5 Tips to Maximize Both Your Current and Long-Term ROI
You don’t need to take an Economics 101 class to understand the concept of Return on Investment, because life is full of opportunities to get to know what this particular phenomenon exactly is, firsthand. But if you’re still looking for an explanation, let us explain one to you.
If you invest $5 into a business, you want that business to return the $5, along with a profit, wouldn’t you? This is the concept of “Return on investment” in its purest form. Ever since money has been in existence, people have been looking at ways to increase the wealth they have by doing different things, but investing is by far the most potent idea. An idea, which focuses on using your hard earned money to attract more money. This should definitely be at the top of your to-do list. But you should never go into it blind either. So to prevent that from happening, and to help you maximize your current and long-term return on investment, let us give you some pointers.
Follow the Revenue – Profit equation
Sometimes also known as the cost function, the revenue function, or the profit function, depending upon which variable is emphasized, the Revenue – Profit equation is all you need to maximize your returns. The equation clearly states that your net revenue is equal to the profit you earn on your investment, minus the cost of operations. Simple, right? So all you need to do to maximize your return on investment is to either increase your profit, or decrease your costs. Voila!
Calculate current returns to decide if you should try & improve them
Human beings are funny. If they are presented with a mountain of gold, they would want two, and so there is really no limit to the satisfaction of our kind. But if you think about it realistically, there are limits to certain things, and in business, everything is based on reality. If you want to increase your returns, you need to make sure that they can be increased in the first place because if they are already at the highest point, you cannot break the ceiling, and there is no point trying to make this effort.
Improve your processes
The magnitude of your investment is always relative; relative to what you pony up. If you fork out $5 as an investment and get $10 in return, you got back a double of your investment. Conversely, if you invest $10, and get back $15 in return, you did get more return, but relatively, it is still less than what you got when you invested $5. So what happened in between? Your investment was eaten up by your processes, the procedures, and the different steps you had to follow to invest that sum. To avoid this, you will need to improve the efficiency of your processes. Maybe improve the web design of your website through OWDT.
“The more, the merrier” rule
Warren Buffet, the most trusted name in Wall Street, has a tip for every budding investor. “Never put all your eggs in one basket,” and if you are wise, you will definitely listen to the name which is synonymous to investment in the largest exchange market in the world. In accordance with this rule, you must create several different sources for your investment, so that they may all bear different results. Never buy too many stocks of the same type, even if you can see the potential in them; try diversifying and putting your money in other options as well.
Get with the world
Follow the trend and keep up with it; you cannot invest in the 21st century like you would in the 19th century. Create different channels for your investment, make use of social media for marketing, and make use of the Internet for advertising.