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What is a business investment?
Effectively, it’s an investment you make in your company with the aim of improving it. For example, digital marketing is an investment, a fleet of vehicles is an investment, and so on. You can pump a lot of money into your company with the hope of seeing big returns. The critical question is, how do you tell if you got a good ROI or not?
Realistically, there are some crucial metrics that help you figure out if things have gone well or not:
Take a look at your sales figures before and after your investment. Has there been an increase in the number of sales you make every month? If there has, then this is a pretty solid sign that the investment yields impressive returns. By pumping money into your company and investing in a certain area, you’ve managed to bring more money in via sales.
It’s one of the simplest things to look for, and a decrease in sales obviously tells you that the investment didn’t have the desired effect. However, don’t rely on this metric alone, there are others to take into account.
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After making an investment, you need to pay close attention to your website analytics. Why? Because it will provide you with so much information about your company. Web analytics let you see things like traffic figures, bounce rate, clicks, lead generation, and so much more. It might be worth looking at online strategic intelligence masters programs, so you can understand all of the analytics and stats available to you. This way, you can make sense of all this data without needing to spend even more money hiring an expert to look at it for you!
Ideally, you want to see improvements across most of your stats. If your website is gaining more traffic and generating more leads, then that’s a very positive sign. Likewise, if you’re soaring up the web rankings, then it’s an indication that the investment paid off. Web analytics can also provide information on specific things that you may have invested in. For example, if you spent a lot of money on an online advertising campaign, then you can view stats that tell you how many visitors came via your ads, whether or not they made purchases, etc. It’s a clear way of seeing how successful some investments are.
As mentioned earlier, increased sales figures tell you that your business is bringing in more money as a result of your investment. However, this only tells half the story. While you should still take it as a positive, you need to view your overall profit margins as well.
Consequently, this shows you if you’re actually making more money thanks to your business investments. It may transpire that you’re making more sales, but the cost of the investment means you’re spending too much money and making a loss. A successful investment helps you make more money while spending less. Thus, your profit margins increase.
The next time you invest in something for your company, make sure you check these three things. They will help you see how successful the investment was, and whether or not you need to re-assess your approach.