Podcast

Ever feel like your decision-making is digging you into a hole? Deeper and deeper and deeper… In this episode Michael and Allissa discuss recognizing and stopping the sunk-cost pattern and making better choices in your business (and life).

Sponsored by The Jojoba Company & Acuity

Transcript:

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Michael Reynolds Hey, everyone. Welcome to the Massage Business Blueprint podcast, where we discuss the business side of massage therapy. I’m Michael Reynolds.

Allissa Haines And I am Allissa Haines.

MR We’re your hosts today. Glad you’ve joined us. Allissa, I have got to tell you, I am so excited because last night was Eli’s holiday performance at daycare and it was adorable. So I am going to send you videos. Be warned.

AH They had a performance?

MR They did. They sang the hot chocolate song from Polar Express —

AH Oh, my gosh.

MR — and We Wish You a Merry Christmas, and a song that I didn’t know called The Old Toy Train, which was adorable.

AH I can’t even. And I say this — and I’m actually shocked at how honest this statement is — I’m really looking forward to seeing those videos.

MR Yeah, so they’re on the way. After we record this episode, I’m going to send you videos. Be prepared.

AH Since we’re sharing that level of stuff, my baby grandson is over today. He and his mom are currently doing laundry in the house —

MR Nice.

AH And — their own laundry. Not my laundry. That’s not who I am as a person —

MR Sure.

AH — and he is almost sitting up on his own.

MR Oh, my gosh.

AH I know. With the little Boppy pillow around him he’s totally good. And even without the Boppy pillow around him, he’s good for a few seconds. But he knows he can do it now, so yeah. And also he’s pretty much sticking out his tongue, like, on demand. When you stick your tongue out at him, he sticks his out. He almost knows his tongue exists.

MR Who have we become?

AH I know. I know it.

MR It’s amazing. All right, good stuff. Well, we have a fun episode today. It is one of my favorite topics, actually, because I encounter this a lot in the business world in the business context of people kind of falling into this. So today’s topic today is avoiding the sunk cost trap in your massage business.

AH Yeah. This came up because — I’m almost a little bit overwhelmed by the topic, so y’all will have to bear with me as we work our way through this. We’re covering this because I am experiencing the sunk cost trap conversations in my head on a daily basis right now with a variety of things, and we’ll have some examples.

MR Well, it happens to a lot of us all the time.

AH It does. So let’s tell people what the sunk cost trap — it’s also called the sunk cost fallacy or bias. It is the tendency of people to irrationally follow through on an activity that is not meeting their expectations. So it’s the concept of throwing good money after bad or — that’s probably the cliché you’ve heard based on it — or spending more time on something that is absolutely not fruitful. And we can give some actual examples, kind of big picture and more granular, of the sunk cost fallacy in action.

So I — my favorite explanation of the sunk cost fallacy is when we use it to stay in bad relationships. So obviously this is philosophical big picture. When we, let’s say, have had a partner for a year or two and we realize that there are situations or habits or personality traits that make them maybe not the best partner for us, but in our heads we think, but I’ve got a year or two in this relationship, but we just spent a ton of money — we just booked a vacation together, we just moved in together, I’ve spent all this time working on this relationship; I should stick with it to see how it turns out. I should stick with it because I think I can make it work. And we overvalue the time and/or expense that we have put into this relationship in regards to planning for our future with or without that person. So that’s my — it turns into people who will never get divorced simply because they’ve been married for 20 years. It doesn’t matter that it’s an unfulfilling, horrible, potentially abusive relationship. That is how that sunk cost fallacy can apply to our life relationships. And not just with romantic partners, but with friendships, and a variety of other things.

There’s also the good money after bad, which we find mostly in examples of a car. And I’m dealing with this with my vehicle right now. We really struggle with this. I bought a used car years ago. I’ve always bought used cars. You have to put a certain amount of maintenance into used cars. I still think they’re a better value than new cars in many ways. But it gets to a point — and you’ll have this happen with a new car, too, if you drive it long enough — where bigger things need to be fixed. And so I just had another light come on and I’m like, ugh, I really just need to just start looking into getting another vehicle. But then in my head, I’m like, Allissa, two months ago you just put $800 to have this, this, and this done, which was supposed to make this car last you another year or two at least. Ugh, I just put 800 bucks in; I don’t want to trash the car now. I’m dealing with that. And it’s a feeling that I’ve put so much into this, I don’t want to let it go yet; I want to keep trying. But how much more money am I willing to put into this vehicle when, really, I just need to get off my butt and start having — creating a plan for a replacement.

