Don’t Let SunkCost Sink Your Business

Have you ever hesitated to commit to something in your personal or business life, such as coaching or marketing, because you've tried it before and didn't achieve the desired results? Perhaps the investment didn't perform as expected or you didn't capitalize on the opportunity.

Sometimes, we let great opportunities pass us by because we feel like it's too late to make a change or because of our past experiences. We resign ourselves to the idea that things will be what they are, regardless of the cost.

Alternatively, we continue to throw good money at bad solutions because we've already invested so much, and we feel like stopping would be a waste.

This approach is known as the sunk cost fallacy, and it keeps us from making progress and moving forward.

I recently experienced this when I committed to a two-day conference for state certified businesses to improve my proposal writing and contract securing skills for Capitalize Marketing. After day one, I realized that the conference focused on earning state construction contracts, which didn't apply to us. Although there were some great people there, the content wasn't relevant to me. I considered going back for the second day because I had already spent $250 and didn't want to waste it.

However, I soon realized that going back for the second day wouldn't help me recoup the value of the $250 I had already spent. The money was gone and going back would only waste another day. The cost was sunk, and I needed to accept that.

I understand that we all experience this at some point. For example, a business owner might invest heavily in a program that fails but continues with it or they may not resonate with the coaching they've paid for and decide not to invest in a new one they like. The sunk cost fallacy often causes paralysis and prevents us from taking a new direction because of the money we've already invested.

So, how do we move forward? If we're spending money on something that isn't working and we can legally get out of it, we should step away. Similarly, if we can afford to make an investment, we shouldn't let past poor investments hold us back.

Don't let the sunk cost fallacy sink your business.