Strategies for Improving Return on Investment (ROI)

Improving Return on Investment (ROI) as business owners is vital. We put a lot of time and money into our businesses — and we want to see a return on our investments! Here are a few strategies for improving ROI: 

Define and Set Your “Return”

Defining returns from your investments is the first step towards improving your ROI. Some of the ways to define your ROI include higher sales, increased revenues, larger profits, reduced production costs, higher employee retention, higher customer satisfaction, and increased brand preference. In addition, setting benchmarks for your return goals help the overall goal come together in pieces. 

Calculate Current Return

In order to improve returns on current investments, you must calculate the return on a specific product or service you are selling, keeping an employee, or other investments. This is to say that if you wanted to hire more employees, you will now have calculations to help figure out what changes should be made in order to pay them accordingly. 

Increase Revenues

Utilizing your current investments calculations will help you find ways to improve sales and/or revenue. Improving your return includes increasing sales without increasing costs, or increasing costs enough to still provide net gain in profits, or raising prices without decreasing sales so much that profits erode. 

Reduce Expenses

Reducing expenses does not require an increase in sales or prices to improve ROI. Dividing overhead and production costs is the most effective way to find better expense-reduction opportunities.

Evaluate Your Investments 

Investments come in many forms, not just monetary. Celebrating employees, including benefits for employees, and marketing campaigns are all ways to increase return on investments. There might not be a calculable way of measuring ROI through these, but there will be an increase in loyalty, easier recruitment of new employees, improved morale, productivity, and traffic on marketing platforms. Remember that these are just a few examples. 

Increasing return on investment does not have to be confusing or difficult. Contact Floro Business Strategies here, for any questions or additional information! 

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