How Do You Measure ROI?
4 months ago
How do you measure ROI?
I recently had a friend offer to invest in my business. When we met to discuss the dream coaching services we provide at Dream Again, he told me, “I would love to invest in your business, but you must know that I demand a high return on my investment.”
That stipulation didn’t surprise me — of course an investor would require a return on their money, but it did give me pause. If I accepted his investment offer, I would be required to produce returns great enough not only to provide for my family and for the family of my business partner, but for this investor too — who was asking for a “high return.”
Although it felt exciting to have someone express investment interest, I knew I would need to make sure I could deliver on his expectation. The good news is, I have confidence in what we’re doing, and I was willing to agree to the demand of high returns. But then this potential investor said something I did not expect.
“Tobe, not all returns are financial.”
Not all worthwhile returns are financial.
In that moment, I recalled what one of my mentors taught me about returns. He explained that there are actually three returns we ought to pursue in business. Those returns are listed below in order of progression, not significance:
The first return is financial. Again, this isn’t the most significant return, but it’s absolutely necessary. If a business is unable to operate with a profit, there is little chance of it being able to offer the second and third returns.
The second return is cultural. If a business is able to generate a profit, it can make financial contributions to influence culture in a meaningful way. Sometimes this cultural influence begins within the walls of the organization, but as that investment deepens, the impact spills out into the surrounding community. Employees and clients are among the first to experience the benefit of a healthy cultural influence, but as they become ambassadors of such a healthy impact, before long, the larger community is experiencing the positive impact too.
The third and final return is eternal. This is the sort of return that is realized when cultural investments have taken root and begin to influence legacy. For me, at its core, these efforts include receiving and sharing the love of God. When we aim to “seek justice, love mercy, and walk humbly with our God” (Micah 6:8), we partake in lasting change.
With that understanding, you may now know why having this investor say, “not all returns are financial,” was so thrilling to me. He was telling me that he was interested in more than financial returns — that sometimes, we make investments because we are seeking ultimately to impact culture and find eternal returns.
This aligns well with the kinds of returns we’re aiming for at Dream Again.
How are you investing? What returns are you hoping to yield from your own investments? Have you ever considered the three returns mentioned here?