What should be a good ROI for a startup? - page 2.

Cookdata

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Crypto wouldn't let me think of other business especially now that you could easily get promised huge return from New projects with shit staking APY and fake percentages.
You are just interested on the percentage, you forgot that factors affect ROI and it doesn't always get achieve as you have stated. For a fresh start up, you need at least to be able to deduct your total cost of production (investment) from the final value.

Quote from: palle11 on April 21, 2022, 01:05:51 PM

15% per annum is not unreasonable for an investor to aim at for the year. But I don't know how you mean by 6.6 years, you mean to get back the invested money ? How do you get to such calculation for 15% profit in 6.6 years time, you didn't take into consideration of tax, inflation etc.

If you multiply 15% by 6.6 years should give you %99, other things you specify weren't consider.

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Quote from: The Cryptovator on April 22, 2022, 02:42:14 PM

ROI depends on what kind of business are you going to do. Most startups just get out from the middle road, they can't reach the final stage. So before expecting an ROI should establish your business. Choosing the right startup business is quite important and experience keeps a role to establish your business. So can't determine ROI from the beginning if it's not an existing business.

If you put up a business you should always have your target profit, but of course things are not easy if you have a business and you can only know this once the operation of your business started. Some are doing great on their first quarter but most of the new business owners losses their faith on their business on 2nd quarter. I think its better to think for long term scenario, just access your business if they can still cover the expenses I believe that will work in the next 3 years. There’s no accurate percentage for ROI though, just take the risk and compute along the way.

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Quote from: The Cryptovator on April 22, 2022, 02:42:14 PM

ROI depends on what kind of business are you going to do. Most startups just get out from the middle road, they can't reach the final stage. So before expecting an ROI should establish your business. Choosing the right startup business is quite important and experience keeps a role to establish your business. So can't determine ROI from the beginning if it's not an existing business.

You would really be thinking first about on how you should gonna sustain your business because it wont really be an assurance that you would survive on the time that you had put it out.
Of course you would really be finding ways on how you would really be profitable and this is the right time that you would really be thinking on having ROI and its true that it would
vary on what kind business that you are running since we know that there are lots of types and industries which you could really make yourself involved with.
Calculations would vary but of course it would be just on the right time.

The Cryptovator

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ROI depends on what kind of business are you going to do. Most startups just get out from the middle road, they can't reach the final stage. So before expecting an ROI should establish your business. Choosing the right startup business is quite important and experience keeps a role to establish your business. So can't determine ROI from the beginning if it's not an existing business.

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Quote from: macson on April 22, 2022, 11:09:24 AM

Feasibility study includes the location of the business and what business you will run, the feasibility study is important in starting a business. before starting my business which i am now living, i did a study first for months, i got this from a successful entrepreneur who has many businesses and this method is proven to be very effective. Besides that, in investing, this is also very necessary so as not to lose money.

Depends on the type of business you will start. If you are starting a shop then it does matter where you will start because you want to sell products to people and you want a lot of people to see you.

However, if you end up with a business that is manufacturing then it wouldn't matter since people expect you to send them by trucks or whatever, or if you start a digital business that runs online then you wouldn't need any place at all, maybe an office when you grow big but that's just a later stage when you have money anyway. Hence, there isn't really one true answer when you are in business, there are situations and you act according to whatever you need at that moment.

Captain Corporate

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I still think that people should be focusing a bit more on the sustainability of a business rather than how well it is doing. There are companies who make millions upon millions of dollars and they go bankrupt after a while, and there are some that barely make enough for the owner to live on and they keep going for 50 years. If you want to get super rich super quick and get out, I understand you, its an idea that many people have these days, during early 2010's the "startup" culture got super high and everyone wanted to build the next thing facebook would buy, but I rather be the butcher down the road who has been living nicely for the past 50 years, that guy seem to figured things out long time ago, and he has been living a good life without much stress.

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I don't know if it was a bad or good decision because each entrepreneur has their own business target. Maybe an entrepreneur has a target, as you say, but another entrepreneur has a different business target. Maybe I can say that the company has not been able to get ROI for the first five years because the company still needs to focus on promotional targets and get more customers. So there is a possibility that the company can get ROI after the first five-year phase. But maybe I am wrong with this because I am not an entrepreneur.

