What’s your biggest concern as a business owner? Do you care primarily about revenue, or are you more concerned with building your brand?

No matter what you’re concerned with, you should always be thinking about your return on investment (ROI). Smart business owners are constantly calculating ROI on every decision they make.

Whether you’re hiring outside help, bringing in a new employee, or starting a new marketing campaign, you should always be thinking about ROI. The article below will provide you with a guide to calculating ROI.

Continue reading to learn more about this useful business metric.

Start by Calculating Your Investment

Most businesspeople think about business ROI as it relates to marketing. When you pay money for an ad campaign, you expect to receive sales in return.

The hope is that you earn more in sales revenue than you spent on the paid advertisement.

It’s easy to calculate how much you’re spending on an advertisement, but how would calculate your investment costs when you hire a new employee or attend a business conference? Investing in a new employee means paying a salary.

Attending a conference means spending your valuable time. It’ll be easier to calculate your investments if you can attach a monetary value to your time. What’s a day worth to you?

Once you have this answer, you’ll have part of the ROI equation.

Think About How You’ll Calculate Your Returns

The ROI calculation is as follows: returns – spend = ROI. Once you’ve figured out how much you’re spending on a project or investment, you’ll have to think about how you’ll measure the returns.

When you think about your company’s ROI, you probably think about it in terms of sales or revenue.

The latest ROI trends show that businesses can also think about returns such as brand awareness, mentions, social media followers, and earned media impressions.

Sales affect your bottom line, but there are other ways to think about returns beyond just revenue.

For example, a new employee may not provide you with instant revenue, but it could help free up your time to focus on other tasks that will help boost revenue.

How to Start Improving Your ROI

If you’re wondering how to improve ROI, you can start by reducing your costs. The next step is to make sure you’re tracking all the revenue you’re getting from your marketing or sales investments.

You can use analytics tools to tie revenue to different sources. One of the keys to properly calculating ROI is to ensure you’re measuring everything accurately.

Calculating ROI for Your Business

The tips in this article should help you figure out how to calculate ROI properly. Calculating ROI will help ensure your business makes smart financial decisions.

If you’re interested in learning more about measuring business results, stay up to date with all the blog posts going up on this website.