ROI, (Return On Investment), is the money you receive from the money you invest. For business owners it’s crucial. Having started a business, usually with their own money, owners need to know whether they’re getting good returns – i.e. profits, dividends etc. If they are great, but could it be more? If they’re not then consideration must be given to the ongoing viability of the business.
Here we look at ROI from the point of view of the business owner and how a few simple changes can maximise the returns. If you own a business, or are contemplating starting one, then read on for some great help.
Many businesses fail before their first anniversary, many more don’t make it to their fifth. This isn’t scaremongering it’s fact. Like any investment, you can lose as well as win. Some business owners have had failure, but are still brave enough to go again. Being aware of the risk is essential, it sharpens the focus.
Now let’s look at some positive factors.
If you invest £1,000.00 in a project that recovers £1,500.00, great! But you have to look at direct returns a little differently. You might think that outsourcing is a bad idea as it costs money. For example, PPC agency services – you could instruct a PPC Management Agency (Pay Per Click) to run your campaign. They may cost £1,000.00, or you could run it yourself.
By yourself, you’d have to spend time/effort on the campaign. Say that time is valued at £500.00. Your returns are £500.00, you break even. The PPC Management Agency run campaign brings in £1,400.00. A profit, and at 40%!
Though the outlay was more, it showed a better return. It’s clear which should be chosen, even where one means spending. This is investing for returns!
Your efforts today, may produce returns tomorrow, or later. Instantaneous returns aren’t always possible. You may invest time and money into a project that suddenly stalls. Fear not, in the future that project may be reincarnated or a similar one comes along for which you have a ready-made precedent. You can then turn around the project quicker, with no additional expenditure, meaning a great return.
Effort is never wasted, even if it is only a learning experience.
Because it’s your business, and investment, you’ll work harder. Nobody cares more about your business than you do as owner. These little extra “efforts” will naturally, without realising, boost the returns on “your” investment.
Opening a business means joining a new community. You need to invest yourself in it heavily and engage at every possibility. This may seem like downtime to some, but you may end up with cross business referrals, or strike up better relationships with suppliers, simply by putting yourself out there. It costs nothing to be sociable, but it can reap rewards.
Watch out for that eureka moment. You may miss it at first, but there are positives in most things. The first PPC Management Agency you engage might be the wrong one, so you instruct another. You could see this as a negative, but think again. You’ve ended up with a better Agency, understand PPC more, and how it works for your business. The monetary cost may have been £500.00 but the return on this in terms of experience is phenomenal. It’s how you see things that matter.
ROI may not be as simple as profits and dividends, though these are of course important. Your returns may at first be intangible, but in the end can prove priceless!