I’m doing a Friday business Q&A. To ask your question, email me here
How much is too much to pay for upgrading your skills, learning new technology or traveling to a conference with unknown value (both in the content and type of people who will be there)? OK, that was a lot of questions wrapped up into one sentence so feel free to chunk something out that’s relevant to the community here. ~ Joel, from Value of Simple
I’m so glad you asked this question because I really think I integrate something into the equation that I rarely see in discussions like this.
Start with the ROI
In the first place, of course, you need to work out your costs versus the value that the investment will garner. Sometimes this is pretty straight-forward: getting a certification that will allow you to be added to a professional directory, and allow you to add it to your CV as a quality indicator to potential customers might be worth every penny. Becoming a Certified Financial Planner, for instance. On the other hand, it might not be worth it– I could get a Life Coach certification, and I highly doubt it would be worth it. And something will fall in the middle, like NLP certification. Will that help me? Well, it probably wouldn’t hurt, but unless I was really interested in NLP, it probably wouldn’t be a value proposition.
Sometimes the Best ROI is in the Least Sexy Option
You know what I would spend money on? An Excel course. I’ve spent money on marketing courses, and productivity courses as well, because improving on the basics is one of the largest gains you can make. I will always spend to build and maintain crucial systems.
But getting back to your question… A conference, for instance, is kind of a crapshoot. You can reasonable expect a number of intangible benefits: You’ll learn stuff, meet people, network and so on. But you won’t necessarily get a ton of traffic or forge a JV partnership. You might, especially if you’re strategic, but it’s far from guaranteed.
So this is where most people will say, “Spend as much as you can afford. Always bet on yourself. Invest in yourself and it will pay off.”
Don’t Forget to Factor in Risk
But this where I differ– I think it’s extremely important to factor risk into the equation. I don’t just mean in paying for things; I mean in all things.
Your brain, when stressed, operates very differently than when it is not stressed (or is stimulated in a good way.) This recent article on stock traders show how badly cognition shifts under various circumstances, and nobody is immune to that. Nobody. So when the chips are down, you need to think about whether your business is in a precarious position, financially.
Even if you’re not in a precarious position, you probably won’t be able to do everything you want to do, and you have to be honest with yourself. Are you rationalizing that conference ticket by saying you’ll make the contacts that will bring in new clients when you really ought to shell out for some copywriting?
You have to understand your brain. You’ll often work twice as hard to avoid a loss as you would work for a similar gain— and the feeling of missing an opportunity weighs heavily. That’s why a conference, by and large, won’t pay nearly the dividend that getting a really nicely integrated e-commerce back end set up… but we persistently rationalize that we could do that any time, and this conference is only once a year. Similarly, investments that rank highly as status indicators, like a website redesign, get more weight than, say, buying some time with Charlie Gilkey to do some strategic planning.
So that’s why it’s important to factor in risk, because of how our brains tend to weight our plans differently, based on the risk attached. You have to address that so it won’t steer you blindly.
Have you noticed your decision making change depending on whether you were running ‘hot’ or when you felt scared?
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