And this happens in businesses too, specifically, my example — and then I’ll promise I’ll let Michael talk and give some of his business examples — like I recently made the decision to give up part of my office space. About three years ago, I started an expansion and I really wanted it to be a dual-use yoga, workshop space and I’ve been hustling for almost three years to make this space cover its costs and make me a little money for my efforts. And it has just not been as fruitful as I wanted it to be. Six months ago, I had this conversation in my head. I also had the conversation with Michael, like, what do I do here? I decided to give it some more time and then finally last month I was really pushed into a situation — or given an opportunity to let go of it in the best possible circumstance and made the decision to do that, to give up this space and to let go. And it turned out to be a wonderful decision, but it’s really had me reflecting on why, six months ago, I didn’t just do it. Why did I waste another six months of time, energy, and money trying to keep this space afloat and try to make it thrive when it just wasn’t working.

So I’m coming at this from a variety of positions in different situations in my life. I’m at various points of dealing with this sunk cost fallacy. Michael, I’m excited about your examples and thoughts on this.

MR Well, sure, I feel like we’re actually breaking up some relationships today. Give us feedback if that’s helpful to anybody out there. [laughs]

AH [laughs]

MR Aside from that, yeah, I’ve seen it a lot in business. And actually this kind of covers relationships and business, good money after bad, because a lot of times business relationships can be on the table when it comes to sunk costs. I just recently sold a marketing agency. But for 22 years, in my marketing agency, I saw a ton of this happening when we’d work with a client, and they would have spent tons of money on their website and they were coming to us because it wasn’t working out and they want us to help them. We said, hey, you just need to start over, and they wouldn’t start over because they said well, I’ve already invested $10,000 in this project and can’t we just fix it. Fixing it is not going to work, and they just can’t get past the idea that they’ve spent X dollars already and they don’t want to feel like that goes to waste.

I’ve seen massage therapists do this too where they’re getting a logo designed or a website design and they’re working with a designer, and maybe they’ve spent $1000 so far on this project and they know it’s not working out, their designer is unresponsive, you’re not giving them the quality they want or whatever, and they just won’t switch to somebody else because they don’t want to start over because they don’t want to, quote, throw that money away. And it happens with software. Maybe massage therapists will use online scheduling software or applications and they’re like, well, I’ve already spent six months’ worth of subscription on this software and I just want to stick it out because I’ve already spent this money on it, and that keeps people from making needed change in their business, I think.

AH Sorry, I was muted because I was in my head going, yeah!

MR Yeah, that happens to everybody.

AH Took me a minute to get back there.

MR Yeah, there we go. Welcome back. Welcome back.

AH So we have some tips on when you recognize when you are getting manipulated by this bias on working your way through it. But first, let’s talk about our halftime sponsor.

MR Let’s. It is Jojoba!

AH Woo, Jojoba.

Sponsor message We are so pleased that Jojoba has been a continuous sponsor and supporter here at the Massage Business Blueprint. I personally am loving jojoba right now because it stands up to heat and cold like nobody’s business. I did a home visit the other day and the jojoba bottle had been in my car for a little while. It’s New England; it’s cold. Some of it had gotten a little solid, and all I had to do when I got to my client’s house was run it under some warm water, and then the oil was warm, it was all liquid. It doesn’t get rancid when that happens multiple times. It has an indefinite shelf life, and that’s what makes it great. If you want to throw a bottle in your heating pad and keep your massage oil warm in the winter, and if you’re storing the big jugs in a cooler atmosphere; it’s great for hot stone massage. And it’s non-allergenic. It’s the closest thing to your skin’s wax ester — to your — pardon me, it is a liquid wax ester akin to the esters your skin produces — I wanted to say that properly. That’s why we love it. You can learn more about Jojoba Care jojoba at massagebusinessblueprint.com/jojoba, that’s J-O-J-O-B-A.

AH So some tips for working your way through this sunk cost fallacy when you recognize that you are getting stuck in it. Do you want to go first, Michael, or do you want me to go first?

MR Yeah, sure. Because honestly, the thing that has helped me the most is to talk to other people about it and get outside opinion. Because we get stuck in our own head — actually you and I had this conversation. I asked you for advice on this really big business decision that I recently had to make. And a lot of it was, I think, some sunk cost kind of thinking coming into that decision. And you told me, hey, from an outside perspective, here’s what I’m seeing. And it totally changed my mindset and helped me realize that I needed to get out of my own head and get past this sunk cost philosophy I was kind of circling around. And so, to me, I think one of the first things you need to do if you feel like you’re kind of stuck here is get a trusted outside opinion who can be honest with you.

AH Yeah, I mean, that helped me a ton talking to you in the spring and it really set me up to be able to make the decisions I made this fall. That was a really big deal. I like to think through a few questions. And you might have even been the one that pointed this out to me. I don’t remember who told me — who suggested this, but they said if you could go back in time before you made the decision — before you bought this car, before you did this business expansion, before you entered this relationship, what would you do? Would you still make the same decision to do this thing? Or —

MR Yeah, that does sound familiar.

