Opportunity cost is the value of the best option you give up when you choose something else. Every euro and every hour can be used only once. The cost of a decision is not only what you pay, but what you could have earned or achieved with the same resources instead.
The clearest case is your own time. Say you leave a job paying €55,000 a year to start a company. In year one you draw €18,000. Your opportunity cost is €37,000, and it is real money even though no invoice shows it. If the business earns €25,000 of profit in year one, you are still €12,000 behind where you would have been. That does not make the decision wrong. It makes the comparison honest.
The same logic applies to capital. €30,000 spent on a delivery van is €30,000 not spent on marketing and not sitting in the bank as a safety buffer. Ask what the second-best use would have produced before you commit.
Two mistakes are common. First, founders count only cash outflows and treat their own unpaid hours as free. A weekend spent building your own website is not free. It is 16 hours you did not spend selling. If a designer charges €1,200 and those 16 hours could have produced €2,000 in sales, hiring the designer leaves you €800 better off.
Second, they mix opportunity cost with sunk cost. Money already spent is gone and should not shape the next decision. Opportunity cost is always about the alternatives still in front of you.
