You Are Here: Home > Articles > Home Business > Article

A Lesson In Business R.O.I.

by Jay Abraham

Most business owners, entrepreneurs and professionals don't appreciate the power and profitability of what I call "Business R.O.I." You probably already see the logic of investing in stocks, bonds or real estate, based fundamentally on a "Return On Investment" basis.

Specifically, if I told you that you'd get a 35% return on a specific passive investment, with little or no downside, you'd do it all day long...wouldn't you? You'd probably actually consider going out and borrowing money at the 5-7% rate it's currently at; because you'd make 600% annually on your money.

Types Of R.O.I.

In real estate, astute investors look at either "cash-on-cash" return, the spread from acquisition cost to appraised value, and/or expected appreciation...to gauge both the merits of the investment—and the positive cash flow it can throw off every month/year.

When people pursue specialized education, i.e. a law degree, a medical degree, advanced technical training, etc., you either consciously or subconsciously do it because you know it will dramatically increase your income, competitive advantage and—yes, your R.O.I. Parenthetically, a recent research study I read said the average college graduate now earns over one million dollars more in their working lifetime [that's $30,000–$50,000 more each and every year] than those without degrees.

In the intangible sense, we all do things because of what I'll call R.O.P.I. (Return on Physical/Psychic Investment). You invest in relationships for the payoff—love, marriage, family, children, companionship, intellectual stimulation, sex, etc.

Those of you who are employees invest your "career capital" in the business you invested or "committed" your career to, in hopes of a rich, long-term return on that lifetime investment.

Now, let's "fast forward" to YOU—the business owner, entrepreneur, startup business or professional in private practice.

It Is All About The "Return"

You may never have thought about this before, BUT EVERY financial, strategic, personal, personnel, or equivalent commitment you make—should ONLY be done—if it yields an acceptable R.O.I. (Return on Investment)...R.O.E. (Return on Effort)...R.O.O.C. (Return on Opportunity Cost)...R.O.I.C. (Return on Intellectual Capital)...R.O.R. (Return on Resources)...R.O.R. (Return on Risk), etc.

Just like in stock/commodity investing, you can look at safety, yield, growth, risk...and most importantly of all— rewards!

How To Be Rich

In his famous best selling book, entitled "How to Be Rich" legendary billionaire, J. Paul Getty taught that:

1. The only way to make a great deal of money in the business world is in one's own business.

(Personally, I think that a business is the ultimate wealth creating vehicle. It dwarfs real estate, investing...anything but probably inheritance. You've got multiple financial levers you don't have available anywhere else.

For one, through marketing you can multiply the performance of 50 financial impact points in your business. For two, If you like real estate you can have the business buy and service the debt with some of the profits/cashflow your marketing generates. For another, there's no real estate that can increase your cashflow by as much as 21 times in a single year—which you can reaslistically do in one year with marketing.

And finally, every incremental profit dollar my marketing makes you, that you can systematize—so that it recurs, is worth, five ten, twenty times more when you are tired of the business and you want to sell it. No real estate, no stock, with the exception of the Internet dotcom bubble-boom, could ever do that for you.)

2. Legitimate opportunities for expansion (meaning finding new selling approaches, or marketing methods, opening new markets, creating new distribution channels, adding new products and/or making new acquisitions) should never be overlooked.

3. The business owner must constantly be alert for new ways to improve his/her products and services—and increase sales. Use prosperous periods to find ways to improve your revenue generating techniques.

4. A business owner must be willing to take risks—to risk capital—when the risks are fully justified.

5. A business owner must constantly seek out new horizons, untapped opportunities and under exploited markets.

It should go without saying that business owners must be constantly alert for bigger, better more profitable ways to increase revenues. Yet, it is a sad fact (from my experience) that many business owners barely comprehend...and act on this immutable reality.

Risk Vs. Reward—Explained

You've heard the old saying, "You have to spend money to make money." But I think it's misinterpreted by most of you. I agree that anyone who desires wealth and success in business must have imagination and be far enough sighted to continuously engineer breakthroughs in marketing, innovation and strategy. You must also be willing to spend and cautiously risk money—but only when the expenditure is justified and the risk is carefully calculated to be worth it.

You can't thrive by being a penny pincher or money grubber. You need to strive to increase recurring revenues and thus vastly multiply your profits. And, quite frankly, the healthier your marketing, the better and bigger your profit... and personal income will always be.

You must direct every effort and action possible to take advantage of profitable opportunities for expansive growth and prosperity. You need to know what (and where) those opportunities are to optimize your long-term business success.

A business owner who understands this fact of business life—and acts on it accordingly—is well ahead of virtually everyone else in your competitive fields.

Make The Impossible...Possible!

A good sense of marketing R.O.I., combined with imaginative foresight, are two powerful factors that can make the impossible, possible! Your willingness to commit time, effort and, yes, capital to what I call marketing/revenue-R & D can (and usually does) prove the critical/decisive difference between mediocrity and millions.

