28 December, 2013

1-5-21 finance: Sunk cost

What if you invested in a thing and it just didn't work out? What will you do?
You've already spend too much money, time, effort in your idea. It is very sad but you have to accept the fact that:
What you have spent has already gone, sunk. And you have to be very objective about this

You need to step back a little bit, be very objective and detach yourself emotionally from your business before taking any decision regarding the business

Any resource of any type invested in the process, no matter how much or how long- MUST have no influence on any future financial decision 
-          The only thing that should affect that decision is whether the potential return of that investment worth the cost or not

We are attached to our ideas emotionally, and although all the facts and numbers may indicate that this idea doesn't worth any invest any more we just keep gambling and pumping more money hoping that we might get our money, effort, time back. SAAAAAAAD :S isn't it?

I know we all hate to lose, but we just have to accept the fact: what has gone has gone, and the only thing we got from that is the experience. There is  no need to waste any more resources on it :(
So don't gamble, saying "If I keep playing may be can get is back". Go home, you aren't thinking rationally. And always remember