More Poker Rules Every Entrepreneur Needs to Know
April 26, 2013
Poker’s unofficial rules of conduct give players an edge when they’re playing, and can also work to give you an edge in the game of business.
Several weeks ago, we brought you a couple of tips on how you can apply the rules of poker to running your small business. Our research into poker revealed that there are dozens of poker rules that, if applied correctly, can aid small business owners in optimizing operations and improving revenue. Here are two more for your business education edification.
Never overestimate your capabilities Winning a few hands in poker is exhilarating, but it doesn’t make you a poker ace. Similarly, a robust start to your new venture, or even several months of rising profits, doesn’t mean you’ve got this whole business thing figured out. One small slip-up in poker can cost a professional poker player thousands of dollars; one small error in your work or business operations can cost you just as dearly. But, there are ways to keep up the momentum of your business without going “all in”. Luckily for entrepreneurs there’s professional liability insurance, which covers you in the case of alleged or actual negligence, personal injury, and defense costs, just in case you do overestimate your capabilities. Don’t fall into the trap of sunk costs Sunk costs represent money you’ve spent that can’t ever be recovered, no matter what course you take in the future. In poker a player can become “pot committed” when they’ve invested a lot of money into a hand, compelling them to continue betting regardless of their chances of winning. Clearly an emotional decision, this can result in disastrous losses. Sunk costs are disastrous in business too. For example, buying $100,000 of automation software is a sunk cost because it was a one-time expense that can’t be recovered. You may find out six months after the install that the software isn’t what you need, at which point logic says to acquire different, more appropriate software. Having just spent so much on software you’ll likely be tempted to try and force a fit between it and your needs, but that would be an emotional decision on par with becoming pot committed at the poker table. So forget the sunk cost. Map out a plan for finding and financing what you really need, and your productivity will soar.