Some of you don't know about the "Sunk Cost Fallacy" and it shows
The Sunk Cost Fallacy
Every entrepreneur learns this lesson at some point. And some of us have to learn it many times to really get it.
The Sunk Cost Fallacy is the idea that just because you poured money, time or effort into something, EVEN IF IT’S FAILING, you should continue on to recoup some of that spent energy, time or money. It’s like running on a treadmill assuming you are making progress.
The Sunk Cost Fallacy can show up in so many ways like:
keeping a new employee on even though you can tell they aren’t a good fit because you went through the arduous process of hiring and training them
pouring more and more time and effort into an offering or initiative that is losing money and is not a hit with your clientele
taking on more and more debt to keep a struggling business afloat instead of getting real and deciding what is not working with the hopes of paying off past debts you have accrued
honoring your past plans instead of using the current data to create a new plan
Hell this shows up in our personal lives, too, in ways like:
keeping a garment you spent a lot of money on even though you dont wear it and feel guilty every time you look at it
staying in a relationship with someone that you know isn’t a good match for you because you’ve invested so much time already in making it work
This can cripple your business (and life!) to not know how to cut your losses and move on. Here are some tips for HOW to move on if you get stuck in this mindset loop.
Get a trusted neutral person who is not emotionally invested to weigh in. Especially when it comes to running the numbers.
Give yourself a time limit. “I am going to give it another try for X amount of time and if Y result isn’t happening by that time I will throw in the towel” (this one is KEY for me)
Rip the bandaid off. When you decide something is over, try to put it down completely and do not dabble in it any longer. See how you feel with it gone. Tell yourself, “I can always bring it back later if I choose.” (spoiler alert- no one ever does because it eventually feels like such relief to be over with it!)
Quitting things is not a sign of weakness! It is a sign of strength, confidence and wisdom. Knowing when something isn’t serving you and moving on is such a brave thing to do. No one expects you to do the same thing forever. So cut your losses, dust yourself off and move on to all the bigger and better things you are destined for!
