Understanding this fallacy will change your entire perspective on decision making.
Keep Reading... //thread//
1/ The sunk cost fallacy means that we are making irrational judgements and decisions because we are factoring in other influences (Emotions, etc.)
This fallacy affects many entrepreneurs and can affect many different areas of our lives, leading to suboptimal outcomes.
2/ These outcomes range from deciding to stay with a partner even if we are unhappy because we’ve already invested years of our lives with them, to doing constant renovations and sinking money into a house trying to improve it when it may be more beneficial to just buy new.
3/ **Why does this happen to people?**
The sunk cost fallacy occurs because not always purely rational decision-makers and are often influenced by our emotions.
When we have invested lots of effort, time, and money into a choice, we feel guilty if we do not follow through.
4/ This fallacy is where we continue to support our past decisions despite new evidence suggesting that it isn’t the best course of action.
We fail to take into account that all past investments that we have already expended will not be recovered.
5/ We end up making decisions based on past costs and instead of present and future costs and benefits.
This is where you can get trapped and continue along a path of future regret and potential failure.
6/ **Why it is important**
The sunk cost fallacy impacts many aspects of our daily lives, and sometimes without us even knowing, which is even scarier to think about.
It's important to stick your head above the trees and take emotion out of the equation when making decisions.
7/ We are focused on our past investments instead of our present and future costs and benefits, meaning that we commit ourselves to decisions that are no longer in our best interests.
Current Focus = Past Investment = Wrong
Current Focus = Potential Future Benefit = Right
8/The sunk cost fallacy is a vicious cycle.
The more we invest, the more we feel committed to continuing the endeavour.
The more resources we are likely to put in to follow through on our decision.
It's a downhill spiral that leads that many people have fallen into.
9/ **How to avoid it**
Being aware of the sunk cost fallacy is the first step.
While it is difficult to overcome inherent cognitive fallacies, we can try to ensure we are focusing on current/future costs and benefits instead of the past.
Self Awareness in Decision Making.
10/ We should focus on actions instead of guilt that accompanies dropping a commitment or goal.
So before you make any emotional decisions understand that past investment does not matter and that you need to focus on future potential gain and opportunity.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
He graduated from Vanderbilt University in 2011 with a Bachelors's Degree in corporate strategy and went on to spend several years consulting for government agencies.
2/ Alex realized he wanted to do something more fulfilling in life and with his career, so he decided to enter the fitness industry.
Alex spent weeks calling gym owners across the country and seeing if he could connect with the owners to learn more about the industry.
Remote Cleaning Business - 10k/Month Cleaning Business Being 100% Remote
I launched and grew my cleaning business for the first year from a different country and different time zone.
If this thread gets 1,000 likes I will drop a FREE VIDEO GUIDE next week.
KEEP READING 🧵
1/ I graduated college and had no idea what I wanted to do with my life. I became a realtor in Philadephia and was working full time. I was not enjoying it and I wanted to make more money.
So I decided to start a cleaning business...
2/ I was living in Philly but I had limiting beliefs of launching it in the city.
So I decided to launch it in Canada, BC - In my hometown.
Fast forward a couple of months and I had a 10k+ a month business while I was 100% remote.
I made over $500,000 by simply cold emailing effectively.
Let me show you how you can do it, by bootstrapping it from nothing. 🧵
1/ $500,000 net income over 4 years from cold emailing in the cleaning industry.
Yes, surprising but possible. When people think "cold email" a lot of times they assume you are talking about e-commerce, ad agency, coaching/consulting, etc
You don't think about sweaty startups
2/ I have been sending cold emails since day 1 of my business and it has landed me:
- Annual contracts up to the size of 45k
- One customer providing 5k/week revenue
- Monthly contracts providing MRR of 25-30k
Here's how I added 50k per month in cash flow, with only 2k upfront capital.
If you are looking for more cashflow, you just stumbled upon a gold mine.
🧵
1/ When I was looking to start my first business I was searching through different industries and noticed a ton of businesses either required large upfront capital to start or it took long to start positively cash flowing.
2/ Then, I stumbled across the cleaning industry...
An industry where clearing 10k, 25k, 50k months was achievable... all with at most a few hundred dollar start-up cost.