Friday, December 30, 2011

ROI Numbers are Tough to Ignore

The Big Question for any business owner thinking of  investing in an LED Sign is "will a LED Sign really increase my buiness?" We know the answer is a resounding YES, but don't take our word for it. The Small Business Administraion has found the addition of a LED sign typically results in a 15 to 150% percent increase in business. What will be your expected return on investment (ROI) with the purchase of an outdoor LED sign? Lets take a typical LED display purchase and determine how long it would take to pay for itself using conservative numbers.

Proposed Sign Price: $8,000

Annual Gross Revenues: $150,000

Assumed Increase in Annual Gross Revenue: 15%

Take the annual gross revenues and multiply it by the assumed increase (in this case we will assume a minimal increase of 15%). Take the result of that calculation and divide it by the sign price. That gives you the number of times in a year the new sign would pay for itself. Then take the number of days in a year and divide it by the number of times it would pay for itself in a year. This gives the number of days it will take for the proposed sign to pay for itself in increased gross revenue.

$150,000 X 0.15 = $22,500 = estimated annual gross revenue increase from adding a LED Sign.

$22,500/$8,000 = 2.81 = the number of times the LED sign will pay for itself in one year.

365/2.81 = 130 days = the number of days it will take for the LED sign to pay for itself (in gross revenue).

So the new LED display pays for itself in 130 days. Less than 6 months after the LED sign is installed, the buisness would be in the black. Plug in your numbers to this simple formula and calculate your ROI.  Can your busines afford to ignore the numbers?

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