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  • #978012
    Vilson
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    Hello Friends,

    I just want to ask that how much ROI(Return on Investment) you can Expect with your Business, for first year?

    Say for Example: $100 k investment

    Thanks and regards,
    Vilson

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    #1104138
    TehCamel
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    Hi Vilson,

    The ROI you can expect on your $100,000 investment in the first year is roughly equivalent to the length of your shoe lace, when multiplied by your average service rate, but divided by the number of widgets you service.

    (what I’m trying to say here is, noone can tell you what your ‘expected’ RoI on anything might be, without specifics.)

    It’s also entirely possible that I’ve misunderstood what you’re trying to ask..

    #1104139
    Shaukat Adam Khalid
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    For me, it’s should be at least 200% (double) with the scalability to redouble the next year ie 400%.

    Then again 100k is too much to invest unless you’ve already got a million dollar business.

    #1104140
    Steve_Minshall
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    TehCamel is correct there is no figure.

    Oh Kahlid we so much live on different business planets! 100% ROI in the first year? This is not impossible but it is extremely unlikely. It is certainly not an expectation and shouldn’t be put across as though it should be.

    So I invest $100k which returns me $300k profit on top of the costs involved in delivering my product/service including my own wages (assuming my time is actually required). I’m in! Where do I send my $100k?

    For me comparisons to ROI should be based on what the money would be doing if you just stuck it in the bank/offset your home loan getting 7-8% interest. In this case a 15% return on investment would be worthwhile.

    The first year in business is tough and things happen much slower than you expect. Also it is very difficult to actually measure ROI because you can greatly influence the figure by deciding what your own wages (not included in ROI) should be.

    Honestly any ROI in the first year is a good start.

    #1104141
    Shaukat Adam Khalid
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    Steve,

    100% is the low end and if you recall, i said $100k is too much unless you have a million dollar business.

    I’ve been involved in real estate, stocks, futures, currency, etc and nothing, i mean nothing produces the returns like direct response, accountable marketing.

    Sure it requires testing and that’s why 100% is a conservative figure to me. I also don’t believe in branding unless it’s a byproduct of direct marketing.

    15% is too low because the risk is much higher in business.

    What is the chance of you losing your money in the bank vs investing it in a business? returns have to be adjusted to address the huge risk.

    It’s never been a money problem. Always been a thinking problem. This is where a strong marketing strategy comes into place.

    Would you believe me if i told you that since the GFC, i have been thinking about creating an “investor group” that invests in high ROI marketing strategies?

    Notice, i did not say businesses but marketing strategies

    Steve_Minshall, post: 115608 wrote:
    TehCamel is correct there is no figure.

    Oh Kahlid we so much live on different business planets! 100% ROI in the first year? This is not impossible but it is extremely unlikely. It is certainly not an expectation and shouldn’t be put across as though it should be.

    So I invest $100k which returns me $300k profit on top of the costs involved in delivering my product/service including my own wages (assuming my time is actually required). I’m in! Where do I send my $100k?

    For me comparisons to ROI should be based on what the money would be doing if you just stuck it in the bank/offset your home loan getting 7-8% interest. In this case a 15% return on investment would be worthwhile.

    The first year in business is tough and things happen much slower than you expect. Also it is very difficult to actually measure ROI because you can greatly influence the figure by deciding what your own wages (not included in ROI) should be.

    Honestly any ROI in the first year is a good start.

    #1104142
    T J Madigan
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    For a baseline ROI standard…
    An astute investor would require minimum 20% ROI per annum if they were to invest in your enterprise.

    #1104143
    AgentMail
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    If you are talking about your own ROI from a business start up, I’d say you’d be happy to break even at the end of year one. Surely that is what most businesses would love to do?

    Again, TehCamel is right, it depends on so many factors, it is basically a rhetorical question.

    #1104144
    Steve_Minshall
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    Khalid Adam, post: 115616 wrote:
    Steve,

    100% is the low end and if you recall, i said $100k is too much unless you have a million dollar business.

    Are you saying 200% or 100%? Or some other nebulous figure in between?
    The question is realistic (although lacking in detail) in that $100k would be a reasonable amount to invest on start up costs. We are not talking about investing in an already established business.

    Khalid Adam, post: 115616 wrote:
    I’ve been involved in real estate, stocks, futures, currency, etc and nothing, i mean nothing produces the returns like direct response, accountable marketing.

    Sure it requires testing and that’s why 100% is a conservative figure to me. I also don’t believe in branding unless it’s a byproduct of direct marketing.

