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The right way to calculate your rate on investment
- JacobAldridge 17y agoEssentially, that a return on investment needs to remember that the principle also needs to be returned, and that the business has a lifecycle. I think the lifecycle part is the real insight here. When I read a business plans that will 'return $100K every year' or 'Grow by 25% each year', I know the writer has been lazy with the numbers. Better off to set targets - linked to strategy - for the foreseeable future (maybe up to 3 years, depending on industry) and then admit everything else is fuzzy.