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For startups 20% is not a bad ROI per annum. This percentage might look small to small and medium investments but considerable for large and average investment. But what ever the category having a realistic ROI keeps greed far from investments. Investment is only fun with reasonable capital. For small and medium investors it looks like use a cup to fetch from an ocean but with patience the small investors too gather enough that can stand as big start up capital

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Quote from: Scripture on April 21, 2022, 06:33:51 PM

Depends on a business and the location of the Business. If you’re planning to have a huge business with huge capital, you can’t expect to have a decent profit in the next three years but if the business is consistent and with a regular customer, I believe ROI can still happen. There’s a lot of failed businesses, mostly a franchise business but that’s fine if you’re one of the owner, just learn from that experience and do better next time, feasibility study is also important before putting up a business.

Feasibility study includes the location of the business and what business you will run, the feasibility study is important in starting a business. before starting my business which i am now living, i did a study first for months, i got this from a successful entrepreneur who has many businesses and this method is proven to be very effective. Besides that, in investing, this is also very necessary so as not to lose money.

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Quote from: Rohan Kotkar on April 21, 2022, 10:21:16 AM

Entrepreneurs struggle with their ROI on businesses. Starting a business is not a difficult task but sustaining it becomes challenging. I've seen a numerous companies go bankrupt after good years of sales. Knowing the reason behind is lack of future projections.

According to you, what should be the ROI for newly launched startups?

My views are around 15% per annum but it would take around 6.6 years to earn the initial amount back. Would it be a bad decision?

I don't think it's possible to set ROI in a generic way. Will have to depend on a lot of factors, what your business is, how your competitors operate, how much the initial cost is…I think we should consider all the factors to be able to come up with a relative ROI before embarking on a startup. Besides calculating the monthly ROI you will receive, you should also consider if your business is not performing as well as you would like, how much more money will you have to spend to maintain and grow in the early years.

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Quote from: Rohan Kotkar on April 21, 2022, 10:21:16 AM

According to you, what should be the ROI for newly launched startups?
My views are around 15% per annum but it would take around 6.6 years to earn the initial amount back. Would it be a bad decision?

The moment your strat-up focuses on ROI it's the moment you have signed your bankruptcy paper.
Even before considering getting an answer you should tell us what you're focusing your business on.
Agriculture, expect 5-10% in the best years, manufacturing below that, commerce, it depends on what type of commerce, setting up a call enter or a video chat business make it 200%, mining bitcoin go for a year, ROI depends on how much you invest and what's the lifetime of the things you invest in, if you buy land and machinery is one thing, if you intermediate car sales is completely different.

Of course, you could achieve 100% ROI in a day if you launch a shitcoin since obviously the first cent buy will be worth more than the entire chain and the investments are what, close to zero?

Quote from: el kaka22 on April 22, 2022, 07:12:14 AM

If you have a product, if people are willing to pay for it, then you are on the right track. Plus, how much you earn also depends on how much you spent, if you spent 10 million dollars, making 15% is not bad, if you spent 1000 dollars, making 15% is horrible.

I think you've used percentages wrong here as it doesn't quite make sense.
Making 100$ with 1000$ is great, making 100 while spending a billion is horrible.

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Quote from: teosanru on April 21, 2022, 01:51:39 PM

ROI for startups? Lol. If you would see most of the scaled startups around 80% of them are unprofitable even at the EBITDA level which is Earnings before Interest Depreciation & Amortization. This means they are running on zero ROI in fact most of them are just burning cash. Startups these days are more about increasing your revenues even if that comes at a huge acquisition cost, also some startups don't even work for revenue, they are running and scaling due to their increasing consumer base, so I don't think you should worry a lot about ROI in the initial stages of a startup, Focus on improving customer acquisition, retention & satisfaction and just try to avoid cash-burning, try liquidating your equity a bit by finding investors because that would be the only quick way to scale up your business.

I appreciate @teosanru for stretching the details. Now I understand what OP means.
Most of them fail as I read thru different examples of it.
Is it that much different with an ICO? Because as I understand it, it's a startup for developing a product which they think will be in demand in the long run. (scalable startups) It's high risk, if I am not mistaken.
TikTok is a good example, right? It boomed because of the unique way of sharing videos or whatever the kids are doing now.
So ROI, can it really be calculated if that is the industry of the startup?

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Quote from: Rohan Kotkar on April 21, 2022, 10:21:16 AM

Entrepreneurs struggle with their ROI on businesses. Starting a business is not a difficult task but sustaining it becomes challenging. I've seen a numerous companies go bankrupt after good years of sales. Knowing the reason behind is lack of future projections.

According to you, what should be the ROI for newly launched startups?

My views are around 15% per annum but it would take around 6.6 years to earn the initial amount back. Would it be a bad decision?

