A Business Lesson From That Night In Porto.
If there’s one money lesson I’ve learned, but I had to be reminded of again from Chelsea winning the Champions League it is to by all means avoid sunk cost fallacy.
Sunk cost is the misconception that you need to pump more money or time into a bad investment and ‘force’ it to become profitable, or else all the time and money you already invested would have been for nothing.
People spend more time at a job that doesn’t fulfil them because they feel if they put in more time then it’d get better.
People stay in a relationship that drains them hoping their partners will change if they could just show them a little more love.
It’s a fallacy!
In reality, you end up wasting the new investment as well. No upside.
“There are two important rules of business, knowing when to get in and when to get out. Of the two, knowing when to get out is the most important.” – Hymie Levy (The Power Of One)
I’m a stickler for determination and holding on, but whether in a relationship or business, sometimes it’s better to end it. At least for your mental health.
Not everything will work even with consistency.
Sometimes an idea might not be saleable or the market might not like or want your product or it can’t just work.
What many people do is they try to force it into working because they’ve either spent too much time or money on it.
But that’s hustling backwards.
I understand the motivational industry tells you to keep trying. But sometimes the best solution is to walk away & cut your losses.
Sometimes, the best solution is to pivot, re-strategize and come back from a different angle.
We have so many companies, musicians, artists who started with a particular product idea or concept & when it wasn’t working they had to go back to the drawing board & rebrand.
Or sometimes even change direction entirely.
There’s no shame in that.
You don’t have money & time to waste.
You shouldn’t be flogging a dead horse.
This is what Roman Abramovich proved when he sacked Frank Lampard despite his status as a club legend and replaced him with Thomas Tuchel.
Business and sentiments are like oil and water, they don’t mix well.
Know this and know peace.