When to quit? An entrepreneur’s guide to pulling the plug
If you believe the pop-psych literature, perseverance is the most predictive characteristic of successful people. But isn’t knowing when to quit equally important for a satisfied and fulfilled life as an entrepreneur?
The basic narrative is that anything worth doing will have major setbacks, and in the face of adversity what you must do is get up, dust yourself off, and try again.
I am living proof of this axiom. Of my 5–6 startups, half have failed, and each time I licked my wounds and started again. But perseverance is only part of the story, because sometimes you need to pull the plug on relationships, investments and even your dreams. In my experience, you rarely look back upon a project’s end and think “I should have continued.” More often than not, hindsight seems to say that you should have ended things sooner rather than later, and the dominant regret pattern of these failures is opportunity cost.
Let’s look at a few cognitive biases that affect the way we think about when to quit and some lessons from entrepreneurs that have done so smartly.
Sunk Cost Fallacy
The Sunk Cost Fallacy (SCF) is probably the most pernicious of the cognitive biases that affect our ability to make good decisions about when to end something. SCF means…
