Business Decisions with Return on Investment

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by Sarah Chisholm
Financial Advisor, O’Farrell Wealth & Estate Planning | Assante Capital Management Ltd.

As a business owner, you are constantly faced with challenging decisions. What expenditures will help your business grow? What strategic changes can you make? What will add value to your operation?

January is the season of annual general meetings and crop conferences for farmers across Ontario. Having attended a few different meetings, one common thread has been the importance of evaluating the return on investment for cropping decisions. Does extra fertilizer add value? What about more spraying or using a different seed? Each of these extras adds to the input costs for the crop, but does it add value? Farmers track their own data with today’s technology, and they rely on experts and researchers who run trials throughout the year to provide test results.

Taking the time to assess the return on investment is a great practice for any business owner whether they be a farmer, crop consultant or any retail/commercial business. For any business owners out there, grab your favourite cup of tea or coffee and start thinking about Return on Investment (ROI).

Focusing on ROI means looking at your inputs and analyzing which ones have added value. For farmers, this could be the cost of the extra round of spraying – did it increase yields or did the larger combine reduce labour costs? For another business, it might mean looking at marketing expenses from last year to see which advertisements or events were the most successful and to what extent.

The best time to start looking at your ROI is now. Start now and know that it will get easier as you begin to understand what inputs you need to track in order to make the analysis. 

For most businesses, marketing is a great place to start your analysis. If you break down all your marketing costs, are you able to track exactly where specific advertisements or events added value? If not, is there a way to update your tracking systems to make it easier to collect information? Having the information allows you to make informed decisions on which marketing practices to invest in and which ones to leave behind.

Consider another ROI – rest and relaxation. As a business owner, you may feel tied down by the business and always wanting it to improve it. Do you find it difficult to step away from the business for a vacation? January is a great time to look back at your vacation and time off from 2022. Did you take enough time off to truly feel relaxed? Did you experience any burnout in 2022? It may seem counter intuitive, but try booking more time off in 2023. Test out the return on investment for rest and relaxation. How much more efficient can you be in 2023 if you have quality time off?

Return on investment is a simple calculation if you have the data. So, start thinking about what ROI calculations you can analyze now and which ones you would like to run. Take a cue from our Ontario farmers and start implementing processes to collect the data and build ROI into your regular business calendar. A trusted financial advisor can help steer you towards which ROI calculation will bring the most value to your business practices.

We welcome questions so please reach out! See our ad in this week’s North Grenville Times and follow us on Facebook @OFarrellWealth.

Sarah Chisholm is a Financial Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please contact her at 613.258.1997 or visit ofarrellwealth.com to discuss your circumstances prior to acting on the information above. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.

 

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