A Return On Investment (ROI) calculation example helps quantify the benefits associated with pursuing a government funding program. The ROI calculation involves comparing the financial benefits expected from the funding program.
The formula for ROI is as follows:
ROI = (Financial Benefits - Cost of Grant Application) / Cost of Grant Application x 100
Financial Benefits:
Estimate the financial benefits that are likely to be derived from the grant if it is successfully secured. This may include the grant amount itself, projected revenue growth, cost savings, market expansion opportunities, or any other quantifiable financial gains resulting from the grant. Consider both short-term and long-term financial impacts when estimating the benefits.
The Calculation:
As FundTact will be assigned to commence and complete an application process, the cost will include the minimal time and effort invested by the applicant business and the FundTact consulting fees. Now let’s consider an example where the financial benefits estimated from the grant are $100,000, and the cost of processing the fund is $20,000 and the maximum time your company, as an applicant, spend with us is 2 hours.
The first calculation will look like this:
ROI = ($100,000 - $20,000) / $20,000 x 100 = 400%
In this calculation, the ROI yields 400%. This means that for every dollar invested in the fund application process, the business expects to receive a return of $4. This high ROI demonstrates that the financial benefits outweigh the costs incurred during the fund application process.
Now, the second calculation will look like this:
ROI = $100,000 - $20,000 = $80,000 / 2 hours = $40,000 per hour
With the second calculation, the ROI analysis reveals that an applicant can spend a maximum of two hours of their time to provide FundTact with the required information for the funding application process, and in doing so, they will earn $40,000 per hour.
Time well spent.