    ‘Direct response marketing’ is not a magical silver bullet its just another way of getting your stuff in front of a consumer. It may be able to get big bucks very quickly IF you get it right but it is very speculative . Just ask Big Kev.

    “But wait there’s more…”:p

    Direct response marketing is not a business in its self, it is just a channel used to get product to consumers. You still have to have a product that people want. Just because you come up with an awesome campaign doesn’t mean you can sell any old rubbish. And if you hit gold and sell big time you still would have had to invest (or speculate) in procuring/making the goods. You still have to manage the logistics of supplying those goods.

    Sure there have been great successes but it is not just marketing. The successful companies don’t just fire up a marketing campaign and count the dollars. They run a logistics company with expertise in procurement, warehousing, transport not to mention the after-sales customer service burden that are inevitable with high volume logistics.

    Khalid Adam, post: 115616 wrote:
    15% is too low because the risk is much higher in business.

    What is the chance of you losing your money in the bank vs investing it in a business? returns have to be adjusted to address the huge risk.

    Of course you want better returns but that doesn’t mean that in reality anything other than an extraordinary business delivers more than modest (sub 15%) returns in its first year.

    Khalid Adam, post: 115616 wrote:
    It’s never been a money problem. Always been a thinking problem. This is where a strong marketing strategy comes into place.

    Would you believe me if i told you that since the GFC, i have been thinking about creating an “investor group” that invests in high ROI marketing strategies?

    Notice, i did not say businesses but marketing strategies

    No Khalid that does not surprise me. But if anyone offers me a deal predicting more than a 15% return then I don’t see it as investing I see it as speculating.

    I get frustrated with what to me are glib claims of 100% …200% ROI because it belittles the efforts and expectations of the good folk here who are battling away trying to build something with very little reward in the early days.

    I have a million dollar business. It is not sensational but, it is solid, secure and growing steadily. I pull a decent income from it and I am proud of it. However, I earned nothing in the first year and it took me 4 years before my income was better than my previous corporate wage and probably 6 years before I actually caught up to where I would have been if I’d stayed employed.

    Now the path I followed will not get me in the BRW Rich List but it is the path that many new business owners aspire to follow. It is a path of modest returns, modest growth and hard work over all disciplines (not just marketing).

    I am happy to come back in a years time and eat humble pie when you have made your 200% ROI but in the mean time spare a thought for all those small business entrepreneurs who are happy if they managed to cover their home loan payments and sell a few more widgets this month than they did last month.

    #1104145
    Vilson
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    Hi Friends..

    Thanks for your time..Now i got some more idea……

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    #1104146
    Shaukat Adam Khalid
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    Vilson,

    sorry for hijacking the thread. This is my last post on this thread so others can contribute.

    Steve, my final response because i don’t want to argue:

    1. Anything less than 100% ROI is a waste of my time. The only reason it’s not common is because most businesses do not start with the end in mind.

    2. IF i were to invest money in someone else’s business, 100% ROI would still be a minimum as long as i handled the marketing, the business is 3yrs+ old, operationally sound, great products/service and happy clients.

    3. Direct marketing is a vehicle to attract and retain clients which is the essence of creating predictable income and a scalable business. Big Kev didn’t understand money management.

    4. I empathise with those who are struggling but i’m not going to retract my statement to please others. Vilson asked a question and i answered.

    5. I know this might annoy others but most people who enter business should not be in business – even if they’ve made millions in their first few year. How many businesses last to their 10th year? i would say less than 30%.

    6. The problem with most “entrepreneurs” is that they are product focused. They don’t understand the dynamism of the business world.

    Business in my experience is all about turning lemons into lemonades. today it might be a gap in the hospitality industry. tomorrow it could be in ICT. My role is to identify those gaps and profit from closing them. Simple.

    The biggest gap i see in every industry is client attraction and retention. I don’t consider myself to be a solutions provider. I see myself as a problem solver. big difference.

    7. In regards to the below, what you are advocating is a high risk approach to running a business that deals with hard products.I Would never run it this way and i don’t understand why most do.

    I don’t like dealing with commodities or goods but if i have to, i would only produce/ procure/ supply once it’s pre sold with a deposit that covers the cost of production. I would not stock inventory and then go to market hoping that people would buy. Not very wise.

    Secondly. I would not sell based on cost of production and thin margins or target budget clients who tend to complain the most. In short, i would not have anything to do with a business that relies on high turnover/volume.

