Does Your Business Get the Best Return on Investments?

They're just three letters but for business owners, they can add up to an all-consuming issue - ROI.

Entrepreneurs and venture capitalists alike want to make sure that they're getting the best return on investment wherever possible.

Fortunately, there are number of ways to get that ROI by looking at both the day-to-day operations and the big picture:

Remember - Cash and Profits are Different

As the Harvard Business Review points out, business owners often confuse profits with cash when they calculate ROI. Remembering that they are different can ensure you're not overestimating your total return.

For example, if you're a small business you may calculate that opening a new storefront location would yield an additional $100,000 in profit the next year.

The deal may look great on paper but cost of operation and inventory changes brought on by the new location could eat up a portion, or all, of that $100,000. 

Be Reasonable with How You're Measuring ROI

It's tempting to calculate every aspect of your business using the ROI model. Unfortunately, it's not a one-size fits all approach.

While something like sales can have clear and tangible metrics available, measuring something like employee satisfaction can be more complicated.

For these reasons, it's important to think about ROI on a case-by-case basis.

Don't be Afraid to Course Correct

Business owners like to believe they have all the foresight in the world and can anticipate every situation their company could face in the next year.

But the truth of the matter is that things change. In addition to annual goals, you should be reviewing your company's progress regularly and course correcting accordingly.

Likewise, companies should constantly be on the lookout for ways to optimize their returns.

As the article, “I Want My ROI!” points out, it's easy to overlook ROI potential in things like your supplier management processes.

Hire the Right People

Don't forget that one of the best investments you can make in business is making sure to hire the right specialists and employees for the job.

In a crunch, it may be tempting to hire the first candidate that seems like a fit. But it may be more valuable in the long run to be patient and ask the right questions.

Does this applicant have a proven track record of meeting their past company's KPIs? Are they the "right" candidate or just good for "right now?"

Not Investing is an Option

There's a lot of pressure out there for business owners to invest in the latest "it" thing. But not every strategy or new technology that's making headlines is right for every business.

While global car companies may be using big data to revolutionize their manufacturing process, your boutique store may not need it.

The Huffington Post may boast about investing in nap rooms to improve employee's health and happiness, but that' doesn't necessarily mean you need to send your tiny staff to the spa every day.

With these tips in mind, business owners can better stay on track when it comes to getting the most ROI across the board.