Have you ever heard of sunk costs? Sometimes it means money but often it is your time.
First, what is the sunk cost? It’s when you already put a lot of money or time into something that it’s hard to walk away and cut your losses.
Investors have this problem when they go in heavy on a losing stock. Then, instead of walking when the stock is falling, they hold on. Now, that’s the gamble! Do you hold on expecting a turn around? Or, do you get out before you lose everything? Obviously it’s not an easy decision, but when investing money you usually know if a company will bounce back. Larger companies have history and news so you can usually predict what may happen. While you may never be sure, you have a good idea of what will happen.
Now, small companies or startups are not predictable. That could be gambling and you really want to be sure it’s going to take off. You have to be willing to lose everything or get out before you lose it all. Not an easy decision!
What about your time? Did you ever put so much time into a project that it’s hard to walk away? I do it too often. Now I try to think things through.
Don’t get me wrong, sometimes you have to react the best way you can, you don’t have time to think something through and have to do something right away. That’s different.
What I am talking about is when you put in so much time trying to build something or make something that it’s hard to quit. Sunk cost of time is the painful thing to walk away from, especially if you believe it will take off despite everyone telling the opposite.
I have this problem, but I have learned to walk away earlier or start over. It’s so hard to do that, but sometimes you have to.
What do you think? Did you ever work so hard on something at home or work that literally didn’t go anywhere? Basically, it failed. I did, and it sucks!
The good thing is, I learned from it. A life’s lesson and in exchange all I had to pay was time, maybe months, maybe years. I could have been doing something better, but I learned from my mistakes.
Then why do I continue to make these mistakes again and again? Because I believe it may be different next time.
Actually, I am learning. Learning that my time is valuable.
I would like to think I won’t fall for something again, but the odds are against me. I love to try new things.
What did you learn to avoid? Did history teach you anything?