The difference between investing and gambling are predetermined exit conditions. So whether you’re starting out or scaling up, define the price you’re willing to pay and the point at which you’ll walk away.
In trading circles, this point of no return is typically expressed as a stop-loss: the price at which you liquidate your position and cut your losses to avoid risking a catastrophic drawdown.
Unfortunately, the stop-loss concept is anathema in many business circles. There’s a toxic culture of entrepreneurship that equates disinvestment with failure, and advocates going all in regardless of the risk.
Pathological obsession has its place, but it’s simply not appropriate for the vast majority of business owners who aspire to achieving financial freedom and creating generational wealth for their family.
No-one starts a business expecting to fail, but this is precisely what happens more often than not. The odds are stacked against you, so set a stop-loss: decide how much time and money you’re prepared to invest, as well as the results that your investment must generate to justify further perseverance.
Success isn’t a straight line. Loss is inevitable. So when you lose, make sure you don’t lose everything.