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Generating an Increased ROI: A Beginner’s Guide

ROI is a particularly important business metric because it can, put simply, help to evaluate the efficiency of any investment

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ROI, Business, Investment, Revenue, Return
Your return on investment can actually mean a few things, including increased profits, reduced expenses, or less tangible benefits such as increased efficiency or improved brand awareness. Pixabay

The goal of any business is to turn a profit, and seeing a positive return on investment is a key step in that process. ROI is a particularly important business metric because it can, put simply, help to evaluate the efficiency of any investment or to compare the potential value for multiple investments. It’s a simple metric that can be applied to any kind of investment, from a stock to a business expansion. The metric isn’t necessarily perfect, however, and perceived values of returns can vary significantly depending on how they’re calculated. Here are some tips to keep in mind when looking to generate an increased ROI.

Define your return

Your return on investment can actually mean a few things, including increased profits, reduced expenses, or less tangible benefits such as increased efficiency or improved brand awareness. Setting goals for your return with quantifiable benchmarks is the first step in determining whether you can generate an increased return. Setting specific goals is generally best to ensure that generating an increased return can be repeated. For example, instead of simply aiming for higher profits in general, aim for higher profits in a specified month and come up with some repeatable ways to get there. This will give you a better idea of whether increasing profits is consistently possible with your current efforts.

Once you have a goal in mind, you must calculate your current return so you can compare it against any changes you may have to make to meet your new goal. Before you can start producing more products, enhancing services, or hiring more workers, you have to ensure you’re already seeing enough of a return to cover such expenses.

Increasing revenue

The easiest way to increase your revenue stream is to simply increase your prices without increasing your expenses. While you can find ways to increase prices without necessarily angering customers too much, this certainly won’t be seen as the most consumer friendly option and could have negative consequences in the long run. Increasing your costs slightly while still generating a net profit is an alternative way to increase your return. The general rule is to use your current return to calculate ways to see an increase in revenue by altering your current business practices.

ROI, Business, Investment, Revenue, Return
Reducing your operational expenses is another relatively simple way to increase your ROI. Pixabay

Decrease costs

Reducing your operational expenses is another relatively simple way to increase your ROI. You don’t even have to increase your sales to pursue a greater return this way. Generally speaking, you’ll need to divide all of your costs into production and overhead expenses to pinpoint areas of each type that can be cut or reduced while still maintaining your profits. You can find many methods to reduce costs, some of which may seem more appealing than others. For example, you could hire contractors, seek competent interns and depend on more energy-efficient equipment. 

Look for other benefits

Not every investment will deliver an immediately obvious financial benefit to increase your ROI in the long run. It simply must provide some kind of undeniable benefit to the business. One example is the contact center solutions offered by BrightPattern. These software packages provide contact centers with ways to dramatically increase efficiency and offer unmatched customer service experiences. Improved agent morale can lead to lower turnover, improved systems save everyone’s time and money, and better customer service experiences generate positive word of mouth. 

ALSO READ: Social Media Tend to Scrutinise Female Stars More Than Male Stars, Says Richa Chadha

With easy integrations with other programs, setup can be quick and painless, and the detailed customer analytics can lead to better ways to generate profits.

Some investments are best calculated both in the short and long term to analyze their full benefits.

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How to Extend Your Business Abroad

Starting a business or expanding an existing one is now easier than ever, considering the multiple options their owners have

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Business
Starting a Business or expanding an existing one is now easier than ever. Pixabay

Starting a business or expanding an existing one is now easier than ever, considering the multiple options their owners have in terms of structures they can employ and even countries they can choose from. While the creation of a new company is usually simpler, the expansion of a business abroad will imply more financial resources directed to finding suitable premises, offices, employment and even production.

When it comes to the structures to be used for expanding a business abroad, the branch office and the subsidiary are the most employed. The creation of a subsidiary in Malta, for example, implies registering a local company which benefits from the same advantages as domestic businesses.

Let’s see what the expansion of a business through these two options implies.

The subsidiary company as an expansion option of a business

The subsidiary will usually be used by foreign companies seeking to develop other activities in the country it will move to. Among the advantages of this structure, we can mention the possibility of choosing the structure under which the business will operate which can lead to an easier incorporation procedure. Referring to the example above, starting a company in Malta under the form of a subsidiary can help investors operate under a limited liability company which is a popular business structure in countries all over the world.

There are also various tax advantages when operating a foreign business under a subsidiary company abroad. Among these, being subject to the same corporate tax, which in certain countries is lower than in the parent company’s home state, can represent a huge benefit when expanding it.

Setting up a branch office in order to expand a company

Compared to the subsidiary, the branch office offers the parent company more control over its activities. This is because the branch office will operate as a satellite of the foreign company, but will also be restricted to completing the same activities of the parent business.

The advantages of the branch office usually refer to more relaxed registration and licensing requirements and cheaper incorporation costs.

Expanding a company in a foreign country is a solution often employed by business owners seeking to diversify their activities and expanding their operations to clients abroad. The advantages of such a decision are often related to increased revenues and also to capitalizing on markets which do not offer the foreign company’s products or services.