Base on my understanding on how a business model should run, i see it not necessary to have the calculations of the expected returns otherwise referred to as ROI, why is because for every business start-up you should not expect any marginalize profit in the first year especially, all you need to do is to develop the business to a certain extent before it can start to generate income with ease, take a look at the big companies and industries existing today, they have all started from a lower level before growth emerges, i will as well advise you not to take loan for a start-up if you're not having your initial capital at hand.

el kaka22

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I would say it is not about the 15% or whatever ROI you have, it is about actually have a customer that pays. These days because of places like google, facebook, and many other similar websites where you can use it for free, and they sell your data for marketing purposes, everyone is trying to build something that is free to use, and they will then make money from ads and so forth.

If you have a product, if people are willing to pay for it, then you are on the right track. Plus, how much you earn also depends on how much you spent, if you spent 10 million dollars, making 15% is not bad, if you spent 1000 dollars, making 15% is horrible. So it all comes down to how much you spend yearly, plus money on top of it to make it a sustainable business.

magneto

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Startups usually generate much higher ROI - at least successful ones.

But that's part of the risk that you take investing in early, seed-stage companies or even pre-seed. You have insane upside but all the downside as well.

It's not unheard of for triple digit growth in the first few years of operation as the startup is rapidly scaling etc. But you have to realise the difference between revenue growth and actual earnings growth as well, companies don't usually become profitable until much later.

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Quote from: Rohan Kotkar on April 21, 2022, 10:21:16 AM

Entrepreneurs struggle with their ROI on businesses. Starting a business is not a difficult task but sustaining it becomes challenging. I've seen a numerous companies go bankrupt after good years of sales. Knowing the reason behind is lack of future projections.

According to you, what should be the ROI for newly launched startups?

My views are around 15% per annum but it would take around 6.6 years to earn the initial amount back. Would it be a bad decision?

15% isn't bad, it is actually good for the start-ups. Target will also change and possibly it grow depending on the situation and business results.

In fact, Big companies will not look for quick returns but what they consider is how their company becomes sustainable in the long run as ROI starts mostly after 5 years since the start of their operation. That is why they need some backup money in order to sustain and remain in the operation.

But, this is not only the thing we may consider, some companies declare bankruptcy because of their poor management and no concrete plan. The failure of the companies not really because of money but it was because of the staff who manage and involve in the operation.

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Quote from: Rohan Kotkar on April 21, 2022, 10:21:16 AM

My views are around 15% per annum but it would take around 6.6 years to earn the initial amount back. Would it be a bad decision?

This is actually a good plan for your return. It's not asking that much and it is achievable but you should be also open to some unusual results at the end of the day or the month.

In business, there's really a wavy journey and you can't be sure with the given timeframe that it will be followed smoothly. The path that you're going to take isn't just a straight one but with a lot of curves and frustrations.

What you need to add is about the possibilities of what if that plan is being prolonged by a situation and you should be okay with that.

Scripture

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Depends on a business and the location of the Business. If you’re planning to have a huge business with huge capital, you can’t expect to have a decent profit in the next three years but if the business is consistent and with a regular customer, I believe ROI can still happen. There’s a lot of failed businesses, mostly a franchise business but that’s fine if you’re one of the owner, just learn from that experience and do better next time, feasibility study is also important before putting up a business.

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If it is true to say more than 80% of new businesses fail after 5 years. (An often cited statistic) It could be better for startups to focus on survival and durability than ROI.

There are startups that pay their CEO $300,000 yearly salary whose gross income is less than $100,000. Many of these start ups fail, can anyone guess why? Partly it is due to CEOs being paid a flat rate and not being incentivized or motivated to ensure their business thrives.

The format with better survival rates is the one Elon Musk has where he earns a salary of $0 and is paid in stock options. HODLing the company results in salary CEO being determined by their own success or failure. Which could be a great source of motivation.

As far as ROI goes, it can be a misleading figure. A startup with $5,000 in capital could have a higher ROI than a startup with $5 million in liquidity but smaller profits.

Personally, I think its better to focus on aspects of the business aside from money as the psychological impact money has can be detrimental on logic and human impulse.

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IMO, startups should be open to the projection that the ROI is going to be long term. It's not going to be about the ROI anymore but with what you've started if you believe on it.
Like if you believe on it but its success is going to be seen after 10 years then you should be willing and open with that. I've read of something like that when the success comes by after that long and the business or startup becomes product and sees the click after operating for a long time.

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