The way you evaluate your ROI—or return on investment—should reflect your business goals. Allow me to simplify just a bit here for illustration purposes.
There are often two paths that new businesses have to decide between when it comes to their growth. Most either need to focus on growth OR profitability. Very few can do both at the same time in their early days.
If they’re looking for market acceptance or a fast exit, they focus on growth. Outside investors will want to know that the business can scale, and a large part of the valuation will be tied to that.
In this scenario, the business might appear to be losing money, but it’s gaining value in other ways. That’s to be expected (it’s also how Jeff Besos gets away with paying fewer taxes).
That value often comes from trading equity for partners and investors who are smarter than you. Sure, ROI might decrease, but you can’t consider that a loss when your business is growing in other ways.
On the other hand, if you want to build a lifestyle business that supports a healthy income, you’ll focus on profitability and boosting that immediate ROI.
Short-term, that means the business may grow at a slower rate, but that’s because you’re working towards a different strategy.
In either of these strategies, it’s critical to know your numbers. In scenario A, you may see a negative ROI as you chase market share. In scenario B, you’ll be stressing over that ROI and ROAS to be sure that each dollar spent produces two or more dollars on the other side. Neither approach is right or wrong—it all depends on your business goals.
Our team has helped both types of companies reach their goals many times over with video marketing, copywriting, ad buying, consulting—even capital investment. If you’re interested in learning how (or just wondering what approach you should take), send an email to business@harmonbrothers.com and let’s talk.
Chief Executive Officer at HB
Grow your business with Harmon Brothers Writing Services, learn more at: https://harmonbrothers.com/writers-room
