ROI – or return on investment – is a critical component of any business; it is what helps to know if the business is on the right track to both meet its goals, as well as for the services/products offered. Typically, we think of ROI from a consumer standpoint, meaning to help those customers know if they are getting value, or results, from the money spent which can be in the form of a service offered (i.e. coaching, consulting, etc.) or a physical product.
But business owners need to be looking at ROI from their own standpoint: is the time and money I’m spending on activities getting me the results I’m looking for. Two areas to track are time and money:
- Time: this is where you track the amount of time you are spending on business activities, which should include both time spent with clients or to get them. Areas to consider should include: identifying clients, referral partners, coming up with ideas to solve client problems, creating programs, posting on social media sites, speaking engagements, networking events, writing blogs or articles, making phone calls, doing research (on client needs, competitors, etc.), actual work with clients. All of these activities are very important to business growth
- Money – this is where you set and track the amount of money you want, or need, to make daily/weekly/monthly/yearly; this equates to how much volume do you need to do to make your desired amount of money in one of those categories. It also means pricing your services or goods appropriately to ensure you’re bringing in the amount of money you need. Add in to this our expenses, which can include: office rent, phone, office supplies, internet services/hosting, buying domain name, printing expenses (business cards, handouts, and the like), webinar/teleseminar services, gifts/ donations, gas and other car expenses, lunches and networking meetings, membership to professional associations, going to conferences. It’s important to know your output.
These are the two main areas I see for tracking ROI, which applies not just to business; personally, we need to track these two areas as well. The bottom line to uncover is our investment into whatever activity we are pursuing and then are we getting the results from that investment. For someone who wants to lose weight, looking at calories expended or days at the gym; for those looking for a new job, how many resumes are being sent out which results in interviews; for those wanting to pay off a credit card, how much money do you need to pay extra and in how many months will it take, and where do you need to cut back on other expenses – I think you get the picture!
Return on investment definitely is important to track so you feel more in control of your schedule, time and money. Reaching profitably, and lessening frustration, while reaching set goals can only occur if you’re meeting them, which can only come if you monitor all that goes on within your business dealings. If you haven’t, it’s not too late to develop an ROI plan to keep you in growth mode, which then allows you to move to expanding the business.
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