    I would only target the mass affluent. fewer clients, high margins.

    Hopefully you understand where i am coming from. If not, let’s leave it. Not here to sell anything or acquire clients / investors.

    I feel for the mom and pop but we need to be realistic. They don’t survive in the long run. Sympathy does not help them when they have lost their business, money, house, marriage and self confidence.

    It’s ok if people hate me for giving them a wake up call. I have met far too many “broken” people who failed in business and equate it to failing life.

    It would be better if they just quit while they are ahead and still have their family / sanity.

    Direct response marketing is not a business in its self, it is just a channel used to get product to consumers. You still have to have a product that people want. Just because you come up with an awesome campaign doesn’t mean you can sell any old rubbish. And if you hit gold and sell big time you still would have had to invest (or speculate) in procuring/making the goods. You still have to manage the logistics of supplying those goods.

    Sure there have been great successes but it is not just marketing. The successful companies don’t just fire up a marketing campaign and count the dollars. They run a logistics company with expertise in procurement, warehousing, transport not to mention the after-sales customer service burden that are inevitable with high volume logistics.

    #1104147
    DJ_m
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    vilson, post: 115436 wrote:
    Hello Friends,

    I just want to ask that how much ROI(Return on Investment) you can Expect with your Business, for first year?

    Say for Example: $100 k investment

    Thanks and regards,
    Vilson

    You have most of the answers above insofar as ‘how long is a piece of string’.

    100% ROI in year one is just a pipe dream. Anyone who claims that this is realistic should show us figures of businesses that they have run that have generated this.

    You can’t measure ROI in dollar terms in year one in a business. It is not like investing in stocks or commodities. At least not in terms of EBIT or profitability. If your business is acquiring assets the you would need to measure your assets. If you have assets such as stock then you can make a financial measurement. If you have assets such as intellectual property or customers it is harder to measure.

    Take one hundred thousand dollars and consider the actual COST of that money over year one. If it is your cash in the bank then the cost of that $100k would only be the amount of interest you would have earned less any depreciation or loss dependent on what you had spent the money on.

    For example; If you take $100k cash that was earning you 5% and invest it is an asset (goods or property) that holds it’s value over one year then your investment is only $5000, not $100,000. If you used the $100,000 to pay yourself a salary then your investment would be $100,005 (the salary less the loss on earnings).

    More realistically you will start a business with $100k. That $100k will be split on various costs. Some of those costs may be on capital expense which you will depreciate over some years. Other costs will be on direct expenses and other costs will be on goods/stock that you will still hold at the end of the year. You’ll need an accountant to tell you exactly what you have invested and what your return on that money is. Some of your investment, whilst an upfront cash payment, will be spread over many years.

    What you should focus more on, in my opinion, and from experience with large corporates is not ROI in the dollar sense but how much revenue (turnover) you can produce from you $100k and what %EBIT you can deliver on the revenue together with the increased value of the business over the same period.

    Ask any successful investor, let’s take the most successful – Warren Buffet, and very few of them will focus on a return in year one. They are far more interested in long term capital growth than a percentage return in any given year.

    What you should be saying is; What will my $100,000 be worth in five or ten years rather than what ROI should I expect in year one.

    If you can turn $100k in to $1,000,000 revenue p.a. after 5 years with an EBIT of 10% then you have a return on sale of 10% for that year. This business may have a value of 3-5 times EBIT so could be worth $500,000 which is 500% on your initial investment (less costs plus yearly returns). You can’t possibly know this after year one and even if your ROI in year one was 0% then that would be just fine.

    #1104148
    T J Madigan
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    DJ_m, post: 115703 wrote:
    100% ROI in year one is just a pipe dream. Anyone who claims that this is realistic should show us figures of businesses that they have run that have generated this.

    This is from your perspective only.

    Case 1:
    * the beginnings of a profitable business generating +100% ROI from the first week of operation.

    20 years ago I was unemployed. I went to the markets and bought a bin of apples for $120. From the bin of apples I bagged 120 3kg bags of apples and sold them door to door for $3 per bag. Cost: Apples – $120, Bags – $10, petrol – $30
    Total investment = $160
    Total ROI = $360 (+100%)

    Case 2:
    30 years ago (as a teenager) I wanted to start a lawn mowing business. Lawnmower cost – $10, income produced from lawnmower $550, outgoings (advertising, fuel, etc) $50
    Profit – $500 in 1st year
    Total ROI – +100%

    Case 3:
    One of my clients. An already established business with regular average 300k annual turnover.
    Additional marketing investment – $18k p.a.
    ROI 1st year – $360k in increased revenue (+100%).

