need to be reading more business books and attending seminars on how to run a business effectively. And, as with the previous case, they should consider collaborating with someone who has good business know-how so that they can leverage their strengths. I actually do a lot of this myself at Cressey Performance; while I’m about 80/20 training/business, having Pete as our full-time business guy allows me to spend more time specializing in various contexts to expand our market segment.
Just some food for thought. I’d encourage you to look at what you do on a daily basis, and consider the concept of opportunity cost as it relates to your fitness and professional development. I know I do it all the time.
Well said article. I was the latter guy, always reading up about traning, but whose business acumen was lacking. Ryan Lee’s bootcamp last year helped open my eyes and focus my goals better. Still growing.
Any quick advice on finding a business partner suited for the fitness industry? It seems it would be good to have a business guy who still has a solid knowledge of training.
Probably, for me, your most helpful newsletter to date. This is a tool for rational thought in the business side of things, which I’ve got to get together. Thanks.
Excellent post, I’m so sad that that’s the picture that came up for personal trainer..what’s with the clip board and the glazed look in his eyes? I see a drag sled, how does that compare to the prowler besides being more expensive? Is it just more realistic for an indoor environment and doesnt need replacement skis?
Great article. I just started on my Master’s in Exercise Science and it has been a great learning experience. I agree with the aspect of not having good business sense and being a good trainer. I have a friend who is great with business stuff and he really helps me out in this area. It very important to be on both sides of fitness and business. This is our bread and butter, so it is important that we understand how to market ourselves and understanding the value of what we possess for others.
August 19th, 2009 at 8:43 am
Well said article. I was the latter guy, always reading up about traning, but whose business acumen was lacking. Ryan Lee’s bootcamp last year helped open my eyes and focus my goals better. Still growing.
Any quick advice on finding a business partner suited for the fitness industry? It seems it would be good to have a business guy who still has a solid knowledge of training.
August 19th, 2009 at 10:05 am
Probably, for me, your most helpful newsletter to date. This is a tool for rational thought in the business side of things, which I’ve got to get together. Thanks.
August 19th, 2009 at 10:10 am
Excellent post, I’m so sad that that’s the picture that came up for personal trainer..what’s with the clip board and the glazed look in his eyes? I see a drag sled, how does that compare to the prowler besides being more expensive? Is it just more realistic for an indoor environment and doesnt need replacement skis?
August 19th, 2009 at 11:37 am
Ha, as a trainer and High School Economics Teacher, I have to appreciate this post! Thanks for writing it up Eric!
-Joe Hashey
August 19th, 2009 at 1:41 pm
Great job EC! It’s amazing how much from Economics class is really usable in our world!
Eric Beard
August 19th, 2009 at 4:14 pm
Great article. Opportunity Cost is something people should look at in life in general.
Darren
August 19th, 2009 at 4:24 pm
Eric,
Great article. I just started on my Master’s in Exercise Science and it has been a great learning experience. I agree with the aspect of not having good business sense and being a good trainer. I have a friend who is great with business stuff and he really helps me out in this area. It very important to be on both sides of fitness and business. This is our bread and butter, so it is important that we understand how to market ourselves and understanding the value of what we possess for others.
August 19th, 2009 at 8:20 pm
Great newsletter as always…That being said, I watched the foam rolling video and have to ask: Have you ever really seen a monkey humping a football?