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July 26, 2023

The Sunk Cost Fallacy and Mike’s old hat – The True Cost of Owning Stuff

Title: Mindset Moments:

Introduction

Welcome to Mindset Moments with Michael from Amazing FBA! Join me as we explore bite-sized thoughts and wisdom about business and life during my wanderings around London and Europe.

The Hat and Clothing Dilemma: Money and Time

Today, let’s talk about the significance of a hat and some clothes in life and business. I have a rather fetching hat, similar to one Terry Pratchett wore. While it holds happy memories, it’s time to part ways. Let’s delve into two reasons behind my decision – time and money.

The Hidden Costs of Objects

Everything we buy has a cost, not just in terms of money but also in opportunities. Every purchase means allocating funds away from other potential investments. As an e-commerce seller, putting money into inventory means missing out on potentially more profitable ventures.

Neglected Inventory and Its Consequences

Long-term storage implications of owning inventory often go unnoticed. Whether it’s stored in your closet, warehouse, or home, space has a cost. Cash is valuable, and tying it up in stagnant inventory can hinder your cash flow, affecting your business’s financial health.

The Solution: Letting Go and Focusing on Profitability

To maintain a healthy business and life, it’s essential to let go of things that don’t bring joy or serve a purpose. Just like Marie Kondo suggests for personal belongings, in business, we should focus on stock that generates good profits and sells quickly.

Overcoming the Sunk Cost Fallacy

One reason we struggle to part with things is the sunk cost fallacy – the emotional attachment to what we spent, even if it no longer serves us. Business owners must overcome this fallacy and make rational decisions about inventory, cutting out items that are not profitable.

Conclusion

By evaluating the true cost of ownership and acknowledging the sunk cost fallacy, we can make better decisions in both business and life. So, as I bid farewell to my hat and clothing, I encourage you to assess your inventory, ensure profitability, and focus on what truly brings joy and success.

Do you want to take your business to the next level? Consider a free Amazon business audit to identify opportunities and threats. Book your audit at www.myamazonaudit.com if you’re already doing a few thousand dollars a month in sales.

Thank you for listening, and I hope you found this discussion valuable!

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Michael Veazey


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