Tip of the Month - ROI vs ROT PDF Print E-mail
In business, we often us ROI, or return on investment, to determine if where we are allocating our dollars in the best way possible.  To calculate ROI, we simply take the profit that we made, and divide it by our total investment to determine how effective the use of our money really was.  As a business coach, I think a better measurement is ROT, or return on time.  Here’s why:

1.         Time is the only true limited resource

If you stop to think about it, you can always make more money.  However, can you make more time?  Well, you can leverage your time, but in reality, your time is limited.  As the old saying goes, the only things you can count on are death and taxes!

2.         Human capital is our #1 resource

Organizations and plans don’t make money, people do!  Your people, including you, are your #1 resource.  That being the case, you want to make the most of this resource.  Since peoples’ time is limited, you really need to make sure that you are focusing on the things that will leverage your human capital effectively.

3.         It’s really about time in the first place

If you stop to think about it, isn’t everything we do about really about how we spend our time?  Most of the things that we do are focused on allowing us to spend more of our time doing what we want to do in the first place!  So, by making decisions based on your return on time, instead of your return on investment, is really the best way to determine if what we are doing is really important, isn’t it?

I encourage you to look at how you spend your time, and ask yourself the question, “am I maximizing my return on time by spending my time in the best way possible?”  Doing this will help you to make better decisions and enrich your business and personal life in the process!    

Tom Kelly is a Profession Business Coach that specializes in working with small business owners, entrepreneurs, and salespeople. He can be reached at (773) 907-0921, or at www.potentialinmotion.com. 

Copyright © Tom Kelly, Potential In Motion, Inc.TM 2007

 

 
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