I think one of the most valuable assets you can learn to possess is the ability to see the upside potential and economic payoff, or business R.O.I. in a given opportunity, proposition or new and uncharted marketing activity.

Most people are seldom born with this ability. Rather it's a developed, acquired, refined, fortified skill. That's why so many people procrastinate, equivocate, avoid taking any chances or pursuing worthy opportunities or embracing promising growth situations for their business. They've not yet grasped the ROI potential these activities offer.

But once YOU discover, then develop the ability to commit, embrace and enthusiastically pursue these decisive growth and prosperity actions—your chances of multiplied success and a rich, prosperous future are greatly enhanced.

But without this mindset, you and your business, practice or startup enterprise can go only so far—or even fail, altogether. I've seen many otherwise promising startups turn into business failures, just because they lacked this capacity. Because they couldn't...they wouldn't invest and focus on new ideas, on new selling approaches, new marketing methods, creating new products, finding new markets, etc.

If you can't see the lucrative possibilities at hand, you're doomed to business mediocrity, pure and simple!

All the prosperous business owners I've known or helped made their biggest strides, because they were able to see possibilities which others either ignored or rejected as not being worthwhile enough to pursue.

The point I'm making?

The supremely successful business owner learns to make the right choice and invest in what's possible. He/she looks at the business R.O.I., what it costs vs. what the payoff potential, i.e., the competitive and economic difference a given new action, opportunity or investment can make to the ongoing prosperity of their enterprise. They quickly see what is the downside cost VS. what is the maximum upside reward their company stands to gain.

When and if the downside is low or affordable, while the upside is huge and can transform your business' entire fate and financial destiny—they act—without hesitation. I know this to be fact. When Jim Cook let me create all new marketing, selling, and distribution systems for his business, and, in essence bet on me—we increased his revenue 100 fold and put an eight figure income bonanza into his pocket.

How Do You Look At And Evaluate Your Opportunities?

When most business owners examine the case for doing something new, they tend to only see the flaws, pitfalls, negatives and problems—not the upside growth, profit improvement or competitive edge. It's really all up to you.

Which brings me back to my original focus—the R.O.I. of business. I've spent my entire adult life trying to help business owners find hidden profit opportunities, overlooked revenue streams, money-multiplying marketing activities they didn't previously maximize.

I've taken my 450 different industry experiences and shown entrepreneurs how to add New and Better marketing approaches, revenue streams, profit centers, selling systems, sales channels, and products or services. I've taught them how to get bigger, better average sales, add many additional streams of income, and even acquire their competition for no out of pocket costs.

Recently, I announced my interest in finding a few promising businesses to work with long term...to add new sales systems, engineer revenue breakthroughs, mastermind ingenious new marketing approaches, create fresh profit centers. I wanted to find people who really "GOT" the economic of business R.O.I. People who realized that if you invest $1 and got back $4 or more net, net each and every year—or more from that one investment...that's a fabulous investment to make, all day long!

I wanted people who realized the R.O.I. of getting new prospects, customers or clients from higher yielding new sources...or getting prospects for 1/2 or 1/4th their current cost of acquisition they're presently paying.

I wanted to find people who recognized that adding one new revenue stream alone, could double, triple even quadruple your business' bottom line. That creating even only one new distribution channel could make your business up to 20 times more profitable. I wanted to find business owners who know that adding new products or services can double, triple, or greater increase the lifetime value and income streams a given buyer is ultimately worth to you.

I wanted people who clearly understood the business R.O.I of getting many new joint ventures, strategic alliances and endorsers on board, to produce hundreds, thousands maybe even tens of thousands of new "first time" buyers— all on a "pay-only-for-results" basis.

I wanted people who really understood and clearly "get" the geometric growth capabilities my Three Ways to Grow a Business model, combined with my Power Parthenon could rapidly add to your business' bottom line—IF you really put it into full blown action.

I wanted people who "get" that every recurring dollar of pure profit I could add to your balance sheet—turned into $5, $10, $20 or more that you'd be paid when (and if) you ever wanted to sell that business.

I wanted to find business owners who "got" my marketing mindset and methods—who could do the R.O.I. math, but had not yet fully applied everything it could do for them.

I'm still looking for a dozen, or so businesses who fully understand the power and profitability that this kind of business R.O.I. can mean to your economic future.

I'm currently, entertaining working very long term (2–10 years) with a handful of you—to massively grow and multiply your business income and prosperity.

The deal I'm offering is attractive to the right qualified prospective companies. I'll receive a base fee for 6, 9 or 12 months (depending on your situation) to keep you committed with some "skin" in the game, long enough for us to unleash the hidden wealth in your business.

How specifically I do it, will depend totally on where your biggest, best overlooked opportunities exist right now. Then we'll devise a long term rollout strategy that's all 100% internally financed from increased profits I generate for you.

But after I get the ball started and rolling—my base fee stops entirely; and I only share in the increased, new found, windfall profits my creative efforts bring you—four dollars in net profit goes to you even before I make one. Four to you. One back to me.

