Topic: What should be a good ROI for a startup? (Read 392 times)

I haven't considered it'll take more than 6 years to get a ROI. I guess best way to go about this is find out the standard ROI for whatever business you are planning to build. Your goal will next be then to survive that long. If you can breakeven earlier then that's just a bonus.


I don't think this is a good way to go about building a business. It should be separate from your own expenses and you must be willing to NOT take a paycheck from your own business during its infancy to be able to reinvest that money back into it. So if you are quitting your job, you wouldn't be relying on the cashflow from the business for your needs, you must have a separate savings to sustain you until the business takes off and can afford to finally pay you a wage - which could be lower than your current paycheck.

This would really depend on what industry you are entering. I remember for a time when food trucks were the rage I remember hearing from TV that it takes 1-2 years to get ROI, which I thought wasn't shabby - assuming your business last that long.

I think instead of thinking of an ROI if you are a newbie, think of a way to survive. Doing research always, find the trend, your location, the target of your business that you are building etc. etc.
What I mean when I said survive is that how will you survive in the succeeding years to come. What will you do if something bad happen to your business?
This pandemic really affects the business sector especially the small and the medium ones that they need to stop it because they are losing money. Its a good thing that some are going back again to their usual business and recovering from their past losses. There will and always be negative events and things in business always so better to think of ways to surpass them instead of thinking too much of the ROI. I'm not saying that don't return your investment but don't focus on it.

No it isn't a bad decision at all. Most of the business especially the small ones doesn't last long and if you're business will last for 6.6 years then it will be a successful one. Successful companies right now took years in order for them to be successful. I just remember Alibaba of Jack Ma where it took 14 years before they will become successful.

The fact that you need patience to build a business also requires money. I get that you can't be rich overnight, but realize that most businesses require you to earn something. If you are going to focus on it full-time then you need it to make enough so that you could pay your bills.

For example, I earn a decent amount right now, if I quit this job and start my own business, and it doesn't earn, then not only I do not have a good business, but also I can't pay my bills and eat food, what am I suppose to pay that with. This is why I believe that even though it shouldn't be something huge, it needs to earn at least enough to pay the bills.

               Businesses are never easy, specially for the ones that have capitalize on a single trend. But yes, even those that have great products or services still fall short at times due to lack of experience or perseverance itself, and even when you have all these, you can still fail on a business depending on a wide variety of reasons. And about ROI, I myself wouldn't suggest any numbers because again, there are a lot of variables to consider when doing a business. Best option would be to just adapt to changes I guess and have at least good enough reserves left to support your business on bad years.

The competition for giant start-ups is very tight, many giants die because they can't compete with new, more aggressive startups, and I think the RoI of startups is very long, if we can get RoI in a year, we are very lucky.

What happens is that creating a company has a completely different set of problems than maintaining a company, for what I have seen many businesses start too big and acquire too many responsibilities early on which end up crushing them at the end.

So a startup needs to start slow and concentrate on reducing costs as much as they can, because it is obvious by the example that you give that even if a startup was making good money that they were spending even more of it and that is why they went bankrupt, and about the ROI you want it is not out of this world but this is something that you can obtain with many other investments for a lower risk, so at least to me it would not be worth to invest in a startup that gives so little money.

It takes a large capital to be a startup, this is because the competition is very tight, in my opinion a good start -up is the focus on a large market, and the current trend is online shopping, provide shipping discounts for all purchases so we must have cooperation Strong with expeditions, and if success is usually around 3 years already get ROI.

There is no certainty in expecting for an ROI amount since not all businesses are bound to succeed, others have become doomed in the end. But for an in demand business that will surely work for the customers, the ROI may even hit 80%-100% at the end of the year, but for those who only show slight movement of success, i guess the ROI would only range lower from 20% per annum.

When you say "ROI for newly launched startups", I don't recall understand, but I want to assume you mean return on investment for new companies?.
If that is what you mean, then I will honestly use my self as a reference here, if I were to be starting my own crypto company, the last thing on my mind would be ROI, what I mostly would care for so much is to make my company stand by achieving targets and goals, and at the same time aiming for the top, cus I know that ones the company is able to get to the top, My ROI can come even within one year, no need waiting 6.6 years or whatever,(I don't know how you came about this number of years anyway.)

Yeah, 15% is already a really good one because there are so many that don’t come any close to that. Some are usually 7% to 10% ROI, so if it’s getting up to 15% then it should be seen as a really good one. Although I’m not saying that something less than that is bad though, the 7% and 10% that I have mentioned are not bad, because a lot of things comes into considering when determining what should be the right ROI, you should compare with other companies and see what they are making.

Not be that an easy way for you to achieve on and there would be lots of hurdles and challenges along the way but somewhat this is been part because no one hadnt able to experience these things.
When you are doing investment then of course you would be thinking or minding about ROI but you should really be minding on how you would really make your business or investment survive
for long term aspect because this is on where you would be determining if you could really make out profits or not for longer duration.Dont rush up yourself because this would
only create haste decisions which might lead to mistakes.

I agree that business is like we make long term investments, hard work and patience are important factors for success in business. I agree it's better
not to focus too much on calculating ROI when starting a business, it will only be a reason to stop if our ROI calculation is not achieved. The most
important thing in starting a business we must understand the products and services that we will offer, even better if we like the products that we will
offer. After that the most important thing is how we do promotions, so that promotions are maximized, determine the market that really needs
the products and services we offer. If we have done all that, we can start the calculation of ROI. We must remember that loss in business sometimes
we have to experience it first, so that we can evaluate our mistakes. Sometimes we need a long time for our business to grow, like any
long-term investment, we must be patient and never give up if we want to make our business successful.

