Updated: May 16, 2022
Return on investment, or ROI, is a metric for determining your company's profitability based on your various business investments and the profits created by these investments. The performance of your company's ROI can have many effects on your organization.
A high return on investment (ROI) suggests that the venture yielded significant earnings. However, it's more than a metric for assessing the viability of your new investments. Maintaining a high business ROI impacts the total cost of ownership, R&D, employment security, business continuity, and many other factors.
It Provides a Monetary Metric
The fundamental purpose of a business ROI is to provide a way to quantify the success of your company per dollar invested. It allows you to assess how well or poorly certain investments perform, allowing you to make informed decisions about which to maintain and which to sell. For example, an investment with a positive business ROI is worthwhile to keep, whereas we must avoid one with a negative ROI at all costs. It also allows you to compare various profitable assets to make the best decisions.
Increase the Total Cost of Ownership (TCO)
The total cost of ownership, or TCO, is the sum of an asset's purchase price and the total running costs over its lifetime. Your total cost of ownership on your various assets will rise as your business's return on investment rises.
Increased Access to Innovation Resources
The more money your company makes, the more vital resources become available. You will have started a sustainable cycle of earnings that will give you funding for research and development once you set up your business plans and strategies to generate a good business ROI.
Reduce Squandered Funds
Careful planning is essential every time you consider investing. To maximize your chances of earning a positive ROI, research the viability of each investment. Because you never know if an investment will provide you with good returns or not, there will always be some risk, but with careful thought and planning, you can stick to the business investments that are more likely to give you the best outcomes.
The strong performance of your personnel is one of the contributing factors to superior business returns. When your employees produce excellent results, there will be no need to cut or rearrange your team. A strong business ROI boosts your employees' job stability and may even provide them with better benefits and bonuses.
An Advantage in the Market
A company's principal purpose is to gain a competitive advantage over its competitors. Sustaining a good return on investment gives you a distinct advantage over your competition, making you more appealing to new clients. Potential clients and customers don't just look at the final product or service you provide. They also look at the internal workings of your company, which is why having a positive business ROI is a distinct benefit.
How an MSP Can Help You Increase Your Profits
It is well worth your time and effort to devote significant attention to improving your business ROI because, as you can see, it may impact various aspects of your organization. Increasing your revenue isn't the only way to improve your results. It also has several advantages for your company, employees, and customers.
Working with a reputable managed service provider is one method to ensure that your investments yield a positive return on investment. Your MSP can supply you with tools and tactics to help you stay on track to meet your objectives and generate the profits you expect.
If you'd like to learn more about how an MSP can help your business improve your ROI, contact us to discuss how our services can help you increase your profits and overall business performance.