Airport travel is a great time to people watch, search new music and catch up on reading. On my recent trip the topic of difficult business decisions came up.
A friend told me that he could make more money leasing the property they owned than running their business there. That’s a hard decision. Shut down after all the investment in marketing and promoting and running the store.
In economics and business decision-making, sunk costs are retrospective (past) costs that have already been incurred and cannot be recovered. Sunk costs are sometimes contrasted with prospective costs, which are future costs that may be incurred or changed if an action is taken.*
Put more simply, there is a time where you need to decide if the investment in a person, procedure or capital equipment is worth continuing to support those previous investments.
Egos and emotion can get in the way, but in the end there was less work and more money. The decision was the right one. Commercial photography is harder than ever, so look at your workflow, services and what you love to do and make the hard decision. Be more efficient and let go of past decisions if they are not moving you forward.
For a great read and to find out if the Jets should keep Sanchez, look at The New Yorker article, That Sunk-Cost Feeling by James Surowiecki. James, thanks for the inspiration for this post.
*source - Wikipedia
Selfie, searching for sunk-costs and efficiency.