All business owners, at some point in time, experience ups and downs in their company’s financial status. From weaker than expected quarters to accounting issues, sometimes it can be difficult to keep your bottom line from bottoming out and ensure your cash flow keeps flowing. In this article, we are going to look at some ways small business owners can increase their ROI.
ROI Tips for Business
ROI, or Return on Investment, is the measurement of how effective the money (and time) you spend on your business is at earning you more revenue. If you invest a dollar, and earn $1.05, then technically, you have a positive ROI.
Of course, we all hope for a higher return on investment than our example above! To that end, here are some quick tips to help you increase your ROI and grow your business.
Use Social Media
When used effectively, social media is a great tool to help increase not just your brand awareness, but ROI as well. With little investment, you can let followers and potential customers know about services and products you offer, as well as special promotions and discounts you are promoting.
Social media sites like Twitter and Facebook are today’s version of word-to-mouth advertising. For example, if a person “Like’s” your page, that user’s friend list will see this on their wall, spreading your message exponentially and garnering extra attention for your brand.
Know Your Competition
Knowing what your competitors are up to, how they price their goods and services, and who makes up their prospecting list, will go a long way towards helping you increase your ROI. For instance, knowing what pricing structure your competitor uses makes it so you can avoid pricing your similar offerings too low. Ideally, you will want to price the same or just below, giving you a competitive edge right off the bat.
Knowing your competition’s potential prospects allows you the opportunity to market to them and try to sway them to your side. If successful, this can be very beneficial to your bottom line.
Hire an Accountant
Some small business owners poo-poo the idea of hiring an accountant or CPA, but this is a big mistake. The right certified professional accountant will help you get your business in order and become more profitable, while freeing you up to work on the more important aspects of your business – such as thinking of new growth areas and prospecting for new clients.
Use Potential ROI to Make Smart Business Decisions
Smart business owners seek to minimize risk, and one way to do this is by using potential or “projected” ROI estimates to help in the decision making process. By analyzing the costs involved in undertaking a new project or branch of your business (including overhead and costs of continued operation), and comparing this to estimated profits, you can determine whether or not to pursue a particular path. Are the margins too slim? Are the risks too great? Comparing estimated costs to projected profit will give you an idea on whether a business decision will provide a good ROI or a bad one.