{"id":5578,"date":"2021-09-13T13:09:23","date_gmt":"2021-09-13T18:09:23","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/starting-a-business\/what-is-return-on-investment.html"},"modified":"2026-05-08T14:58:00","modified_gmt":"2026-05-08T19:58:00","slug":"what-is-return-on-investment","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/what-is-return-on-investment.html","title":{"rendered":"Return on Investment Explained for Small Business Owners"},"content":{"rendered":"\n
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Return on Investment Explained for Small Business Owners<\/h1>\n\n
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\n By Amber Sheppard, Esq.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Return on investment<\/span> (ROI) is a metric<\/span> small <\/span>business<\/span> owners<\/span> use to measure the profitability of a business investment<\/span> by comparing the gain or loss to the initial cost. A good ROI<\/span> yields a higher net profit<\/span> than the cost of the investment<\/span>.<\/p>\n\n <\/div>\n\n\n\n

This FindLaw article helps entrepreneurs<\/span> understand why return on investment<\/span> (ROI) matters in a business investment<\/span>. It will also show how to calculate the rate of return<\/span>.<\/p>\n

Return on Investment<\/span> Basics<\/h2>\n

To attract capital, startups<\/span> need to understand what an ROI is and why it matters to investors, lenders, and new business members. Below are important aspects of ROI:<\/p>\n