

The right way to calculate your rate on investment - slapshot
http://www.avc.com/a_vc/2010/01/how-to-calculate-a-return-on-investment.html#top

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JacobAldridge
Essentially, that a return on investment needs to remember that the principle
also needs to be returned, and that the business has a lifecycle.

I think the lifecycle part is the real insight here. When I read a business
plans that will 'return $100K every year' or 'Grow by 25% each year', I know
the writer has been lazy with the numbers. Better off to set targets - linked
to strategy - for the foreseeable future (maybe up to 3 years, depending on
industry) and then admit everything else is fuzzy.

