The ROI Gambler theory...

No, I’m not talking about a Mark Wahlberg movie, or Gambler’s fallacy, or gambling and information theory… in fact I’m not talking about gambling at all - quite the contrary. In the immortal and sage words of Kenny Rogers in his song 'The Gambler':

“You've got to know when to hold 'em, know when to fold 'em, know when to walk away, and know when to run…"

You will most often hear that you should be persistent, keep pushing, never give up, finish what you start, see it through to the end. Sure its important to finish what you start, but not when finishing what you started will end in you being in a worse position than stopping, and doing something else. In fact, in my experience, most people actually find it easier just to keep going - making the decision to stop after sinking so much effort and energy (and time and money) into a project is hard. It takes discipline to see a project through to completion, and it takes discipline to review your project for on-going viability without taking all that hard work you have sunk into it into account. 

When looking at the viability of a project, calculating the ROI, you don’t take sunk costs into account. Why? Because every day you should look forward at what will give the best return, from this day onwards. If its a good project, the ROI should get better every day… but if it doesn’t, and you have another option where the ROI looks better - well, knowing what not to do, and when to stop, is just as important as knowing what to do, and when to start.

Time for some self awareness; do you know when to fold 'em, and do you have the courage to walk away (or run)??