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How to Calculate ROI on Your Business Investments

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Whether you have a startup business or you’ve run a successful business for a few years, there are a lot of things to evaluate and think about if you want to continue growing. For many business owners, the first things that mark “success” and growth is profit and an expanding customer base.

While these are essential aspects of a company’s success, it can be easy to overlook other aspects. When you evaluate your business strategy, how often (if ever) do you double check your return on investment (ROI)?

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If you haven’t thought much about ROI, now is the time to invest a little time in taking a close look at your ROI and see if you’re actually making a profit.

What is ROI?

The formal definition of ROI is “a profitability measure that evaluates the performance of a business by dividing net profit by net worth.” In short, ROI takes a look at your profitability, but it’s important to remember that it isn’t always the same as profit.

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ROI is the money you invest in your company and the return you see; that’s a little different than regular profit as profit measures your business’ performance. It’s also important to know that just because you have a large sum of money, you cannot automatically assume you have the best ROI.

The Basic Formula of ROI

Finding out your ROI is a relatively easy process and if you want to get a rough and quick idea of your ROI, grab a calculator. Let’s use this example:

You buy 40 shares of Miss K’s. Makeup for $20 a share; your investment cost is $800. You end up selling your shares for $1,000. To find out your ROI, you will subtract your investment from your profit and divide by the investment ($1,000-800/$800). You end up with .25 or 25 percent; your ROI is 25 percent.

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Simply put, the formula for ROI is ROI = (Gains – Cost)/Cost.

Utilizing Online Tools

Sure, you can figure out all of these ROI calculations on a calculator or piece of scratch paper but who has the time? It’s important that your ROI results are accurate and don’t take up too much of your time. As a business owner, there are better ways to invest your time in your business.

Using an ROI Calculator will not only give you accurate results. Take marketing, for example. Every business benefits from marketing if it’s done correctly. When you use the ROI Calculator, you can find out how much you’re spending on marketing, and then you can determine whether or not it’s a worthy investment.

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When you use this online tool, you also have the opportunity to get a free guide that will help you figure out to keep your costs low and optimize your investments while improving your ROI.

You also have the opportunity to get the most from a marketing campaign and evaluate a strategy that will work specifically for your business.

Reference Link: https://www.consultwebs.com/roi-calculator/

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