Last week, Wayne shared his thoughts on the difference between accounting and finance. This week, he speaks on expenses vs. ROI. Viewing every outflow as an expense clouds your judgement when opportunities are presented to invest and grow your business. Please listen and share your comments below.
Michael J True says:
How do I obtain a print copy of this ROI vs EXPENSE blog . . . thank you . . . mike
Wayne Rivers says:
Currently not available, Mike, but we have had a rash of inquiries about transcripts lately, and we are looking into it. Thank you.
George Schwab says:
Thank you Wayne. Another great perspective. Quick question: I recently became the Treasurer and Finance Committee Chair of our HOA. I consider our association to be a family business and can easily apply your FBI perspectives to our association and the way we do business. I believe we are all stewards, not managers, of our business until the next group or generation takes over. Do you have any thoughts on this?
Wayne Rivers says:
Wow, you are a brave man to jump into the middle of HOA affairs! Interesting viewpoint that an HOA operates like a fambiz (I think you are probably correct) and that you are a steward for the next generation of leaders. Thank you.
K Watson says:
I wondered when this was going to come up. Imagine the ROI if the “i” was half!
Wayne Rivers says:
You are obviously better at math than me, Kevin! If you reduce the size of the denominator, your ROI definitely gets higher!
Don Woodruff says:
Wayne, spot on. We don’t have expenses, we have investments. If people insist on using the term expense, then maybe they should look at ROE.
Your comment about cutting a dollar of expense goes straight to the bottom line; that is a potential business misnomer? Is cutting the marketing budget really an overall savings (long term vs short term)?
Wayne Rivers says:
Great question, Don. Cutting marketing is a short term expense reduction, but is almost always a long term mistake due to diminished ROI as I think you already have intimated. Most contractors don’t genuinely believe in business development’s – if well executed – ROI.