The Most Important – and Overlooked – Measure of Return on Investment
The Most Important – and Overlooked – Measure of Return on Investment
But while that internal drive to succeed is crucial to professional success, it can also be an entrepreneur’s downfall. They get so focused on the traditional picture of “success” – the dollar signs – that they forget what really matters. And when that happens, no paycheck is big enough.
Take Peter, a fledgling entrepreneur, for example. When he landed his first big client, he was thrilled. The additional revenue would make things so much easier! He could pay off his debt, prepare for holiday bonuses, and finally start to breathe a little easier. Or so he thought.
Within weeks, it was clear that this new client was a colossal problem. She was demanding, rude to the office staff, difficult to please and quick to blame. Peter’s staff discussed their concerns with him, but all he could say was, “She’s a high-ticket client and she really helps our bottom line. We’ll just have to put up with her.”
Things got worse. His staff grew tense when the phone rang. They started avoiding the client when she came in, and Peter noticed they were taking more sick days. They felt betrayed by Peter for valuing the client’s dollars more than their happiness, and the situation continued to deteriorate. By the time Peter referred the client to another company, the damage had been done, and he stood there thinking, “It just wasn’t worth it.”
How did Peter get upside down, and how can he avoid making the same mistake again? It’s simple: look beyond the dollar signs – there’s something much bigger to consider.
When faced with the decision to keep or fire his difficult client, Peter reflected on his Return on Investment: his financial compensation for the time and effort he invested. This drove his decision to continue with the problem client – and this was his big mistake. If he had measured the amount of grief and fallout this client was causing against the amount she contributed to the bottom line, he never would have worked with this company.
In other words, the more pertinent question was: what kind of experience was he getting in exchange for his time and effort? I call this his Personal Return on Investment (PROI).
When David, one of my coaching clients, called with a new business opportunity, he was so excited that he could hardly wait to tell me about it. He was poised to purchase another business, one that would complement his quite well. On paper, it all looked good: he could double his revenue, trim expenses and really get ahead. But there was one glitch: the new business would have to continue operating from its existing facility – an hour away from David’s building. When we discussed the full
implications of this – the logistical issues, travel time, and challenge of running two locations – his enthusiasm began to wane. The personal cost of generating that money was going to be too high. When he assessed what his experience of this acquisition would be, I heard those same familiar words: “It’s just not worth it.”
When you account for your PROI as well as your bottom line, you choose avenues that are healthier, more satisfying, and make better use of your life energy. Decisions that maximize your PROI you will move closer and closer to an extraordinary and fulfilling life. You’ll enjoy your business more, and you’ll have more to give. After all, a miserable leader isn’t much good to anyone.
If you build a habit of looking for your PROI – weighing your investment against the quality of experience you have – you may notice a surprising trend. You become more careful about how you spend your time; more selective about who you spend time with; and less inclined to spend money on inconsequential things. If the personal return isn’t there, “it just isn’t worth it.”
Over time, you might start to realize what The New York Times Magazine brought to light in an article titled “The Futile Pursuit of Happiness”: happiness (or a sense of reward) is absolutely not determined by dollars. Reporting on the work of a Harvard psychologist and his team, the article offered scientific proof that a big salary and an expensive car don’t make people nearly as happy as we think they will. In fact, your personal return from anything you can purchase is usually much less than expected and very short-lived. In the end, the biggest emotional return comes from something we can’t buy – quality experiences with friends and family.
The key point here is this: if you want to build a satisfying business, one that is both personally and financially rewarding, you must consider your experience of all decisions going forward.
Although being broke can be a horrible experience, it’s just as bad to have a lot of money and a low personal return. When you devote too much attention to your financial ROI, your personal ROI will suffer. But when you shift your attention to include your personal return, something amazing happens… you increase both your personal return AND your financial return.
Maximizing your PROI is one of the surest ways to create more of what you want in your life. When you increase PROI, everything else tends to fall into place. Why? Because when you genuinely enjoy what you’re doing, and you engage in things that give you a high personal return, you perform much better – across the board.
COACH KEVIN’S CHALLENGE:
1. Do you know what gives you the greatest personal return? Here’s one way to find out: brainstorm a list of 100 things you want to do, be, and have by the end of your life. I’m not asking you to commit to each item, just to list the things that resonate with you.
Once your list is complete, look for the common threads. Do you notice any patterns? Take a minute to wonder why these are the things that are important to you. Why do they seem satisfying? In other words, what is it about them that gives you such a high personal return? The common threads among your goals and ambitions highlight what is important to you, the things that give you the greatest value in life.
2. If you won $10 million in the lottery, but you couldn’t buy any cars or houses, what would you do with your time? Spend some time building a list, and then look for the common threads. Under these conditions, what becomes valuable to you? When you’ve identified that, you’ll have a much clearer picture of your own uniquely fulfilling life.
3. Now, what are you going to do with this information? How are you going to align your life with that which fulfills you? The following table will help you sort out your thoughts.
Step by step, you’ll find yourself moving closer to your own ideal life.
What compromises your personal return? Things to stop or reduce: 1. Personally 2. Professionally
What improves your personal return? Things to start or increase: 1. Personally 2. Professionally
The Most Important and Overlooked Measure of Return on Investment - To learn more about this author, visit Kevin Lawrence's Website.
