Poker is unlike almost any other game, in that being successful is not just a measure of how you play the cards that you are dealt…being successful in Poker is also a measure of the cards that you choose NOT to play. Poker is a game that rewards players that know when to quit. You can see this in the fact that a professional poker player will only choose to play a mere 15-25% of the starting cards that they are dealt, while an amateur will choose to play over 50%.
Great business owners are similar to good poker players, in that they are also characterised not just by how well they run their businesses, but also by their ability to time when to move on (sell and retire) in order to maximise their return.
So… as a business owner, what can you learn from good poker players that can help you time your exit correctly?
- Being able to read the signs
In business, and in poker, you need to be keeping a close eye on “the cards you are dealt”, so that you can notice when they are losing value.
In business, this means keeping an eye on KPIs like revenue, expenses, profit, competition, new patient flow, etc.
2. Being able to recognise your emotions
In business, and in poker, it's important to make important decisions rationally and unemotionally.
There is a well-known cognitive bias called the sunk-cost fallacy that can hold business owners and poker players back from being able to quit when they should. The sunk cost fallacy causes people to be too emotionally anchored by their past investment (time, effort and money) to accurately assess the likely future returns of their current facts on the ground. When this happens, it can become impossible to know when it is the right time to quit and move on.
Businessmen and poker players are only successful if they are able to keep their emotions in check and successfully navigate this sunk cost fallacy cognitive bias.
3. Make decisions based upon the facts on the ground
Once you’ve read the signs and kept your emotions in check, you simply need to make logical decisions based on the facts.
If you are deciding to stay or quit, is it because you have read the signs and rationally assessed your future prospects? Or is there an irrational/emotional anchor pushing you forward or holding you back (like the sunk cost fallacy)?
In business ownership, and in poker, winning is not about each transaction. It’s all about the long game - and winning the long game is not just about playing well, it’s about knowing “when to hold ‘em and when to fold ‘em”, so that you are ahead after the total amount of time and hands played.
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