Return on investment (ROI) is an important metric that many businesses use to measure the effectiveness of expenditures or new systems. It provides a very direct way to judge decisions or implementations. Small businesses need to be especially aware of the ROI for different investments since they can affect revenue significantly. Several investments provide a higher ROI for small businesses than most others.
Many small businesses enter the market without the type of industry-standard equipment and systems used by successful competitors. Purchasing good and appropriate equipment, computer systems and software suites will provide a high ROI. The right infrastructure and capital expenditures will increase the productivity of every employee. They also minimize mistakes, simplify workflow and increase the quality of the products or services provided to customers.
Every small business relies on the skill, experience and output of employees. It is better to invest in finding the best employees possible for each position rather than taking whoever is available at the time. Investing in the right workforce will allow a business to overcome obstacles and streamline the work that needs to be done. This could even lead to innovations. A skilled workforce will provide a very large return on the initial investment over the life of the company.
Internet marketing has one of the highest ROI rates of any investment a small business can make. Internet marketing includes search engine optimization (SEO), email campaigns and website design and management. Social media and mobile marketing are also worthwhile investments. An Internet marketing agency can use techniques to make the small business more visible and to reach customers in specific niche markets. The overall effect of Internet marketing will improve the profile and brand of the company for years to come with only a minimal investment when compared to other expenditures.
Recommended for YouWebcast: 4 Steps to Creating a Marketing Content Plan
Some small business owners do not realize the value of investing in analytics when first starting. Investing in software suites and professionals who can collect, aggregate and track customer or business data over time provides a high ROI. The data can be used to intelligently guide business decisions, make product changes and segment markets effectively. It also shows weaknesses and opportunities for expansion in ways that are not possible through other means.
A new business needs to track the ROI of different areas for some time. Certain investments might not start to produce returns for months or years. Others like marketing might pay off in just days or weeks. It is important to examine areas that have a low or negative ROI over time in order to identify elements that need to change.