Cost vs. Investment: What’s the Difference?

I recently was telling my wife about an opportunity I was considering to be a sponsor at an upcoming trade show. As we were talking, she asked me how much it would cost. My response was, “Is it a cost or is it an investment?”

What’s the Difference?

What’s the difference between a cost and an investment? A cost is simply an expenditure of money, time, or resources. An investment is an expenditure that has a strong possibility of a return. I had to really think through the sponsorship opportunity to determine whether it would be a cost or an investment.

Evaluating the Difference

When considering whether something is a cost or an investment, it helps to ask yourself some honest questions. In evaluating my opportunity, I asked myself:

  • Will I simply spend time with friends and enjoy the trade show, or will I let more people understand what I do and how I can help them?
  • Will I pick up enough new clients either immediately or somewhere down the road that will bring in revenue that exceeds my sponsorship costs?

If I simply have a good time, it’s a cost–which is fine, but it’s just a cost. But if I get out of my comfort zone and work for new introductions, for interviews, it’s an investment.

Which Is It, a Cost or an Investment?

As you journey through the decision making process on whether to attend that webinar or workshop, sign up for a training course, buy that business book, fire a consultant, purchase new equipment, place an ad in a magazine or on the radio, hire a coach, or hire a virtual assistant, ask yourself, “Is it a cost or an investment?”

  • Will you will get enough additional revenue as a result of the investment of time and money to exceed the time and money spent?
  • Will you get one more client that will provide enough revenue over time that will warrant the investment?
  • Will you receive enough new sales?
  • Will you gain new skills that will eventually bring in the required new revenue?
  • How long will it take to bring in the required new revenue?

If the answer is “yes,” then the money and time spent should be considered an investment.

By understanding the difference between costs and investments, you can better decide how to spend your money, time, and resources.

Published on June 20th, 2012 in Blog

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By working with me as your coach, as your partner as you climb the mountain of high achievement, you should expect some , if not all of the following outcomes:

  • Take your business to a higher level
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  • Be better at what you do so you will be among the high achievers
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