After launching two videos and articles pertaining Return on Investment (ROI) in Coaching and Consulting, I have got many questions from coaches, consultants, and business executives how to properly calculate different return on investment ratios, how many different approaches there are and what is the difference between them.
There are more ways how to calculate the return on investment ratios. Every company uses its own method. It is important to understand which method a company uses and use it in your calculation and approach when dealing with the company.
1. Return on Investment (ROI Ratio) – a very important ratio well known in business and widely used by Certified Public Accountants and other finance people, called Return on Investment, abbreviated as ROI. This ratio basically tells us how many dollars are gained as result of investing one dollar.
2. Benefit-Costs Ratio (BCR) – a very common return of investment ratio. BCR compares benefits and costs of the coaching or consulting projects. The BCT tells us how many times the benefit is higher of what was paid for the effort.
3. Return on Investment (Simplified ROI = Profit) – this is a rather simplified yet powerful ratio. It subtracts costs from the coaching or consulting from the benefits from the investment and calculates the level of the Profit.
4. Net Present Value (NPV) – this is quite complex and very commonly used ratio within the business, especially within the big corporations. The main advantage of this ratio is that it calculates the time value of benefits and cost of the investment. It says that $1,000 received (or paid) today had a different value of $1,000 received (or paid) in future. This ratio summarises time value of the initial investment (costs) with future benefits and testing if the coaching or consulting project is acceptable.
I provide new and effective Training in return on investment calculation and corporate Finance – ROI, financial management, financial planning and budgeting, contingency plans, accounting, taxes and much more. For more information, please, contact us on our email: email@example.com, via Facebook or via phone.
Example of Financial Coaching Training Program:
I can help you to prepare all your return on investment calculations and to be well prepared for your business development or maintaining existing business.
I can also help you to prepare your own case studies with ROI calculation to be well equipped for your present or future negotiation.
I can provide you my finance expertise in other areas – for example, planning and budgeting, review of your financial performance, mentoring new finance skills you want to acquire etc.
Within the web blog sections, there are also two short videos, where I explain the ROI concept, calculation, methodology and how and where the calculation can be helpful for coaches or consultants.
Author: Tomas Horejsi has 20+ years’ experience in the corporate finance area with top international companies in Europe and USA, as Chief Finance Officer (CFO), Finance Director, Finance Manager, Finance Controller, Finance Analyst etc with the best international companies – SEPHORA (LVMH Group Louis Vuitton Moet Hennessy), Dover, Cemex, Tesco Stores, Royal Ahold, Mediterranean Shipping, Gefco, Unilever, KPMG. He is Certified IECL Coach (Institute of Executive Coaching and Leadership), Sydney and Certified Trainer. He owns Finance Coaching & Consulting International Company (FC&CI).