We’re told through our lives that we should never QUIT. The internet is full of both cat videos and inspirational quotes like ‘winners never quit’.
Recently we’ve all been going through an extreme situation and many business owners have come in direct contact with that proverbial brick wall. The word pivot has been overused over this period as many of us have shifted, changed and re-focused our businesses to maneuver around the brick wall that is lockdown and the pandemic.
But how many times must we bang our head against that brick wall before we realise it’s never going to break, and we’re not going to pivot around and through?
There are two concepts to consider when in this situation. The first is ‘sunk cost’ and the second is ‘opportunity cost’. We are often fixated on the ‘sunk cost’ that we don’t consider the ‘opportunity cost’.
‘Sunk cost’ is focused on the past. We fixate on how much we’ve spent, thinking that just one more push will make all that cost worth it. We forget that this is in the past and now unrecoverable. We are where we are because of the cost in time, effort and resources in the past, but that is all. It doesn’t matter that we’ve put £2 or £2,000,000 to get to where we are now. All that matters is where we are now.
What we do NEXT is important. Closing out the option of a complete change – QUITTING on what we’ve been doing – should not be the case. The only costs we should consider are CURRENT and FUTURE costs NOT the past ‘sunk costs’ and we should consider ALL options. For every choice we make there is a cost paid by not taking the opportunity of using the time, money or resources on taking other choices – this is the ‘opportunity cost’.
At every decision point, we should consider the return on investment of all options, and be open to the option of a radical change and QUITTING on your current course of action.
Which brings me back to inspiration – we don’t fail by ‘QUITTING’ we fail by ‘GIVING UP’.
Freakonomics has a great episode on the upside of quitting, well worth a listen
