Return on investment is a business strategy that is widely talked about in venture capital circles. When companies introduce initiatives to get the best ROI, just about every aspect of business is impacted positively, from the financial bottom line to productivity and from projections to growth potential. As a business owner, you will want to evaluate various ways to squeeze the best ROI from your company operations, and here are four ways for you to do so:
Simplify Your Computing Needs with the Right Systems
Your data and information infrastructure is more than likely the most complex business process in your company. Many business owners tend to add to this complexity without realizing it, and this is what you will want to avoid. In general, you want to look for ways to minimize complexities in favor of rapid ROI gains.
Choosing the right system is the best way to simplify your computing needs. For example, small business owners should evaluate cloud-based solutions such as Microsoft Exchange Online with Office 365 while owners of larger companies should consider the advantages of IBM Power Systems such as the i5 line of servers. What you want are systems that are simple to set up, operate, and maintain.
Use Business Intelligence
When you introduce a new initiative to your company, you will want to apply principles of business intelligence to make sure you will get the best ROI. In essence, business intelligence refers to data analysis and benchmarking that will show you the best courses of action for your initiative.
By applying business intelligence techniques to your initiative, you will be able to increase ROI by making the right decisions, finding opportunities to reduce costs, increase revenue opportunities, and mitigate risks that may get in the way of generating profits. Business intelligence is a process that you can easily add to your operations on a contractual basis.
Apply Principles of Strategic Planning
One of the problems with introducing business initiatives is that many company owners will do so in haste and without strategic planning. First of all, while it is good for you to always think about ROI maximization, you will first have to know how much profit you can reasonably derive from the initiative, and this alone will require elements of strategic planning to be applied.
Strategic planning is all about forecasting profits, allocating resources, measuring the performance of managers and supervisors assigned to carry out the initiative, and considering business proposals that may arise over time. You have to know about the factors that will determine your profits, and you have to know how these factors can be elicited. For example, a pizza delivery business that has less than 20 percent regional market share will probably be able to squeeze about seven percent ROI from any given initiative. To get 60 percent ROI, the pizza delivery operation will need to command more than 36 percent of regional market share.
Always Include a Method to Measure ROI
Whenever possible, the business initiative you introduce in your company should have a reasonable method to measure ROI, which is not always easy to determine on its own because the return itself should not always be measured in terms of monetary profits. The initiatives you introduce may require both time and money to execute, and both can be considered investments.
In the case of a marketing campaign that involves paid online advertising, ROI measurement tends to be pretty easy thanks to modern analytical tools such as Google AdWords. On the other hand, if your initiative calls for putting employees to work part-time on an organic SEO project, you will have to measure ROI on account of the hours spent by workers on this initiative.
In the end, you should not assume that all your business initiatives will automatically result in maximum ROI situations. Take the time to evaluate the recommendations presented herein so that you are in a position to derive greater ROI from a strategic point of view.
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