Running a Small Business? Measuring ROI Will Make Everyone Happier

March 11, 2015 / by Raquel Royers

happy_employees_524027103What do you think when you hear or read the term ROI? Not too excited by the term, right? You know it’s important but we can agree it sounds pretty boring and dull. However, ROI may be more important than you think. Guess what? ROI ends up impacting people, the community, your employees and your company culture.

ROI always impacts the people of an organization. You care about people, especially the people that are involved in your company - your employees and your customers. This is why you should care about ROI and know more about it. If relationships and having happy, productive employees matter to you when it comes to running a small business, then so does ROI.

Let’s back up a bit. What is ROI?

ROI is short for return on investment. However, it’s much more than that. Return on investment will help you to see if the things that you are investing in are worth it, if they are helping to grow your business and if they are making you money.

Think back to 2001. Anything stand out to you about this year when it comes to business? Yep, the Tech Crash, or also known as the Dot-com Bubble. What went wrong here? People invested money in companies and bought stock in startups that didn’t have any product yet. On paper, it looked liked these investors and companies' ROI was doing really well, but ultimately there was really nothing to invest in. The ROI was in a bubble and a bubble eventually pops. Which it did and ultimately millions of dollars were lost.

Now, we’re not saying anyone could predict that was necessarily going to happen. But, if they had been paying attention to their ROI, they would be able to tell that it just didn’t make any sense. If you got in, bought and sold your stock or investment quickly, you made money. But if not, you lost it all, since there wasn’t anything to gain in the beginning.

When running a small business there are 3 different ROI’s to measure:

  • Financial
  • Employees
  • All the accouterments [equipment, etc.]

While measuring financial and accouterments are important and can have a drastic impact on your business, let’s go into more depth about the people, because truly what’s a good business without a good company culture and happy employees?

There are two types of ROI you need to know about. Knowing the difference between the two is especially important.

Hard ROI

Hard ROI is something that you can actually measure clearly. Hard ROI is objective.

Example: When you hire an employee you can calculate how many hours they are going to work, how much work they get done in an hour, how much it’s going to cost you, etc.

Soft ROI

Soft ROI is harder to measure. It’s subjective.

Example: You hire an employee and your clients love them, they fit right into your company culture and they produce quality work.

To find out what a good ROI is, you need tools to help analyze and calculate it. You need to know what to measure and how to measure it. ROI is important because it not only affects your financials, employees and customers but the success of your business as a whole. When you know how to calculate your ROI, it makes you happier, thus resulting in happier employees and a business that runs more smoothly. Inbound marketing can help you do this. If you want to actually know what you are investing your money in when it comes to marketing your small business, and be able to measure your efforts, inbound marketing is the answer.

Since 2002, Half a Bubble Out has been dedicated to providing marketing, advertising and small business consulting that meet the needs of our clients. We specialize in powerfully telling stories through inbound marketing to grow your business filled with more passion and provision. Based in Chico California, we serve clients throughout Northern California and across the country to New York. 

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Topics: small business, employee happiness

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