If there is at least one thing you can learn from television shows like Dragons’ Den and Shark Tank, it’s that you should always have a great handle on your numbers. Whether your business is online or offline, physical or digital, you need to know your numbers. How much revenue did you pull in last year? How many units were you able to push last quarter? What is your profit margin on a per-unit basis? Can you get a better wholesale price?
These are all important figures to keep in mind as you determine the overall profitability of your business, because you need to know where you have opportunities to grow your revenue and reduce your expenses. You need to know what ventures or projects are worth investing your time and money into, and what opportunities are better off being pushed aside. What does your year-over-year growth look like?
Now, there are all sorts of different systems, software and programs you can use to track all of this kind of data. You’ve got plenty of spreadsheets and accounting software to help you stay on top of this sort of thing. If you’re into affiliate marketing and other similar avenues, you’re likely already using a number of built-in and third-party tools for tracking such key metrics as CTR, CPC, eCPM, and so on.
These all lead back to perhaps one of the most important metrics of them all: ROI. At the end of the day, return on investment is the number that really matters the most. If you bring in $10 million in revenue, but it cost you $100 million to get it, then you’ve probably got some pretty big problems. The kind of ROI you can expect will vary wildly based on a number of factors, but it is definitely something you need to keep an keen eye on.
But here’s the thing. Not everything can be summed up using raw numbers alone and return on investment (ROI) is no exception. Allow me to illustrate with a couple of key examples.
Several years ago, I agreed to co-author a book with John called Make Money Online. The book is largely from the perspective of John and his online journey up until that point, offering insights and advice into how to make a full-time income from part-time blogging. At the time, John basically offered me two main options.
First, he could pay me a flat rate (or a per page rate) to ghostwrite the book for him. I’d do the work, he’d publish the book, and my name would have never been attached to the project in any official capacity whatsoever. You’ll find that this is oftentimes the case with a lot of celebrity memoirs and other similar kinds of autobiographies. No one really cares about the ghostwriter. They want to know about the celebrity. Fair enough.
Alternatively, he could provide me with zero up-front payment whatsoever and I’d get a cut of the resulting royalties from book sales. Now, it would be easy enough to compare how much I’ve earned from my share of the royalties against how much the up-front payment would have been in a pure ghostwriting arrangement, but that’s only part of the picture. With this second option, which I chose, I would share the byline with John.
Instead of having just “John Chow” on the cover, the cover to Make Money Online reads “John Chow with Michael Kwan.” That’s huge. I cannot say with any real certainty how much work I’ve received as a freelance writer as a result of this shared byline or how “better known” I am as a result, but there is a definite intangible value to it, just like having my own byline for this blog post. The ROI goes beyond the raw numbers.
Here’s another example. In 2017, I set out to vlog each and every week. My YouTube channel has been around for years, but this was the first time I was sticking to a set publication channel. The content of the videos range from travel to fatherhood to local events, but the goal was to have a new personal video up every Monday morning. And I accomplished that goal.
When I first set out, I had hopes that this would help to grow my YouTube channel significantly and, by extension, grow my online reach and exposure in general. It helped, to some degree, but in all honesty, I haven’t exactly been getting as many views as I had hoped. Does this mean the vlog experiment was a waste of time and energy and effort? Not at all.
The intangible ROI goes far beyond view and subscriber counts. Through the vlog, I was able to connect with some other local YouTubers in Vancouver. Through the vlog, I was able to exercise a different set of creative muscles and learn so much more about video production, as well as video editing and the whole YouTube ecosystem. I learned a lot and these lessons can be applied to other endeavors I may have in the future. The ROI goes beyond the numbers.
Many people have the misconception that success is a straight road paved only by success after success. The truth of the matter is that the road to success is littered with innumerable failures and shortcomings, and it is through these experiences that you learn how to keep moving forward, taking the lessons with you to the next project or opportunity. That’s the real ROI.