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When ambitious entrepreneurs set their minds to accomplish something, they can summon a tremendous amount of drive, tenacity and commitment to make their vision a reality. And what a vision it is… a luxurious home, expensive cars, fine dining and more. Ah, the trappings of success!
But while that internal drive to succeed is crucial to professional success, it can also be an entrepreneur’s downfall. They get so focused on the traditional picture of “success” – the dollar signs – that they forget what really matters. And when that happens, no paycheck is big enough.
Take Peter, a fledgling entrepreneur, for example. When he landed his first big client, he was thrilled. The additional revenue would make things so much easier! He could pay off his debt, prepare for holiday bonuses, and finally start to breathe a little easier. Or so he thought.
Within weeks, it was clear that this new client was a colossal problem. She was demanding, rude to the office staff, difficult to please and quick to blame. Peter’s staff discussed their concerns with him, but all he could say was, “She’s a high-ticket client and she really helps our bottom line. We’ll just have to put up with her.”
Things got worse. His staff grew tense when the phone rang. They started avoiding the client when she came in, and Peter noticed they were taking more sick days. They felt betrayed by Peter for valuing the client’s dollars more than their happiness, and the situation continued to deteriorate. By the time Peter referred the client to another company, the damage had been done, and he stood there thinking, “It just wasn’t worth it.”
How did Peter get upside down, and how can he avoid making the same mistake again? It’s simple: look beyond the dollar signs – there’s something much bigger to consider.
When faced with the decision to keep or fire his difficult client, Peter reflected on his Return on Investment: his financial compensation for the time and effort he invested. This drove his decision to continue with the problem client – and this was his big mistake. If he had measured the amount of grief and fallout this client was causing against the amount she contributed to the bottom line, he never would have worked with this company.
In other words, the more pertinent question was: what kind of experience was he getting in exchange for his time and effort? I call this his Personal Return on Investment (PROI).
When David, one of my coaching clients, called with a new business opportunity, he was so excited that he could hardly wait to tell me about it. He was poised to purchase another business, one that would complement his quite well. On paper, it all looked good: he could double his revenue, trim expenses and really get ahead. But there was one glitch: the new business would have to continue operating from its existing facility – an hour away from David’s building. When we discussed the full
implications of this – the logistical issues, travel time, and challenge of running two locations – his enthusiasm began to wane. The personal cost of generating that money was going to be too high. When he assessed what his experience of this acquisition would be, I heard those same familiar words: “It’s just not worth it.”
When you account for your PROI as well as your bottom line, you choose avenues that are healthier, more satisfying, and make better use of your life energy. Decisions that maximize your PROI you will move closer and closer to an extraordinary and fulfilling life. You’ll enjoy your business more, and you’ll have more to give. After all, a miserable leader isn’t much good to anyone.
If you build a habit of looking for your PROI – weighing your investment against the quality of experience you have – you may notice a surprising trend. You become more careful about how you spend your time; more selective about who you spend time with; and less inclined to spend money on inconsequential things. If the personal return isn’t there, “it just isn’t worth it.”
Over time, you might start to realize what The New York Times Magazine brought to light in an article titled “The Futile Pursuit of Happiness”: happiness (or a sense of reward) is absolutely not determined by dollars. Reporting on the work of a Harvard psychologist and his team, the article offered scientific proof that a big salary and an expensive car don’t make people nearly as happy as we think they will. In fact, your personal return from anything you can purchase is usually much less than expected and very short-lived. In the end, the biggest emotional return comes from something we can’t buy – quality experiences with friends and family.
The key point here is this: if you want to build a satisfying business, one that is both personally and financially rewarding, you must consider your experience of all decisions going forward.
Although being broke can be a horrible experience, it’s just as bad to have a lot of money and a low personal return. When you devote too much attention to your financial ROI, your personal ROI will suffer. But when you shift your attention to include your personal return, something amazing happens… you increase both your personal return AND your financial return.
Maximizing your PROI is one of the surest ways to create more of what you want in your life. When you increase PROI, everything else tends to fall into place. Why? Because when you genuinely enjoy what you’re doing, and you engage in things that give you a high personal return, you perform much better – across the board.
COACH KEVIN’S CHALLENGE:
1. Do you know what gives you the greatest personal return? Here’s one way to find out: brainstorm a list of 100 things you want to do, be, and have by the end of your life. I’m not asking you to commit to each item, just to list the things that resonate with you.
Once your list is complete, look for the common threads. Do you notice any patterns? Take a minute to wonder why these are the things that are important to you. Why do they seem satisfying? In other words, what is it about them that gives you such a high personal return? The common threads among your goals and ambitions highlight what is important to you, the things that give you the greatest value in life.
2. If you won $10 million in the lottery, but you couldn’t buy any cars or houses, what would you do with your time? Spend some time building a list, and then look for the common threads. Under these conditions, what becomes valuable to you? When you’ve identified that, you’ll have a much clearer picture of your own uniquely fulfilling life.
3. Now, what are you going to do with this information? How are you going to align your life with that which fulfills you? The following table will help you sort out your thoughts.
Step by step, you’ll find yourself moving closer to your own ideal life.
What compromises your personal return? Things to stop or reduce: 1. Personally 2. Professionally
What improves your personal return? Things to start or increase: 1. Personally 2. Professionally
The Most Important and Overlooked Measure of Return on Investment - To learn more about this author, visit Kevin Lawrence's Website.
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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