    Some business models do allow for 100%+ ROI, others do not.

    #1104149
    Steve_Minshall
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    Khalid Adam, post: 115666 wrote:
    Vilson,

    sorry for hijacking the thread. This is my last post on this thread so others can contribute.

    Steve, my final response because i don’t want to argue:
    Oh please Kahlid stay with me I’ve been meaning to debate and flesh out your stellar marketing strategies for ages. Vilson has his answer which is rather unhelpfully somewhere between ‘be grateful for anything’ and ‘200%’.

    I’m sure he won’t mind if we hijack his thread to find out how we can get a 200% ROI.

    Khalid Adam, post: 115666 wrote:
    1. Anything less than 100% ROI is a waste of my time. The only reason it’s not common is because most businesses do not start with the end in mind.

    That’s just setting a goal. I can target any ROI I want but all the ‘laws of natural attraction’ and ‘creative visualisation’ in the world won’t deliver it unless I am realistic and have an offering of substance to deliver.

    Khalid Adam, post: 115666 wrote:
    2. IF i were to invest money in someone else’s business, 100% ROI would still be a minimum as long as i handled the marketing, the business is 3yrs+ old, operationally sound, great products/service and happy clients.

    Why 3 years old when it is apparently achievable in year 1? Why great products/service I thought that was irrelevant?

    I am genuinely interested to hear about your past 100%+ ROI investments. Please tell.

    Khalid Adam, post: 115666 wrote:
    3. Direct marketing is a vehicle to attract and retain clients which is the essence of creating predictable income and a scalable business. Big Kev didn’t understand money management.

    So it’s not all about the marketing?:confused: A business does have to invest in its financial systems as well as its marketing after all?

    Khalid Adam, post: 115666 wrote:
    4. I empathise with those who are struggling but i’m not going to retract my statement to please others. Vilson asked a question and i answered.

    No one wants to be pleased, people are just confused. I am not asking you to retract your statement I am asking you to put some substance and explanation to your answer to give it credibility. So far all I have got is that your idea is to target rich people with a direct response marketing campaign ..sorry strategy.

    Khalid Adam, post: 115666 wrote:
    5. I know this might annoy others but most people who enter business should not be in business – even if they’ve made millions in their first few year. How many businesses last to their 10th year? i would say less than 30%.

    Sure but irrelevant to the debate.

    Khalid Adam, post: 115666 wrote:
    6. The problem with most “entrepreneurs” is that they are product focused. They don’t understand the dynamism of the business world.

    “Dynamism of the business world” so that means you need to keep an eye out for changes and opportunities and develop the business to capitalise on them? Don’t most business call that Research and Development? So its not all about the marketing then?

    Khalid Adam, post: 115666 wrote:
    Business in my experience is all about turning lemons into lemonades. today it might be a gap in the hospitality industry. tomorrow it could be in ICT. My role is to identify those gaps and profit from closing them. Simple.

    Simple.

    Again love to hear some of your past successes and the key things that made them successful..

    Khalid Adam, post: 115666 wrote:
    The biggest gap i see in every industry is client attraction and retention. I don’t consider myself to be a solutions provider. I see myself as a problem solver. big difference.

    So are you going to use direct response market to help businesses attract/retain clients?
    But you are not going to provide a DRM service? Are just going to charge your customers to tell them how to do it?
    Or are you going to use direct response marketing to attract customers so that you can fix any problems that they may have.

    Kahlid I am not trying to be facetious I am just genuinely confused about what you are espousing.

    Khalid Adam, post: 115666 wrote:
    7. In regards to the below, what you are advocating is a high risk approach to running a business that deals with hard products.I Would never run it this way and i don’t understand why most do.
    No my business was a low risk, build slowly on past gains to become an expert in the field while keeping a look out that your field doesn’t become irrelevant. Invest small amounts of money and lots of effort to slowly grow a sustainable enterprise that keeps pace with what the market in your niche wants.

    Khalid Adam, post: 115666 wrote:
    I don’t like dealing with commodities or goods but if i have to, i would only produce/ procure/ supply once it’s pre sold with a deposit that covers the cost of production. I would not stock inventory and then go to market hoping that people would buy. Not very wise.

    Then you are not talking about ‘direct response marketing’:confused: Direct response marketing relies on having a warehouse full of stuff, a big bang advert that customers respond to straight away and you empty the warehouse the next day.

