27 December, 2013

1-5-19 finance: Return-on investment

That is basically a financial concept relating to investment:
How much do I expect to make based on the investment that we have made?

That is a question every investor and every entrepreneur ask himself. It is kind of "opportunity cost" concept:
Is the investment I am making/the money I am taking is the best place/solution, or there is something better I can do with it

It is awesome to think about everything you are making for the business this way, for example;
-          Equipment you buy
-          People you are hiring
-          Money you are putting
-          Time taken
-          Energy spent
-          Enjoyment sacrificed  
How much do you put in vs. how much do you get out? Is it the best efficient use of this resource, or there is something better to do with that?


Return-on investment is a kind of "opportunity cost" question that is applicable to anything you put in your business, and a very good way to assess the choices you are making regarding your business