A return on darned near anything

I took some time at my quarterly review to think a bit more deeply about some of the investments I’m making in my business.  With my money, yes, but also with my time.

And being an analytic, one of the most helpful tools for doing that is a Return On Investment (ROI) calculation.

What’s fascinating for me is how much I can learn by doing this exercise:

• I uncover investments (particularly with my time) that I’m putting into parts of my business.  And yes, that time does really cost money, even if it’s sometimes hard to count.
• I also discover returns that I hadn’t expected.  There are often side-benefits to what I’m doing, even they don’t deliver an immediate monetary outcome.
• I start seeing patterns in how these numbers shift over time, showing me that some activities are cyclical, or changing in importance.

Suppose that I’m looking at whether my social media is yielding results.  On the investment side:

• I may pay someone to set it up for me.
• There might be tools which charge me either up-front or as I use them.
• And, as we all know, this can be an incredible time-suck.

On the return side:

• I have to actually define what the tangible result is that I desire.  More clients?  Stronger visibility?  Influence with key people or groups?
• Some of them may be measured in dollars, which is great.  But for the ones which aren’t, I decide whether I want to try to convert them to dollars with some time=money calculation, or be satisfied that I can use my business judgment to decide whether the outcome is “enough”.
• And I need to list the long term benefits of this investment: connections to key influencers, building of my brand reputation, and developing towards a competitive position.

Most business owners are comfortable with the concept that not everything can be measured by money, and that’s my philosophy too.  But it’s important to become the financial analyst every once in awhile to see what you learn by looking at the dollar signs.

Just don’t let the numbers make your decision for you.  Use your brain and even gut instinct.