When growing your business, possibly one of the most important metrics to consider is your return on investment (ROI). Rather than just revenue or gross profit, ROI offers a more detailed picture of how your business is performing as it measures net income against investment.
In short, it calculates just how effective each investment your company makes is, from marketing campaigns to employee wages. If you spend a certain amount on an hour of an employee’s time, does the work done generate a higher value in terms of profit?
You might find that your current ROIs are falling a little short of where you want them to be, especially if you want your business to deliver significant growth in the year ahead. So, from adopting accounts payable software to reassessing your budgets, how can you go about saving costs and improving this essential metric?
Cut down on unneeded spending
Perhaps the easiest way to start when pursuing a higher ROI is to assess the areas where your spending isn’t translating into proper returns.
Most businesses have at least some degree of unnecessary spending, whether it’s in licenses for software that nobody utilises anymore or in buying snacks for the office that nobody likes.
Wherever your business is spending its money, make sure to consider whether it is delivering any true value. Of course, this isn’t an excuse to go about slashing all of your spending on employee perks. More, this is your opportunity to go through the balance sheet and weigh up the balance of each outgoing costs against what it brings your business in return.
Adopt automation support
In order to maximise your ROI, you need to be sure that you are getting the most value out of your business’s primary resource – time.
The longer it takes someone to do any given task the greater result it needs to deliver in order to avoid a loss of investment.
However, a lot of the key tasks within your business are likely to take a lot of time. When it comes to things like invoice management your team needs time to properly go over the paperwork for approval and ensure that there are no errors or inaccuracies.
Things like data entry also suck up hours of work time that could be better spent elsewhere.
Rather than giving up those productive hours to menial admin, though, you can utilise the support of digital tools designed to automate much of that work.
Packages such as AP automation software can be given a lot of those more time-intensive responsibilities, freeing up your team to spend their time on more value-adding tasks such as outreach.
By cutting down on the amount of time it takes each invoice to progress through the pipeline, you also save on processing time, cutting your cost per invoice.
Re-assess your marketing strategy
Not all marketing is born equal. If you want to reach the right audience for your business you need to properly consider each potential avenue and site. Choose the wrong one and you could waste a large chunk of your marketing budget on ads or emails that won’t generate any particular leads.
When you’re deciding how to approach your business’s marketing strategy, utilise analytics tools that can assess the performance of your activities across platforms and formats. Don’t simply stick to doing the same things that you always have – consider factors such as how different keywords are performing and what is sending the most people your way.
If one avenue of your strategy isn’t getting many customers to come to you, then it might be time to drop it and put that money to better use elsewhere.
When it comes down to it, cutting business costs and increasing your ROI is all about optimisation – whether through AP software, spend reduction, or any other process. You want to get better results on a lower level of spending, without jeopardising the performance of your business in the process.