Return On Investment In Your Small Business
Definition: A profitability measure that evaluates the performance of a business by dividing net profit by net worth. OK so everyone in business has heard the term ROI (Return on Investment) but what does it mean for the small business owner, you ask? Let’s talk about it. You can calculate the ROI of just about anything you spend time and/or money on. Simply track the cost and the benefits of any area of your business and see how it does.So what does the entrepreneur need to know about ROI and their business? Well, by tracking ROI you can determine if your time/money is being used efficiently and effectively basically are you getting the most benefit from your efforts. For the small business owner some of the ROI issues arise over staff. At what point does the ROI tilt in favor of hiring? How valuable is YOUR time? Can you earn more money by focusing your attention on different things and hire someone to do the tasks that eat up your time? Is the investment in training and salary worth the freedom to focus on things that can earn your business more money? No one can answer these questions for you since every business is different but it is worth sitting down and figuring out.Advertising is another great area to determine ROI and if you are spending cash on an advertising campaign you better be able to track it so you know if your dollars were well spent. There are many avenues out there that are inexpensive or free but can be time consuming. Then there is the issue of your Copy. If your copy is not right for your target market it does not matter what your ad campaign is or where you post it. OK now I have really opened a can of worms but you can start to see the importance here of tracking information on anything you spend time and money on to see how you can do it better, more effectively and efficiently. And sometimes the least expensive does not give you the greatest ROI. Marketing and publicity can be areas that you get what you pay for but you need to check out a businesses track record to know what their ROI is for their clients.There are many more areas to delve into so stay tuned for more to come.
