A cost-benefit analysis is a “systematic approach to estimating the strengths and weaknesses of alternatives that satisfy transactions, activities or functional requirements for a business.”
Obviously we are talking about your life, not a specific business, but if you want to start a business, a cost-benefit analysis is vitally important because it will tell you how badly you really want it. Everything we do in life comes at a cost.
If we want to get someplace faster, we fly. But it’s more expensive to fly a family of four from Michigan to California than it is to drive. The benefit is the time we save. If time is not an issue, then it’s more beneficial to drive and save the money. Other items you would have to consider in this particular cost-benefit analysis is the wear and tear on the car you drive, spending three full days in your car with the family (especially true if you have young kids or teens), the cost of gas, motel and food, and your own ability to sit in a car for three days.
In its simplest form, this process is all about determining what you are going to give up in order to get what you want. In high school, I had to do a cost benefit analysis every single weekend when it came to my social life. Was drinking with my friends worth the chance of getting caught and losing my chance of playing college baseball and ultimately my dream of playing in the big leagues? The answer was an unmistakable no.
A cost benefit analysis is what led me to leave my performance coaching business and dive head first into Real Estate. I think it is important to think through major life decisions but I do not think you must take weeks or months to think about it. A cost benefit analysis allows you to focus on your definition of success and if your current path is getting you there. It also allows you to research the new endeavor you are considering to make sure it does align with your definition of success.
Do not sit around and ponder too long, use a cost benefit analysis to get to where you belong quicker.