What Does ‘Return On Investment’ Mean For Small Business Owners?

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The COVID-19 shock last year shocked many local businesses as the government imposed intermittent closures and curfews. With most businesses closed and movement restrictions imposed, the Philippines experienced its biggest recession since the end of World War II, according to the Philippine Statistics Authority.

Fortunately, economic analysts expect a fragile but steady recovery in existing businesses in 2021, as economic activity gradually picks up, which in turn would usher in a rebound in growth. This year, the next steps for small and medium businesses are to survive and thrive by growing, growing and focusing on return on investment (ROI).

Recognizing the value of ROI is critical to business success, as most existing business owners know. Examining your annual return on investment helps you analyze and compare how your investment has performed over specific time periods.

The value of ROI

Return on investment is defined as the financial benefit received from a given business enterprise. With ROI, business owners can (1) determine the value of an investment and (2) monitor its performance.

The simplest formula to measure this is to divide the net profit, or the present value of the investment, by the cost of the investment. This simple equation, with a few inputs, tracks both profitability and business efficiency.

Investments made in marketing campaigns, maintenance and other things can also be easily monitored. The flexibility and versatility of the ROI make it a key performance indicator necessary for the profitability of the company.

Focus on business expansion as a goal

The number of existing companies makes competition tight. Stay on track to grow your business with essential tools and ROI as a measure of profitability.

Be the company that not only offers the best products and / or services, but also transparency. Say no to ulterior motives and unethical practices.

And before you grow, maintain a positive ROI momentum. A good indicator of business growth is when profits are steadily piling up.

Ride the waves with caution

Maintaining a positive ROI and watching your business grow can be exciting, but it also comes with its own set of challenges. Business expansion requires long term investments which more often than not mean money out of pocket.

A prudent but quick way to complete the capital investment is to obtain financing from a bank.

To help existing SMEs, the BDO SME Loan allows entrepreneurs to maximize their available real estate by using up to 70% of its value to obtain a business loan. Through its term loan, business owners can borrow a lump sum and installment payments to make monthly amortization more manageable. With the additional financing, entrepreneurs can meet long-term needs such as (1) the purchase of new equipment to increase production and (2) the acquisition of new warehouses or offices to modernize business facilities.

Making good business decisions can be intimidating, but it becomes easy when you find the right business partner. Go with it BDO SME loan. Get a quick calculation to help you with your loan decisions across the BDO SME loan calculator.

For any request, visit BDO SME loan today.

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