ROI and payback
A generator, solar panels, a new machine or a second vehicle: what does it earn or save each month, and after how many months has it paid for itself?
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Rule of thumb for a small business: an investment that pays for itself within 2 to 3 years is usually a good one. If you borrow for it, include the interest: Loan calculator.
What to count in an investment
- All costs: purchase, installation, transport and import costs, not just the shop price.
- Running costs come off the return: fuel and maintenance for a generator, insurance for a vehicle, replacement batteries for solar panels.
- Currency: if you buy in dollars and earn in SRD, the payback time moves with the exchange rate. Try a higher rate too.
- Savings count as return: solar panels that lower your EBS bill, or a machine that saves a worker.
- If payback takes longer than the life of what you buy, it is not a good investment.
A helpful tool, not tax or legal advice. Check important amounts.