What the Entrepreneur Can Learn from Sunk Cost

Creating a business from the ground up is a process, one full of challenges and tough decisions. It’s vital to the success of your business that you are not held back by the decisions you’ve already made and the resources you’ve already put into your business. This concept of sunk cost often keeps people from growing and realizing the potential of their company. From money, to time, to effort, to emotion, it’s critical to not let the resources you’ve already put in stop you from what you and your business can become. Big or small, it’s important to stay agile in order to reach success.It’s important to have the self-awareness to recognize when an idea is not working and to let go of that idea, despite everything that’s been thrown into it to try to make it flourish. This doesn’t mean to pack up shop or stop trying. Instead, what I want to convey is the importance of being able to let go and move on, rather than dwell on time and energy spent. When you recognize that an idea is not working, it’s better to go back to the drawing board and make a change, rather than to keep trying to build something that isn’t working.I know this is easier said than done, by far. With all of the time and money spent, not to mention the sacrifices made, it is insanely difficult to come to terms with moving away from a current business model and changing things, even though this may be better for the company in the long term. But instead of dwelling on all of those resources, it’s imperative to accept this as part of the growing process, without which you cannot achieve success. The bottom line is that no one gets it right the first time but it’s important to be able to learn from those experiences and move forward.Even the most successful companies have had to pivot in order to achieve success. Twitter started off podcasting, Youtube did video dating, and flickr was a strategy game. These companies are wildly successful because they could realize their original business models no longer made sense for them and were able to let go and accept the resources they had spent. This initial effort is part of the learning process and it is okay to let it go because the process and experience is what will bring you to success, even if it doesn’t seem like this is what’s happening. In spite of how daunting accepting sunk cost can be, you can’t connect the dots looking forward, only looking back.I’m intimately familiar with how difficult this can be. Insticator started with a completely different business model, as a B2C company that had users predict TV shows in order to win rewards. Now, we’re a technology platform that enables website publishers to drive their audience’s engagement while also earning revenue from advertising. Going into it, I had no idea that this is the place we would end up. Although it seemed like a natural trajectory to pivot to our current model, it was difficult to let go off all the code written, hours spent and money invested in the initial years of the business. But we are better for it.This process was by no means easy. There are deep fears that come with massive change. If I pivot, will my team start to lose faith in the company? Will they think their work is a waste? Will I lose good people or be seen as disorganized or scared? A multitude of apprehensions and uncertainties come to mind. But these are normal, warranted, and vital to the process. And you may lose some people, but the good ones will stick with you, and you don’t want the ones who will jump ship at the first sight of difficulty or change on your team anyway.Don’t let the ‘sins’ of the past prevent you from having a successful future. As long as you keep pushing through with hard work, dedication and passion, you’ll get there.Special thanks to Zack Dugow of Insticator!You can meet him and the rest of the Insticator team at NY TechDay on 4/21