Sunk costs are things like IT systems, staff complements, pricing policies, that have built up over years.

Sunk costs are so entrenched that it often takes a disaster to wipe them away.

Part of the reason the German military was so powerful in the early years of World War II is because it had to forfeit every gun, tank, ship, and plane to the Allies after World War I, which meant it rearmed inbetween wars with brand new, state-of-the-art supplies while other armies used outdated equipment.

Having everything taken away from them in 1917 was a competitive advantage in 1939.

A practical example of this is when successful new industries can only be run by young people because they’re not burdened with past conceptions of what a product is or how an industry should be managed.

Investor Dean Williams once said: “Expertise is great, but it has a bad side effect. It tends to create an inability to accept new ideas.”

Maybe the same applies for your business.

Maybe you need to start from scratch.

Or find someone else who can start from scratch without your emotional baggage.