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Frequently Asked Questions
What is a good ROI for a small business investment? ▾
For most business investments, 50-100%+ ROI over the useful life is considered strong. Marketing investments should ideally return 3-5x (300-500% ROI) to be compelling. Equipment purchases at 50-100% ROI are typical. The most important metric is often payback period — you want to recover the investment within 6-12 months for most operational purchases. Longer payback periods (18-24 months) are acceptable for major equipment or infrastructure investments with long useful lives.
How do I calculate marketing ROI? ▾
Marketing ROI = (Revenue from campaign × gross margin - campaign cost) ÷ campaign cost. For example: $5,000 ad spend generates $20,000 in revenue at 60% margin = $12,000 gross profit. ROI = ($12,000 - $5,000) ÷ $5,000 = 140%. The challenge with marketing ROI is attribution — not all revenue from a period is directly caused by your campaign. Use UTM tracking, promo codes, and channel-specific landing pages to get accurate attribution.
Should I invest in software vs hiring? ▾
Software typically has much better ROI than hiring for repetitive or administrative tasks. A $200/month software tool that replaces 10 hours of $30/hour work saves $3,000/month for a 1,400% monthly ROI. The calculation changes for creative, relationship, or judgment-based work that software can't replace. Build a simple ROI model for every significant software purchase — and set a calendar reminder to cancel tools that aren't delivering the expected return.