How to Calculate ROI on a Small Business Investment: With Real Example

ROI helps small business owners compare whether an investment is worth the money, time, and risk. It is useful for equipment, ads, inventory, software, training, and new services.

ROI Formula

ROI = net return / investment cost x 100.

If you spend $2,000 and earn $2,600 back after costs, the net return is $600. ROI is $600 / $2,000 x 100 = 30 percent.

Use the ROI Calculator and Investment Return Calculator to test scenarios quickly.

Real Example

A small bakery spends $1,500 on a new mixer. Over six months, it helps produce extra orders that bring $4,000 in revenue. Extra ingredients, labor, packaging, and fees cost $2,000. Net return is $4,000 - $2,000 - $1,500 = $500.

ROI is $500 / $1,500 x 100 = 33.3 percent.

Include All Costs

ROI becomes misleading if you forget labor, maintenance, shipping, payment fees, training, or wasted inventory.

Use the Profit Calculator, Margin Calculator, and Break Even Calculator to check whether the investment supports real profit.

Customer Metrics Can Change ROI

For marketing investments, compare customer acquisition cost with customer lifetime value.

Use the CAC Calculator and LTV Calculator when measuring ad campaigns or subscriptions.

Bottom Line

ROI is only useful when the inputs are honest. Include all costs, measure net return, and compare ROI with break-even, margin, and cash flow before investing.