Forget Return on Equity … focus upon Return on Effort

By Leon Gettler, Talking Business >>

WHAT ARE some of the rules that entrepreneurs and small-to-medium enterprises (SMEs) have to follow to grow their businesses?

Former scientist turned business consultant and coach, Tom Williams said successful entrepreneurs needed focused management practices and to block out time for strategic planning.

It’s a formula that helps any SME owner to scale their business and overcome any barriers to growth, according to Mr Williams, whose business is branded InnovationConsult. 

Mr Williams said while a lot of entrepreneurs focus on RoE (Return on Equity) he urges his clients to plot a different form of ROE. It’s Return on Effort.

“I encourage my clients to plot the profit contribution of different categories of clients with the effort it takes for the organisation to serve those clients and look for a group of ideal clients that are not only profitable but are pleasant to work with and don’t excessively take up a lot of time and effort,” Mr Williams told Talking Business.

“Once you’ve identified those clients, then it’s a matter of thinking about where you can reach them, how can you reach them and primarily with outbound marketing. You can use things like Sales Navigator to identify where these people are, how to reach them and begin a conversation with them and set up a pipeline that allows you to predictably, reliably, and repeatedly get $5 to $3 back for every $1 you invest in finding these targets and converting them to clients.”

Springboards for growth

Mr Williams said entrepreneurs needed five springboards for growth.

These are: having a value proposition, having a vision of where the business will be in the future, hiring quality people and leaders, having good process and systems and having a sales and marketing machine that drives profits instead of costs.

Mr Williams said employer branding and values are critical for recruiting and retaining quality staff.

He said many employers “hadn’t thought this through”.

“If you’re young and talented, why would you want to work with a particular organisation?” he said. “You’ve got to think through what you’re providing so you become the employer of choice.

“Often the younger generation wants a social purpose beyond just making money that they can believe in. They want to have some fun in the organisation, they want to believe they’re going to be working with people they enjoy working with, of course, they want good remuneration and they want career prospects.

“But it’s the total package of believing in the organisation, sustainability, ESG (environmental, social and governance) is coming into it more and more. It’s the total package to be the employer of choice.”

Total value proposition

Mr Williams said entrepreneurs needed to develop a total value proposition for clients, giving their customers “the emotional payoff”.

He said entrepreneurs should also develop systems and processes to ensure their business runs like clockwork.

Some of this, he said, came down to having quality software providing CRMs (customer relationship management systems) and ERPs (enterprise resource planning systems).

This came down to a lot of work – “something no entrepreneur can avoid”.

“Work-life balance is something that’s obtainable down the track a bit – but in the early stage, your work has to be your life in order to be successful,” Mr Williams said.


Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at


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