The Return On Investment Principle: Are You Getting It Wrong?

There are many ways to look at a business and the most talked about is the principle of Return On Investment better known as the ROI.

The ROI is a measure of what a business gives back to you after you have invested into it. This is often a very important figure but it is also open to a lot of different interpretation. For example, Investment is often seen as a monetary investment which is a very important factor when running a business but it is not the only investment people can give to a business.

Time is another major investment which is also very important and something that many people forget about.

The idea of ‘Return’ is also open to interpretation, as many people see money as the only real return when they try to figure out the ROI and for most people this is true. In fact for everyone it is true but it is not the only ‘Return’ which is important. Again time or as many business people prefer to call it ‘time freedom’ is a very important ‘Return’ from their business.

The return for some is not in a monetary value or a value measured in time, at least not yet, the return for them is measured as a form of education. The return is the new set of skills they have developed or information they now possess which further down the line could generate them more money or free up time.

These factors combined can make a far better return but it doesn’t stop there, sometimes measuring the ROI is not always straightforward, the ideal results or ‘Return’ will not be seen today, or next week or may not be seen for quite some time.

For example I recently heard about a guy who spent around £30,000 investing in a franchise where he went around the country writing people’s wills for them. He offered a service that ensured his clients affairs and estates were properly dealt with when they die so that there are very few issues for their loved ones.

He is expected to make roughly £12,000 a year which means he will not see his investment paid back until he had worked at least two and a half years.

The return is not always determined on the amount of money that you have invested, what you do is a HUGE factor. Obviously, the £30,000 that was invested in the will writing business is a huge investment and it needs to have some return but that money itself will not bring back any returns as it only bought the franchise name and tools. It is the actually doing the work which will bring the money in.

So if the guy worked 40 hours a week and wrote 20 wills it would bring in ‘X’ amount per week but if he worked 60 hours and wrote 25 wills then it would bring in more money. If he only wrote 5 wills a week then he would earn less meaning that it would take a lot longer to earn back the £30,000 he invested.

Money can be ‘seen’ to have a direct return if it is used in the form of online CPC adverts as seen on Facebook.

People have ran a series of ads sending people to websites where they were either selling something, promoting a product or just relying on 3rd party advertising click revenue.

For every pound or dollar these advertisers spend they would generate two or more back and they would set out to improve the ROI for every pound/dollar they would spend.

Online businesses monitor everything they do or spend to get a complete ROI, in this article  Using SunFrogShirts To Generate Extra Revenue From Your Website I show you how to generate money promoting T-Shirts in posts and that it only takes a few minutes to do. The return on TIME investment can be huge especially if a post does well.

The ROI can be measured in many ways and I have already touched upon the fact that the education and skills you get from something is a return which has dividends later on in life. Over the years I have personally paid out a couple of thousand pounds for DVD courses and access to several online membership courses.

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For the first few years there were no monetary or time returns that I can say were beneficial and at times it caused some heated discussions with my better half but now, six years after I started I am now in an excellent position.

The list of the skills and ways I know how to make money online include…

  • I can work from home and from most places around the world,
  • I know how to create websites,
  • I know how to write articles and eBooks,
  • I know how to publish eBooks on Amazon Kindle, Free-ebooks.net and others
  • I know how to create YouTube accounts
  • I know how to create videos
  • I know how to create and use social media platforms
  • I know how to promote affiliate products like T-Shirts
  • I know how to build squeeze pages and op-tin boxes
  • I know how to run email newsletters
  • I know how to run membership sites
  • I know how to generate money from Google AdSense
  • I know how to run CPC & CPM adverts on Facebook and Google AdWords
  • I know rudimentary SEO practices
  • I know how to manage overseas workers

Not bad for a guy who spent twenty or so years working as a carpenter and joiner from the age of sixteen. I am sure there are many other things that I have missed off that list but it isn’t until now that I appreciate what the returns are from those initial investments of those thousands of pounds and the time I spent at weekends and evenings learning those new skills.

Even though it seemed costly, one course was costing me roughly £69 a month, I kept at it because I knew…

  1. I was learning a whole lot of new skills which I could take anywhere and change my life.
  2. I was ‘wasting’ more than £70 a month on food and drink using coffee shops, bars and restaurants including take away food.

Certainly none of the food and drink that I was buying was going to benefit my life or change it so if I was willing to spend money on things which basically were a waste then I could afford to keep investing in my future and education. I also decided to cut down on a few ‘nights out’ and ‘take away nights in’ to save some money.

beer and pizza

After all, if I wanted to change my life situation then I needed to do something and investing time and money into learning WAS THE THING I needed to do and spending on ‘non essential treats’ was not changing my life but keeping me stuck in the life I wanted to escape.

I would most certainly say that investing that time and money in myself has paid off now and that the return is a better life and a complete new skill set that I can take anywhere.

So when you are starting something new and you want to look at the ROI remember that it is not always about what you get back that same day or that it is solely reliant on the monetary investment, there is so much more to consider.

The one thing I think people need to consider is that ROI is a meaningless measurement if you invest money but do very little work.

Many people invest money on programmes, do very little then give up saying that the method ‘does not work’ or that they were ‘taught wrong’ when in fact their lack of focused constant action is to blame.

Actually doing work and doing that work constantly over a period of time is the most valuable investment a business needs. If one man can invest only time and no money but works hard for weeks at a project he can make it work whereas another man who can invest thousands of pounds/dollars into a project but does nothing will have nothing to show and no success.

It would be good if we could write just one eBook and have huge success from it or create just one video that goes crazy on YouTube that brings in a lot of money meaning that the ROI was into the thousands of percent but the truth is that is not always going to happen.

On Free-ebooks.net I see the name Mike Bozart everywhere, he is publishing a lot and I do mean a lot of short stories. It would appear that either he is doing a lot of writing and has 44 books on Free-ebooks.net as we speak.

books by mike bozart

He could be using the site as a traffic generator sending people to bigger and better books for sale on Kindle or to a website where there are audio books or adverts. I am not sure what his business model is, but I can say that it must be working. It is working because he writes plenty of books and the fact that he writes plenty of books shows that it is working, he has not written one or two and then given up.

He has invested quite some time into writing these short stories and they will bring in results, those better results will be dependant on the more time he invests in creating books.

Obviously if you invest a lot of your time and money in a project and the results are pointing to a complete failure then you should stop but it is often very hard to predict a failure or a success until a set time has passed but it is easy to give up too early and prevent that success from happening.

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