AH Yeah, I know we talked about this; you might have even been the one who said that. And that was huge for me. That was a really big deal because when we had that conversation in May, I ultimately decided to stick with it for a while because financially to shut it down would have been short-term worse. Or actually I was thinking about shutting everything down and moving my whole office and that would have been financially bad for me. But that really helped me because I realized if I could go back three years and not do this second level of expansion, I would not have done it. So that helped.

And what do the numbers say? Literally running the numbers. And that was a huge part of my decision-making in the spring. What do the numbers say? Will you be financially better off six months from now if you make this decision to end this thing or will you be worse off, and how should that guide your decision making?

The next two are a little floopier because these sunk cost things are an emotional trap in many ways. It’s how we weigh and value our positive and negative experiences. How would you advise a friend? I use this a lot in interpersonal relationships and when I’m talking to friends and even when I’m talking to kids and when my partner and I are talking to each other about things that we feel. If your friend was in this situation, what advice would you give them? Thinking that — I know we’ve talked about this before — that idea of thinking how your friend would advise you, puts you in a slightly more objective position to look at the specifics of your situation. Well, my friend would tell me that my partner is an unsupportive jerk who doesn’t care about my personal growth and obviously isn’t prioritizing the happiness and well-being of our family, so yeah, maybe I need to look at it from that perspective, too. Which, again, these are dramatic things; I’m really not trying to break up anyone’s relationship. But really, it happens in friendships. A really good friend would be like, yeah, that other friend is terrible. I broke up with a friend a couple of years ago in a very clear — a situation happened, I was like yeah, I don’t think I can be friends with you knowing that you lie to me this way. When I ended that friendship — it was very clear and clean and thanks for being my friend for 10 years, I think that we’re done here. It was painful, it was very hard, and I still feel that loss, but it was remarkable to me how other people in my life were like, yeah, she was never very nice to you, Allissa. I know you got some things out of that friendship and I know you gave a lot, but she wasn’t a great friend for you, and I’m glad you got out of that situation. It was remarkable to me to be like, oh, people outside of this saw that. I wouldn’t have been receptive, I don’t think, if they had pointed it out when I was in that friendship. But it really helped me gain perspective after that, and it eased the grief a little bit.

Along with that, how does this situation make you feel? When we talked about what I was going to do with my business expansion stuff, I very clearly was like I’m exhausted. I’m tired, I’m unhappy, this isn’t fulfilling, I don’t want to be stuck in this situation for the next several years, and I feel yucky about it. Sometimes you will make decisions that temporarily will impact you financially, but they’re the best thing for you holistically and emotionally, and that’s a really big deal. If you’re not happy running your small business, why are you doing it? I don’t work so hard and work for myself so that I can be miserable. So that’s really helpful to me. Would you go back — if you could go back in time, would you do what you did, and what do the numbers say, how would you advise a friend, how do you feel? What else you got, Michael?

MR Yeah, I like to remember that a lot of times it’s easy to give up on something and feel like a failure and to see it as giving up on something or not finishing something. But really, more and more, I like to see it as you’re closing a door so you can open a different one. It’s a more positive thing to me now. It used to be I would — oh, well, I want to stick with things because I don’t want to feel like a failure and that’s what I was running from. And instead, I want to be running to something. I want to run to that open door that’s available once I close the other one. I mean, whether it’s as simple as changing software, or whether it’s something like scrapping your website and moving to someone else who can do a better job even though you spent a bunch of money on it, or whether it’s closing a business, or whether it’s changing how your business operates, or expanding or contracting a business, whatever it is, I’ve really embraced that the sooner you accept that something is not working and it needs to change, the sooner you can open that new door and walk into a more positive experience and a better opportunity to grow. Hope that’s helpful. It’s kind of a little touchy-feely and philosophical, but I hope that’s helpful.

AH It’s really, really helpful. What — and that’s a — I’ve used this kind of productivity-wise, what has to die so that this can live?

MR Yeah, that’s one way to say it.

AH Yeah, what do I — before I take on any new task or job or before I say yes to anything, I think where am I going to fit this into my schedule, what has to die in order for this new idea or project or collaboration or whatever to live? What has to come off my schedule to put this on it? Conversely, what could live if this other thing died? What could I do if I ended this other thing that is sucking time, energy, money, out of me. What could I direct my resources of time, energy, money to if this other thing was just taken off of my plate? That can be really helpful in prioritizing and making decisions.

MR Yeah, I like that.

AH And that’s all I got.

