Return on Investment
There is no end of expenditures that we can make and find a way to justify whether it be an investment in a booth or recording facility, training or coaching, demo production, equipment - we all know how much we love our toys - marketing, conferences, and software subscriptions to name a few. With all that we have to learn in establishing and growing a successful business, it can be difficult to know what expenditures are truly warranted.
The calculation that should be employed is straight-forward and a cornerstone of the finance world. It’s the Return on Investment (ROI) calculation.
Say you’re thinking of doing a demo in a new genre, for example video gaming which we’ll estimate to be $2,000. Next, you’ll estimate your potential earnings from this specific income stream and let’s aim for $1,500 a quarter. The steps to calculate are as follows:
Annual estimated income = $6,000 ($1,500 X 4).
Estimated net income = $4,000 ($6,000 - $2,000).
Your return on your investment would therefore be 200% ($4,000 / $2,000).
Now go forth, invest in thyself and thrive.
