Opinions expressed by Entrepreneur contributors are their own.

I was recently speaking with an entrepreneur who’d passed on an investment because it would not need yield the company at least a 10x growth opportunity. I told him those returns might be reasonable when investing in small businesses (under $5 million) but that he should consider lowering his ROI threshold when investing in larger ones.

My logic was twofold: First, bigger companies are harder to grow as quickly as small ones, so the growth percentages will be lower; and second, there’s the potential to make substantially more money on a bigger company investment, even if the ROI was only 3x to 5x.

Here’s how to know when it’s better to focus on percentage returns vs. dollar returns when assessing your investment opportunities.

This article is from Entrepreneur.com

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

4 Key Indicators It’s Time for You to Hire Your First Employees and Stop Doing Everything Alone

Opinions expressed by Entrepreneur contributors are their own. Recognizing when to transition…

The UAE Ministry of Health and Prevention Launches The UAE National Nutrition Strategy 2022-2030

The UAE Ministry of Health and Prevention (MoHAP) has launched the UAE…

The Hidden Benefits of Business Failure: My Personal Experience

I don’t believe people when they say “I have no regrets.” I…

Best Practices for Operating Your Business in a Rapidly Changing Market

Opinions expressed by Entrepreneur contributors are their own. The market we work…