It doesn't work that way ... if everyone could count on 15% ROI from the beginning then everyone would be a businessman! Depending on the business, there is no ROI in the first few months/years, you can even be in the red until everything starts, here we say "until the wheel start turning"! Like it's hard to make a wheel starts spinning, but once it starts it will be easier! I said months or years need before that, how much exactly depends on what kind of business you plan to start and many other factors! Only when you put the business on its feet profit start coming! Of course, if you did everything well in the beginning!

Business is something which should be taken as long term investment and artwork of patience! It’s built stone by stone and you have to have considerable amount of hardship with it. I don’t think math should be put forth immediately. First you need to set up base for it, have recipe ready for your business which includes smart to hard work, management, plan executions and much more. Once you have product or service ready and available in the market then you should start with the ROI maths. Sometimes you could get more than enough sales and sometime you may not get anything. So it’s really upto that.

I think that this is something that has to do with the industry that you’re into. Every industry is never the same, there are some industries you would be into and the expected ROI would be around 15% to 30%, and some can go as high as a 40% and more.

So, I think that it is best that we study the industry that we are going into, and that would help us come to the conclusion of what should be expected from the start-up. Another you also have to know is that small businesses take a lot of risk, so things can as well differ. Finally, it all comes down to the team, if they play their part really well, everything goes successfully.

Reports from sources stated that many start -ups that continue to burn money, there are even start -ups that have burned more than 10 years of money and always report losses in large quantities, if startups can get a 15% ROI per year, of course it is good because the current competition is very strict.

and just to give example why we can't determine a fixed ROI, during this pandemic period, you can't get your target roi because of so many restrictions and uncontrolled situations. you can have your estimates but not fixed ROIs. also, it depends on the demand of your services or products. better if it is used massively by regular people but if you only have special niche to tap, that would be hard. also, you need to innovate as your competitors may be upgrading and you need to get ahead of the game as well.

If I wanted to start a small business I would like to earn a 30% ROI at the start of operations. I would like a fast food business, these are my ideas, but making it a reality implies good planning to achieve ROI.
I would also have to deal with inflation and market conditions.
But if we take a look at the opinions of the experts we realize that our expectations are a little different.

Precisely. You can't expect a fixed ROI because the market situation too may differ in some ways. But as long as you hit the average ROI for a certain business, i guess you will see consistency in making profits. Same as you can't guarantee as to how long your business will stay competitive in the market.

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.


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

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.

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.

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.

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.

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.

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.

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

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.

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.

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?


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.

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?

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.

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.

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.

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.

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.

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.

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.

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.

Unless you add those incomes back to your capital and lessen that 6.6 years of yours. This is our story, we are nearing our 2nd year of our small business since it started running way back  June, 2020. I have seen a lot of changes in just a year. That small amount of money had become to the point that we've manage to get a decent car, house and lot, and paid bills not exceeding a thousand dollars a month. We have manage to rake 20 to 40 percent income per month, it depends on the business you have.

We started on an 800 dollar worth of products, and now it is worth around 40k USD all in all. All we did was put all the profits back to capital and bought more products to sell, and we did not stop until this day, we are going to continue and hopefully it gets better. By the way the products that we sell at first was, disposable mask since it was so hype back when COVID was just starting. We've moved to beauty products now since most people here stayed at home. Later on we've also entered the food and clothing sector, which is imported from different countries. I have realized that all consumables are easy to sell unlike clothes and other things that are not essential goods. People needs food, hygiene and clothing, and this was our target from the start so I guess it is all good for now. At first it was just meant to make ends meet, but then we've become busy these days and never thought of gaining more than we have ever wanted.

It is quite difficult for a startup to predict ROI. At the time of the formation of a startup, 70% -80% still do not understand that they simply will not reach the estimated level of implementation of the project itself within 9-12 months. After that, they are waiting for the extinction and loss of investor interest. The rest will clamber and try to do something. Only a few of them will survive. Fantasies and ideas are great! The implementation of a working project, the market, the nuances and competitors are completely different. Measuring and setting ROI for a startup is a very dubious act....

It's impossible to put a definitive figure on this as it is so wide ranging. If you're starting a shop selling sweets or a hairdresser, you have quite static costs and should be able to judge your income stream fairly quickly. If you're pioneering a new type of online game, hoping to see it skyrocket in popularity to pay off your bank loans, then it is quite possible to jump your income hundreds of percent per year. Any company selling a product should generally aim for 100% profit on each item if they are not generic, which would translate into reasonable margins above what you're expecting. If you're looking at it from the eyes of a venture capitalist, then 15% is definitely not worth it - you can buy into some well established companies with a steady income that make close to that for much less risk.

Do you mean real world businesses or investment? I would say that 15% per annum is a bit far off or could really be attained in a short term duration but it would be depending on what kind of business

you are running into because it all matters with the demand of course but 15% is a bit conservative.If we do talk about crypto investment or something like that then it would really be just too small

to target or to make it as a goal and it would be more much better if you do aim or target bigger percentage i would say.

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 will say that even 10% or lesser ROI after all the wages for a startup is good,all they have to do is to think about their short term goals that is where most of the entrepreneurs are failing and end up bankrupt. Before starting any business they need enough knowledge without it the capital amount is at high risk.

If you were a student of business studies, you wouldn't have asked this question. You should know that there is no fixed ROI for sustainability of a business. Sustainability of a business depends on numerous factors and future projection is just one of those factors.

Do a market research on your competitors. Use websites like Statista to gain insights. See what is the average ROI in your field of business and now see prepare a business forecast to see if you beat the average ROI.

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.

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?