Opportunity costs are an important concept to understand when deciding how to allocate resources for business operations. Put simply, opportunity costs represent the value of a forgone alternative – that is, the cost of not doing something else with your time, energy and money. For example, if you choose to spend time on one task instead of another, you have incurred an opportunity cost because you can’t do both at the same time. Opportunity costs should be taken into consideration when making decisions about how to use resources efficiently and effectively.