You're always 3 times better off than I am.

If you are a solidly profitable, reasonably well capitalized business, have enough R.O.I. vision to see the upside, make the commitment and go the distance—contact Rick Duris, my colleague, at 1(847)217-3039 and he'll tell you everything you need to know—to see if working long term with me is the right business investment for you.

I have my other products, programs and services—all of which R.O.I. 5, 10, even 100's of times your modest investment. But with all of them...YOU have to do all the work for yourself.

With the proposition I'm making here—I do everything for you. I do the creative, marketing, masterminding, set up the deals, etc. You just bank all the increased rewards.

Contact Rick if you really do "get" the big vision concepts of business R.O.I. His contact number is 1(847)217-3039. Or e-mail him in confidence at rick@abraham.com.

How Serious Are You About Growing Your Business?

In closing, here are some other important factors to think about if you're truly serious about growing your profits many times over by finally letting the power of marketing based business R.O.I. thrust you forward many rungs higher. I think you'll find these points as stimulating as the thoughts I've just shared above.

I learned from master marketers, who were great entrepreneurs (that became legendary income earners) this secret:

That every time you got your ads pulling better, every time you got your prospects converting higher, every time you got your buyers spending more and then buying more often, every time you figured out how to add any new revenue streams to your existing business model, every time you got another new distribution channel (like a profit sharing/no-cash advertising relationship or a major affinity group or many different groups) to do a long term strategic alliance/endorsement—your income earning capability multiplied over and over and over—again.

I probably have a significant advantage over you. I've personally seen my clients (and my own) income grow by ten times over…just by using this "R.O.I.-Based" Income Multiplying Formula. I've actually seen previously average earners amass seven and 8-figure paychecks doing it.

So why don't YOU embrace the power of this infallible money multiplying dynamic more seriously and completely? When we talk to people on our list, it amazes me how little they understand (or use) the positive force this financial dynamic can deliver to their bank accounts.

I provide many different programs and seminars that focus 100% on getting businesses massively higher R.O.I. on their marketing, advertising, opportunities, assets, capital, etc.

But if you continue doing the status quo, you can't, YOU WON'T possibly achieve any of the upside financial richness you're entitled to claim.

"Beat the Pants Off" Your Competition

By the way, a major new business book just revealed that the traditional "top-down" business model is getting the pants beaten off it by what is called a "Networked Business Model" or NBM—where the business starts engineering joint ventures, outsourcing, revenue sharing partnerships.

NBM keeps your overhead low, outsources key expertise to specialists who can do certain key activities bigger, better and they get paid mostly on performance—in direct proportion to the success and impact their efforts/actions have on the bottom line.

I've long advocated using performance-based strategic alliances to maximize and multiply your profit boosting abilities. It's a huge opportunity—if your business can take full advantage of its radically "non-traditional" operating and compensation structure. That requires expert guidance, like the kind I provide in our group programs or in my private, long-term work with ongoing profit sharing clients.

I think strategic alliance-type networking offers a business like yours the preferred form of competitive advantage today. You gain maximum flexibility, maximum response, maximum experience for minimum time, effort, expense or risk. It's virtually guaranteed to improve your business productivity and profitability—frequently by multiples of 100% or more! You really need to understand and examine THIS powerful approach to profit building, just to stay competitive.

Creativity Makes Your Business Money

The business world finally realized that creative thinking can make their businesses a lot more money. New ideas, approaches, methods, solutions and strategies have been conclusively proven to drive massive economic business growth. Creative thinking is crucial to YOUR business today because it produces new forms of approaches, products, and revenue streams.

Creative thinkers solve challenges, competitive/revenue/profit boosting problems. Cheap labor or greater productivity-alone is no longer enough to guarantee your business economic/financial superiority and prosperity. Your economic success rests more, in my mind, on getting new ideas into your business and using them to thrive in changing circumstances.

Creativity is the key factor in making more money today. There is more demand and need for creativeness in your business than ever before—creativity produces measurable, tangible business R.O.I. so great, few other business approaches can equal.

The Key To Greater Profits...

FINALLY, the key to greater profits lies in increasing earnings through targeted results. You need to find specialized experts who are masterful at delivering the targeted results (i.e., greater advertising results, greater size units of sales, more sales per customer, more revenue channels, etc.).

This need is critical and will always BE the highest demand your business can attend to. In the 21st century the greatest determinant of your maximum business success will prove to be your ability to creatively collaborate with these specialists—revenue growth experts, marketing experts and networking resources who possess the skills, abilities, experience, expertise, contacts and mastery your business lacks.

Copyright, all rights reserved 2005 Jay Abraham

As the founder and CEO of Abraham Group, Inc. in Los Angeles, California, Jay, considered "America's #1 Marketing Genius", has spent the last 25 years solving problems and significantly increasing the bottom lines of over 10,000 clients in more than 400 industries worldwide. Jay has seen and dealt with every type of business you can imagine. And he’s studied and solved every kind of business question, problem, challenge and opportunity.

Share this article: