Money In, Money Out: The Importance of the Return On Investment

Hard numbers don’t lie when it comes to financial success, and no matter what industry you’re in, or what job you have, if you don’t get an appropriate return on investment when it comes to cash flow, the only end result is failure and/or bankruptcy. This can be an extended timeline, but the sooner you get into the black, the better.Importance of return on investment

And there are several basic perspectives that you can look at that equation from, including the ideas of salesforce investments, the stock market, small business improvement, marketing and promotions, and the idea of the loss leader. Every business transaction is different, but knowing the basics will still help you make more advanced decisions.

Salesforce Investment

Improving your salesforce investment is key if you have a medium to large company. And depending on your product or service, the most important factor in your return on investment success is how well that salesforce is doing, strictly by looking at the numbers. If you invest in better salespeople and sales techniques, and more money starts coming in, then you know that you made the right decisions.

The Stock Market

Investing in the stock market is a good way to see a direct correlation between money in and money out. Work the system and the percentages, and the return on investment comes out in your favor. Try to do something too risky, or get lost when you don’t pay attention to overall trends, and you’re almost guaranteed to lose money in the long run. Unless you’re a genuine financial expert, it’s usually good to trust stock market investment companies over your own hunches.

Small Business Improvement

One tough spot to be in when it comes to putting money into something is the situation of the small, growing business. You can follow tips for starting a business, but then run into problems when you don’t have the cash to keep following that main plan. Then what do you do? Putting money in, before you know it will give you a return, is a tough psychological decision.

Marketing and Promotions

Another gray area for investment is when you spend on marketing and promotions. Typically, there’s no real product that you get back from spending this cash, but in the long term, you have to figure that positive branding will do more for you than what would happen if you didn’t promote yourself or your company.

The Loss Leader

And finally, the idea of the loss leader is something that many retail stores work with in the “money in, money out” equation. By selling something for under its real value, stores bring customers in, hoping that they’ll buy other things in the vicinity. If the overall financial picture tips in their favor, then that loss leader did its job effectively.