Article: When do you stop throwing good money after bad?
That is a big question. The answer really depends upon the subject in hand. If it is gambling in a game kind of way the answer would be very different to if it was a business investment, where success could literally be just around the corner.
For the purpose of this article, I am talking about business investment, where you have invested a significant portion of money already and require spending further money to try to make the venture a success as opposed to a miserable failure, therefore losing all the money that you have put in so far.
The answer will nearly always depend on how well you know your niche and to what extent you have done your homework. Basically asking yourself real questions and requiring real answers as opposed to fantasy ones that you really hope are right as opposed to being sure are right.
Often business investment requires risk (albeit well managed risk), the bigger the risk you will take should depend upon the potential rewards associated with that risk. Would you invest, for want of a better word, 100 thousand pounds in an advertising campaign that, if successful, could reap you 101 thousand pounds back? Probably not! But would you invest 100 thousand pounds in the same campaign that could lose you a little if failed, but gain 1 million pounds if successful? Probably.
The main foundation of this article is insisting homework, homework, homework. Make sure you know exactly what you are talking about or trust whole heartedly the knowledge and expertise of those who are advising you on the subject.
I am a great believer in the fact that you have to spend money to make money. As you are making a little, reinvesting it, making a little more and reinvesting that too, your competitor invests a large amount of capital and rips off your idea. This shouldn’t happen, but does in a frustrating number of cases!
So what can you do? Do I really suggest borrowing money, therefore risking great debt to grow your idea? No. Instead I would strongly recommend picking your battles. If you are trying to keep your finger in too many pies, you are likely to have yourself and, or, your finances spread too thinly. Instead, pick the specific avenues you intend to pursue and run after them wholeheartedly.
Will there ever be a time to give up? Maybe, again, at every decision point, make sure that your investment is worth the risk. Bear in mind that from the point that you are deciding whether it is worth throwing good money after bad, it is effectively a new business venture with risk to be weighed up.
