Your dream is a sunk cost: Facing reality with your start-up

This article from the New York Times underscores a point I've made to unemployed friends, my college students, even in articles a few years ago for the Dallas Morning News, and I've alluded to it in this blog, here.

Treat your dream to build a business as a sunk cost.

Feel good Successories posters and legions of Twitter career coaches would have you think otherwise. They've no skin in the game. Of course they're going to tell you to 'go for it'. They aren't investing their savings, their time, their energy.

A sunk cost is a cost that is irretrievably lost. Business professors tell us to ignore them when making go-forward decisions. Any entrepreneur, hell, any gambling addict will tell you that it's hard to do. One more sale, one more roll of the dice, and it's all alright again. But it's not real. Your dream is a sunk cost. No getting it back - that is, it's there, it's been imagined, it exists. No turning back on having the idea. The 'one day'. It's a yearning, and therefore a drain on your energy, but not yet your wallet, or your family. Turn your back on it. Because everything that follows is not, not yet anyway, a sunk cost.

Now, hopefully this allows you a bit more objectivity. Every additional moment you put toward this dream is a sunk cost. An opportunity cost. At some point you invest in research and site location reports, engineering drawings or trips to see investors or check out competitors. Sunk costs of time, energy, initial but modest expense. But you still have money in the bank and a steady job.

The dream, the drawings, the unsigned lease agreement, a logo, and business cards. Sunk costs.


Now the question is, IGNORING your sunk costs, ignoring the biggest sunk cost, that is, IGNORING the fact that this design/store/studio/idea is 'your dream', are you ready to move forward?

Really?

Because if you are really ignoring the 'sunk cost' of this emotionally compelling dream of telling your boss to f- off and instead go it alone, then you need to be able to tell yourself this: That you are sufficiently distanced from this dream such that even if this was someone else's dream, you'd still invest this level of energy and money into it.

Because in the end, dreams aren't real. Sunk costs, on the other hand, are real. And bankruptcy, particularly self-inflicted bankruptcy, is a nightmare.

Okay, still? Great. Dream's over. Wake up and get to work.