Do you know your ROI?
Continuing on the theme of my last post, you get what you put in and it only makes sense to put in when you’re sure of what you want to get out of it.
In short, returns on your investment.
In this post, I want to ask you if you know what your ROI is?
From my years of working in retail, I learnt that a store’s profitability was measured by Revenue per Sq.M – how much money the store made for every bit of retail space. Many businesses base their profits as the first measure of success, and the more profits on the balance sheet, the stronger the business. Similarly, many individuals might consider earning six-figure salaries or a senior leadership position as a good enough benchmark for their personal efforts in a job or corporate environment.
But, I always step back and ask myself, “Will I be defined by the salary I take home or a position I hold from a job or profits from a business I run, or is there something else that matters more to me?”
One of the most sobering and realistic occasions in our life is when we go to a funeral. To see someone we know and love lying lifeless makes us all question our purpose in life and in this world.
Many of us remember those who have passed based on loving, sharing moments of fun and emotion. A loving aunt or neighbour who gave extra sweets? Or a loving grandpa who always let us play a bit longer in the backyard?
We’ve never really remembered someone because they owned a Rolls Royce or owned a Super Yacht. Possibly the reason why Bill Gates wants to be remembered for the difference his foundation makes more than the billions in his bank account.
Many times over, I have worked for and with companies who hold a very myopic view of putting their efforts solely on gaining short term sales revenue driven by a commission-driven sales team, without building a pipeline or value for their customers. If you assume that your customers are dumb to not know the difference, then it’s you that will be dumb ass in the end when they move to a competitor who gives them value, respect and attention.
A personal experience was a major retailer who I used to work for a decade ago. After being in business for over thirty years, the shops shut down. From turning over millions of dollars, they lost revenue in thousands week on week. How could that ever happen to such a big business with hundreds of customers, well-established brands and stores in best locations with good foot traffic?
The main reason was the business owner’s inability to recognise the changes ahead, and still stick to analog business models whilst the markets had moved onto digital age. A lack of awareness of what the ‘new’ customers wanted, how they shopped and what would appeal to them meant that he was engaging with the wrong audience.
So, let’s spend time on knowing and working towards our ROI?
For most businesses, revenue comes from reputation. What are your renowned for, and what do you stand for? What difference outside of the accounting books do you make in the environment around you for your internal and external stakeholders?
Reputation will build revenue and that will build long term returns that are sustainable. A good personal brand takes years of work to build but minutes to lose. Quick sales are essential for businesses but should not be at the expense of losing out on the long term strategy, purpose and growth of business.
If you’re an entrepreneur looking to make your mark, failure is more of a norm but your ability to network and collaborate with people will define how successful you can potentially be. A personal rapport will open more doors than just throwing dollars at everything. Your suppliers will work with you if you treat them as partners; your customers will buy from you if you listen to their needs and try to work with them.
Good luck with your efforts….it’s OK to make money but never compromise on your reputation as a person, business or brand. When times are tough, cash and connections are the first things to dry up, but your reputation will be the fifth gear that will get you over the hill.
*Please Note: All comments are my own and in relation to my own venture Tynderbox: Igniting your Innovation. These are not connected in any way to Reed Elsevier, LexisNexis and its affiliates.