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The Opportunity Cost of Social Media - More Than $30,000 a Year?
Posted on June 3rd 2011
If you're a business owner who earns $70,000 a year,
your time on social media may be costing you
more than $30,000 annually
Is your business on Facebook, Twitter, LinkedIn? Do you spend a fair amount of time updating your posts and pages to inform and connect with customers? Then it may be time to assess how much participating in social media is costing your business and whether it’s a good use of your time.
Social Media is Free, Isn’t It?
If you’ve hired a social media professional to handle your business’s presence on the most popular sites, you know the hard costs of promoting your products and services, or establishing your brand and expertise, online.
But what if you handle social media yourself? Most small business owners and entrepreneurs do, but that doesn’t mean social media is free.
Social Media’s Opportunity Cost to Your Business
Remember when your economics professor covered the concept of opportunity cost? Everything we do has a cost, even social media. One way to determine that cost is to access what your potential earnings would be if you used the time you invest in social media to focus on activities that will drive revenue for your business.
Ironing Shirts and Opportunity Cost
The best way I ever heard opportunity cost defined was listening to two business associates argue about whether or not they should iron their own dress shirts or send them out to the laundry. One guy insisted that ironing his shirts himself was well worth his time, since he liked the way they felt when he wore them much better than the stiffer laundry-ironed variety.
But his peer asked him a few simple questions: 1) How much does the laundry charge to iron one shirt? Answer: $3.00 per shirt. 2) How much do you earn per hour? Answer: $43.00 per hour. 3) How many shirts can you iron in an hour? Answer: 3.
Doing the math, it was costing the guy who ironed his own shirts $14.33 per shirt based on the fact that he could be spending his time – and valuable time at that – doing other things. If he’d sent his shirts out to the laundry, three shirts would cost him $9; but doing them himself cost him $43 – almost 500% more.
Evaluating the Cost and Worth of Social Media for Your Business
So what does all this mean for your business? Using a simple method of assigning value just for argument’s sake, and leaving out the varied nuances and complexities of undefined ROI and brand value social media brings to your company, let’s see how much it costs a small business owner or entrepreneur to handle their own social media.
Business Owner A earns a net income of $40,000;
Business Owner B, $70,000;
Entrepreneur A, $100,000;
Entrepreneur B, $120,000.
If they each work 50 hours per week, their hourly wages roughly come to $15, $27, $39, and $47 respectively.
An Hour a Day of Social Media Can Cost $12,267 Every Year
As you can see, investing only one hour a day toward social media can have real costs:
Business Owner A - $4,176
Business Owner B - $7,047
Entrepreneur A - $10,179
Entrepreneur B - $12,267
Three Hours a Day of Social Media Can Cost $36,801 Every Year
Business Owner A - $12,528
Business Owner B - $21,141
Entrepreneur A - $30,537
Entrepreneur B - $36,801
Making Social Media Profitable for your Company
That’s a lot of money. So what are your options? The reality is that for entrepreneurs and small business owners, it’s hard to equate opportunity cost with checks you mail to vendors. If you’re determined to handle your social media marketing yourself, there are things you can do to make your time worthwhile:
- Limit your social media time to one hour or less per day
- Schedule your tweets in advance using apps such as Tweetdeck, HootSuite, or Twuffer
- Set specific goals for your social media presence and make sure your updates and tweets match those goals
- Limit the time you spend looking at non-business related social media material
- Sign up for an app which automatically sends a direct message to your followers and/or automatically follows back whoever follows you
- Break your Twitter followers into usable lists, i.e. SEO, website design, social media, human resources, angel investors, etc. That way you can scroll through a topic-specific list of tweets instead of hundreds that may be of no interest to you.
- Take advantage of top sites which follow the important events happening in business, social media, tech, and the world instead of trying to keep track yourself. I recommend Mashable, Alltop, Huffington Post, and your favorite newspapers and magazines.
If these tips don’t redirect your focus from social media to generating revenue, it may be time to hire a social media professional to take care of your online presence for you. Only you can decide what your time is worth and how best to spend it for your company.