Is Your ROI Target Killing Your HMO Business?

2024-08-07

In this episode, we're discussing something I believe is incredibly important: return on investment (ROI) or, as I prefer, return on capital employed (ROCE).This is undoubtedly one of the most critical metrics we should consider when appraising and analysing deals in our business. However, in my opinion, and I need to get on my soapbox here, too many people are excessively focused on this target, setting standards that are simply too high. This, in fact, hinders the future potential and performance of their...

In this episode, we're discussing something I believe is incredibly important: return on investment (ROI) or, as I prefer, return on capital employed (ROCE).

This is undoubtedly one of the most critical metrics we should consider when appraising and analysing deals in our business. However, in my opinion, and I need to get on my soapbox here, too many people are excessively focused on this target, setting standards that are simply too high. This, in fact, hinders the future potential and performance of their business.

Now, that might sound counterintuitive because surely the better the ROI, the better the ROCE, the better the business, and the more you can grow your business. So in this episode, we’re going to discuss that, including:

- Understanding ROCE and its limitations
- The pitfalls of overly high expectations for ROCE
- How to balance ROCE with other metrics
- Alternative strategies for ROCE
- The benefits of long-term investing

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