    No you don’t ‘hope’ people will buy it you research your market first. But direct response market without stock ready to go is not direct response marketing?

    Khalid Adam, post: 115666 wrote:
    Secondly. I would not sell based on cost of production and thin margins or target budget clients who tend to complain the most. In short, i would not have anything to do with a business that relies on high turnover/volume.

    But that is the bread and butter of direct response marketing models.

    Khalid Adam, post: 115666 wrote:
    I would only target the mass affluent. fewer clients, high margins.
    Oh ok rich people. That’s the key ;)

    Khalid Adam, post: 115666 wrote:
    Hopefully you understand where i am coming from. If not, let’s leave it. Not here to sell anything or acquire clients / investors.
    No Kahlid I really don’t understand where you are coming from. But no lets not leave it there I have read many of your posts and they have confused the hell out of me but I really do want to understand where you are coming from.

    At the moment I can not understand if you want to sell a million singing billy bass on a breakfast TV infomercial or flog a something to the rich (sorry mass affluent).

    All I know so far is your target market is rich people and that your product is ‘fixing problems’ and direct response marketing is the ticket to get 100%-200% ROI.

    So enough of the fluff how do you get from rich people/fixing problems/direct response marketing to 200% first year returns? And come on share some of your war stories about how this has worked for you in the past.

    Khalid Adam, post: 115666 wrote:
    It’s ok if people hate me for giving them a wake up call. I have met far too many “broken” people who failed in business and equate it to failing life.

    It would be better if they just quit while they are ahead and still have their family / sanity.
    Nobody hates you Khalid because you haven’t given anyone a wake up call you have just confused them.

    #1104150
    Steve_Minshall
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    T J Madigan, post: 115716 wrote:
    This is from your perspective only.

    Case 1:
    * the beginnings of a profitable business generating +100% ROI from the first week of operation.

    20 years ago I was unemployed. I went to the markets and bought a bin of apples for $120. From the bin of apples I bagged 120 3kg bags of apples and sold them door to door for $3 per bag. Cost: Apples – $120, Bags – $10, petrol – $30
    Total investment = $160
    Total ROI = $360 (+100%)

    Case 2:
    30 years ago (as a teenager) I wanted to start a lawn mowing business. Lawnmower cost – $10, income produced from lawnmower $550, outgoings (advertising, fuel, etc) $50
    Profit – $500 in 1st year
    Total ROI – +100%

    Case 3:
    One of my clients. An already established business with regular average 300k annual turnover.
    Additional Marketing investment – $18k p.a.
    ROI 1st year – $360k in increased revenue (+100%).

    Some business models do allow for 100%+ ROI, others do not.

    Hi TJ,

    The first 2 examples need to have your own wages taken from them to give a true ROI value.

    The last example shows that it is much easier to get a high ROI on specific investment in a mature business. Ie: buy a machine that cuts production time to fraction. This is realistic but the question of a 100% ROI on a $100k start up is extremely ambitious.

    #1104151
    DJ_m
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    T J Madigan, post: 115716 wrote:
    This is from your perspective only.

    Case 1:
    * the beginnings of a profitable business generating +100% ROI from the first week of operation.

    20 years ago I was unemployed. I went to the markets and bought a bin of apples for $120. From the bin of apples I bagged 120 3kg bags of apples and sold them door to door for $3 per bag. Cost: Apples – $120, Bags – $10, petrol – $30
    Total investment = $160
    Total ROI = $360 (+100%)

    Case 2:
    30 years ago (as a teenager) I wanted to start a lawn mowing business. Lawnmower cost – $10, income produced from lawnmower $550, outgoings (advertising, fuel, etc) $50
    Profit – $500 in 1st year
    Total ROI – +100%

    Case 3:
    One of my clients. An already established business with regular average 300k annual turnover.
    Additional marketing investment – $18k p.a.
    ROI 1st year – $360k in increased revenue (+100%).

    Some business models do allow for 100%+ ROI, others do not.

    Case 1.

    How long did it take you to sell 120 bags of Apples?

    Case 2.

    How long did it take to to mow these lawns?

    Case 3.

    This is just to fluffy to have any real meaning to someone putting $100k in to a start-up.

    Nobody would argue that some businesses make 100, 200, 500% and more ROI in the first year, however advising someone with $100k to invest that returning the same amount again is just foolish.

    I could buy one item on eBay for $10 and sell it for $100 giving me a 1000% ROI less costs. A stand alone number without considering all other factors is just plain silly.

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