Overcoming the Sunk Cost Fallacy: Knowing When to Walk Away from a Bad Business Move


The Sunk Cost Fallacy is the misconception that an individual should continue an endeavor or objective as a result of previously invested resources like time, money and energy.

Have you ever forced yourself to sit through an awful movie because you paid $10 for a ticket?

Have you ever stayed in a bad relationship because you had invested 2–3 years of your time with that person?

Have you ever refused to throw out a shirt that you hate and have never worn just because you spent $35 on it?

If you answered yes to any of these questions, you are guilty of partaking in the sunk cost fallacy.

Those who are most guilty of the sunk cost fallacy are avid gamblers — spending $100, $200, $300 on the Blackjack table, believing they are in too deep to walk away and choosing to stick around in hopes that their luck will turn around.

Those of us who are not gamblers, can obviously see this way of thinking to be absolutely ludicrous.

So, why do we continue to think in this way in regards to business and life?

How to Eliminate The Sunk Cost Fallacy Way of Thinking in Business

Having a three year relationship with a client who has recently started taking advantage of you does not mean you should stick it out in hopes they will come around.

No, you should find a new client that treats you better.

Spending $5,000 on a new marketing strategy that ends up not working doesn’t mean you should spend $5,000 more in hopes that it eventually will work.

No, you should walk away from the strategy and try something new.

While it is difficult, it is important to remember to never get emotionally or mentally invested in your work, because this clouds judgement.

The old cliche, it’s just business, has lasted through the ages for a reason. At the end of the day, win or lose, it’s just business.

Don’t continue to throw money at a loss in hopes that it will one day become a win… otherwise, you will be out of business.

By Cole Schafer

Did you enjoy this article? If so... 

–– Sign up for The RENEGADE where I deliver paper airplanes directly to your inbox containing the tools you need to kick ass in business and life.

What Entrepreneurs Can Learn From Kanye West

What Entrepreneurs Can Learn From Kanye West

What is the difference between being humble and being modest?

Modest describes the personality trait or behavior of not flaunting oneself.

Whereas, Humble describes the inner state of an individual — one’s ability to accept and respect another’s intellect and wisdom, one’s ability to submit themselves to a deep level of work to perfect their craft.

In other words, modest describes your behavior and humble describes your ego.

The problem with many people today is that they are neither modest nor humble —

They are flashy about skills and talents they do not possess and they are too conceited to learn from those who are more skilled and talented than themselves.

The world’s most successful individuals are not modest, but they are certainly humble.

Kanye West, Mark Cuban, Steve Jobs and Muhammad Ali are great examples of people who are not modest, but extraordinarily humble.

In Kanye’s song Spaceship, he raps, “Lock yourself in a room, doing 5 beats a day for 3 summers, I deserve these numbers.”

Many people watch Kanye West and see an arrogant asshole and they are right — he is an arrogant asshole. But most people who watch Kanye West don’t see an individual who is extraordinarily humble.

You can’t be as successful as Kanye without being humble. Individuals who aren’t humble believe they have already perfected their craft, and therefor they don’t submit themselves to the countless hours of deep grueling work that is required to reach a mastery level.

Fonzworth Bentley, a lifelong wingman of Kanye’s, was quoted in The Faderas he reflected on what all went into the creation of The Life of Pablo, Kanye’s most recent album.

“Ye (Kanye) had a bed set up in the studio and so he would usually take a nap for an hour or an hour-and-a-half, go to the gym, and then come right back.”

Yes, he brought a damn bed to his studio and slept there…

Be Humble, Sit Down

If you don’t want to be modest, that’s fine.

In many ways, modesty is overrated. If you are extremely skilled at what you do, it is advantageous to make the world aware of your talent. But make sure you are putting in the work, make sure you are being humble.

Kanye West is far from modest. After all, he screams from the tops of mountains, making the world aware of how great he is.

But, Kanye’s extraordinary ability to be humble is what has allowed him to stand on those mountains.

Modesty without humbleness is like a lion without teeth.

Sharpen your teeth before you speak.

Otherwise, keep your mouth shut.

By Cole Schafer

Did you enjoy this article? If so... 

–– Sign up for The RENEGADE where I deliver paper airplanes directly to your inbox containing the tools you need to kick ass in business and life.