What should be a good ROI for a startup?

[Rohan Kotkar]

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?

[palle11]

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% 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.

[avikz]

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?

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.

[Findingnemo]

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 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.

[teosanru]

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?

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.

[stomachgrowls]

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?

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.

[Fortify]

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?

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.

[DrBeer]

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?

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....

[kaya11]

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?

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.

[tabas]

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.

[Hydrogen]

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.

[Scripture]

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.

[jossiel]

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.

[Yamifoud]

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.

[magneto]

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.

[el kaka22]

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.

[Doan9269]

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.

[Reid]

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?

[stompix]

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?

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.

[DanWalker]

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.