Casino managers love patrons who “double up”.
It occurs to most gamblers, sooner or later, that if they
double the bet after losing, then they will get back all they lost and make a
profit when eventually they win.
However, the net result of this is usually that the gambler
ends up turning a small loss into a big one.
It is therefore depressing to see people who are supposed to
understand business doing the same thing and responding to failure by pouring
in more money without changing strategy.
These reckless gamblers include most major banks, the Big Three
automobile manufacturers, and the governments of the USA and the UK, whose
response to the problems caused by their deficits is to run up bigger deficits.
Humble entrepreneurs should learn from their mistakes.
Never reinforce failure. Study why something has failed and
make appropriate changes before committing another penny. No problem was ever
solved by more of the same.
If a change of strategy is not enough, then have the courage
to cut losses. Close an operation rather than lose the whole company, and close
a company rather than lose everything.
Above all, when in a hole, stop
digging.