How is my investment doing?

ROI

Do you view your business as an investment? Good it is. It’s an investment of money, time and resources. A good way to measure how well your business is doing is by measuring the return on investment.

The measure of your time is easy to measure. It’s just a simple question, does what do makes you happy? The measurement of money is a little trickier to measure but doable. There are a few ways to do this but one of the simplest is the return on investment (ROI) calculation.

For a single period of time take the net profit of the company and then divide it by the total assets. This is the money made by the assets put into the company. In the beginning of the company this will almost always be a negative number. But over time this number will grow in proportion to the success of the company. To get your overall ROI take a look at your balance sheet. Add the retained earnings and the net income together. This will give you the total profit or loss of the business since the inception of the company. Then divide the into your total assets. This is the number that you want to keep an eye on. If it’s low or negative you will want to get that number up. But the most important thing is to keep an eye on that number and have a goal for it. Know where you business is and where it is going.

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