Recognizing sunk costs

It’s one of the most important lessons you can learn: All that matters is the future. That is the clearest way to describe sunk costs.

What happened in the past, what occurred between you and your customers, the efforts and investments you put into your job, the brand building and analysis and yearly reviews, the Friday meetings and the one on ones, the time you spent wisely and the time you wasted … are now all gone.

A sunk cost is a cost from the past that you can never actually recover and shouldn’t shape your future decisions. It’s a past investment that is now gone forever.

Example: The $12,000 of Romanian Pinot Noir your company stupidly bought four years ago but have only sold one case of? If you take a bottle out to every customer who said no to it over the last four years, and hear them say no again, what have you accomplished?

You cannot build your future business trying to correct mistakes of the past. You cannot build your future business to pay yourself back for that one week you really only worked seven hours (but improved your golf game tremendously). You cannot build your current business aiming to recover the year (or five!) spent with a boss or company that didn’t work out.

All that matters is what happens today and tomorrow, and the day after that and the day after that.