Let's Break it down!
First you're going to break down your basic financial ROI numbers.
How much are you going to invest in the project over it's first 5 years, and how much Estimated Revenue will correspond with the investment, leading us to Annualized ROI.
Now this is optional for smaller businesses, but your solvency ratio is important for long term stability. It allows us to view what the effect on solvency will be when implementing this initiative.
If the change is huge, that may be a sign that your risking a lot by doing this.
If your solvency ratio is not going to change by doing a small initiative, don't worry about it.
What are other companies seeing when they do this initiative? What's the comparative Rate of Return for other people that have already gone through this pathway?
Shameless Plug, That's why the inner circle mastermind meetings are so important, you're going to be able to ask the hard questions that will lead to enlightening answers from some of your other mastermind members.
And what are you missing out on by doing this?
Initiatives cost resources, they expend your team's time and effort, as well as your capital. Sometimes you have to choose to do one project over the other because you simply don't have the capital to do both?
What are you missing out by implementing this initiative?
Make sure we're evaluating our top Financial Risks!
- How likely is it to happen, how severe will it be when it does?
- How can we mitigate these risks?
- Are these risks TOO risky for our business?
Discount Rate Applied NPV -
Simple P/L applied to clients and the acquisition costs.