Questions? Feedback? powered by Olark live chat software

There's a rule for getting rich: "For every penny you spend, earn more than a penny back." Certainly there are many others, but this one gets to the heart of every good business decision, receiving a positive return on your investment (ROI).

Many of small business owners know the concept, if not the terminology. The math example is easy, but powerful: If you spent $1.00 on your business every day and earned $1.10 in return (110% ROI), you'd earn $37.40 (including your initial $1.00) by the end of the year. However, if you reinvest the full amount every day and continued to earn an extra 10% back, by the end of the year, you'd have over a quadrillion dollars. If only it were that easy.

The reality is, every day does not get earn us a 110% ROI. Some days the ROI is less than 100%. Even worse, some days the ROI is negative and our businesses lose money. However, we all have to keep investing in our businesses. Payroll, utilities, rent, marketing, supplies. All these are investments. We have to make some investments, while we get to choose others, but we all have to invest. Without investment, no business grows.

The takeaway, consider each investment. Some will generate a positive ROI. Some will not. But you have to invest to find success with your business. Avoiding an investment because you "don't need another bill" is not the way to grow, it's the way to slowly starve your business' potential.

Comment