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If you are within first two years or five years of start of your business, then running in red should not be thought of as a bad thing. However, if you are ten years into your business and earning less than minimum wage from your business, there is a serious problem afoot that needs to be addressed immediately.
STARTING OUT
When you are just beginning your own business, you have plenty of time on your hands. This is reason why most small business owners do not properly count their time in ROI equation. They just look at cash expenditures and incoming monies, and they are satisfied with that calculation.
It is often said that people generate kind of results that they believe they can achieve or kind that they want to achieve. Seeing goal is first step to achieving goal. Expectations will always bring results equal to expectation.
Having been down business startup path before myself, I too understand desire to calculate ROI without consideration to time invested in enterprise.
However, I also understand importance of placing a value on my time and working that into my final numbers.
In beginning, I ran two types of ROI calculations: all resources exempting my time, AND all resources including my time.
Of course, I actually set a higher expectation for my own income level. First, I had decided on ten dollars an hour for my time. Later, I adjusted that amount upward.
Starting out, even though I ran two versions of my ROI calculations, I relied first on my resource excluding my own time. Once I had achieved this goal, then I refocused my attention to reaching ROI which took into account my own time.
Now, that time has passed, I can go back and look at my yearly ROI and see that I have earned enough cash to pay for those early days of famine.
THE SECRET OF TURNING ROI CALCULATIONS INTO SUCCESS
Every step in your business startup is a calculated guess as to what you believe you can achieve.
Measuring your results is essential to making your business profitable. ROI measurements are imperative to measuring and understanding results you are achieving with your new or existing business.
Take into account all factors relating to profitability of your business and don’t smudge on facts to make it seem more profitable than it really is. It is important to approach your business and your business results with absolute honesty. Be honest with yourself and face facts of your task.
An honest examination of your business at regular intervals will help you get on and stay on track to keep doors of your business open. You will thank yourself later.
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