MR Cool, I like that. Well, if it’s okay, occasionally, we like to end our show with a couple of iTunes reviews for our podcast. We get a handful of those on a regular basis, and we have a couple of new ones from last month that I actually am really honored by. So if you don’t mind, I’m going to share those.

AH Yeah, and I really like to think of this as a big old thank you because obviously y’all are listening to the podcast right now; you don’t need us to sell you on it. But when people say nice things, we like to share and express our gratitude for that. So read them out, Michael. So this first one is from montyvin and the title is “Inspired me to get back into massage!” I read that and I was like, wow, that is powerful and a huge honor. This person said, “I got my license about nine years ago, practiced for a little less than a year before I was too pregnant to keep massaging. I have been doing the corporate thing, but have maintained my license in the hopes of someday getting back into massage. I have been thinking more seriously about it in the last year, but have been nervous about all the catching up I have to do and wondering how I can make the transition. This podcast has me committed to making a career change, and because of all the awesome content, I feel confident that I can succeed. Thank you so much for putting together this amazingly informative and fun podcast.” That’s — like I said — a huge honor to feel that we played even a small part in helping this person have the confidence to get back into a career that he or she really obviously loves. That’s powerful. I really appreciate that. Thank you.

AH That’s really lovely. I’m going to —

MR Absolutely.

AH — I’m going to print that one out and frame it.

MR Right? The second one here — you’ll see kind of why — have kind of a soft spot in my heart for this one here. This is by Paco Sr. And Paco says, “I have been a massage therapist for nine years and a massage instructor for seven years. In the past two years, I’ve become really connected with audio learning. It started with some basic podcasts and recently I drafted doing audible.com too. I’ve always wanted to be a reader, but have never learned well that way. I set a goal and this year I listened to 20 full-length educational books in 2018 and am subscribed to 8-10 podcasts too. I oddly never thought of looking to see if there were massage podcasts. I listen to lots of business books, but finding this podcast recently and having information specific to my field has been awesome.” And here’s my favorite: “They both do a great job. I connect more with Michael, but they both bring great insight.”

AH Oh, shut up.

MR No, here — see I love my 15 minutes of fame here, because to me, you’re the celebrity of our relationship where everyone’s always like hey, Allissa — our partners and sponsors are like hey, can Allissa do a webinar for us, can Allissa write an article for us, can Allissa come to our event, oh, Michael can come too. It’s always they want you. I love my little gold star here where someone connects with me as well. That makes me happy there. Just had to share that.

AH All right. That’s fine. You get so little that I’m absolutely willing to give you —

MR Yeah, throw me a bone here and there. That helps. That helps.

AH And you know, I’m a big fan also of all different kinds of podcasts and I totally love — there’s not a ton of massage podcasts and I’m really thrilled to be able to — I don’t know — even be part of that. And I want there to be more. I want to be really, really clear. I want there to be a ton more podcasts for massage business owners specifically. And I love it. I want to point out one more — my — I’ve mentioned it before, there is a dude in California named Haley Winter who’s doing a How’s the Pressure? podcast. It is called How’s the Pressure?, and it is interviews — it’s mostly interview-based with lots and lots of different massage therapists in all different areas. He covers a lot of stuff that you wouldn’t think are related to massage, but they really are. I have been on an episode specifically talking about client confidentiality. He’s had Bob McAtee, Bonnie Thompson, just tons and tons of people, Ruth Werner, Whitney Lowe, all — I can’t even name all — Tom Myers. The man got Tom Myers on his podcast. Come on.

MR Wow.

AH And Carole Osborne and Rajam Roose. And he’s got an amazing podcast, yes, that I totally just hit play on it by accident while I was scrolling through all of his episodes. My bad. Sorry about the music in the background. You should all be subscribing and listening to Haley Winter and his How’s the Pressure? podcast. And I just wanted to say that out loud. There aren’t a lot of podcasts I love, and I love his, and if y’all aren’t listening to it, do it now.

MR Yeah, Haley’s good people.

AH He’s awesome. I want to get back on that podcast, I have more — we need to have him on here, too, there’s a lot —

MR Yeah, yeah.

AH We’ve got a really good plan for 2019. I’m super excited. Okay, I’ve blathered enough. Go ahead.

MR I’m sure we could arrange that.

AH Bring it home.

MR Well, thank you for those two most recent reviews and all the reviews we receive. We really appreciate that. We read them all and appreciate them all, so thank you. So that does wrap it up for today. A reminder you can visit us online at massagebusinessblueprint.com. Check out our premium member community if that interests you as well as everything else you find on the site. You can contact us there. If you have a question or a topic or something you’d like us to discuss on a future episode, email that to us at podcast@massagebusinessblueprint.com, and we will look forward to your feedback on that as well. Thanks again for joining us this week. Have a great day, and we’ll see you next time.

AH Bye.