Many years ago, my business partner and I decided to build 14 houses in Crewe.
It’s not exactly like we made the decision on a whim, but there was also a distinct absence of long strategy decks and long financial models. We had a compelling idea – and with the help of some advisors (who, not irrelevantly, were paid if we went ahead) we enthusiastically jumped in.
Years later, we were in the grind of living with that decision. By the time we had half-built houses, we couldn’t undo it. We had to press on through contractors disappearing, utility companies delaying us by months, and general faff I never even knew existed - even though we knew by this point we were guaranteed to lose money.
Saying “yes” took a few meetings of fun, optimistic conversations about potential upside. We never thought to ask what it would take to stop if it turned out not to be as great as we thought.
So here’s how I propose working out how much effort you should put into a decision: how painful will it be to get out of?
Because ending something is hard! There can be:
Practical friction: selling a property, clearing out possessions, cancelling a contract Responsibility to others: employees, partners, family Psychological cost: admitting to yourself that it didn’t work out, or wasn’t what you hoped; feeling like you failed; the sunk cost; fear of public embarrassment
And to make matters worse, an exit is rarely an event. It’s normally a process ‚ which means you need to not just have the courage to make a difficult decision, but then live with the admin of that decision for weeks or months. All the while, being constantly reminded of the general unpleasantness of it all.
For example, take the case of putting your child into a private school – an easy “yes” when you’re having a good year and you’ve just walked past a sweary group from the local comp. The school makes the process delightful, aspirational… you feel great about it.
But the exit cost could be massive: you’d need to pull your child out of school, away from their friend group, and be the bad guy who turns their life upside down. Or if you can’t stomach that, you’d need to make huge sacrifices to maintain the commitment until they turn 18.
That’s a decision that deserves a lot of thought.
Yet most of us get it backwards: we spend months chewing over easily reversible decisions, then make the big, consequential ones on a wave of optimism, excitement, maybe hubris.
It’s not hard to see why. Starting something is an optimistic act. Saying “yes” feels good, you’re focused on the upside, and if someone’s selling it to you they generally design the process to be fun and frictionless. Nobody shows you the exit on the way in.
So my proposed fix is to do two things:
1: Make the reversible version of the decision first
Rent the expensive hobby equipment before buying it Agree a short-term trial with the coach, even if it works out more expensive per-session Start the business on the side before quitting your job Keep going back to the same place on holiday as if you owned it, even before you do
2: When that’s not possible, price in the exit upfront
Deliberately shelve the optimism and ask yourself: “If this isn’t as good as I thought, what will it cost me to get out?” And make sure you’re still enthusiastic about starting, even knowing that possible future cost exists.
That second question is the one we never asked ourselves about Crewe: “If this isn’t as good as we think, what will it cost us to get out?” The answer would have been “we can’t”, and that’s the point at which the decision deserved the months of research I often give a new laptop.
We might well have gone ahead anyway. It was a compelling idea, and optimism is hard to argue with. But we’d have gone in knowing the door only opened one way, and I like to think we’d have walked through it a bit more slowly.