Some endeavors pay you.
Some punish you.
Many founders say yes to new work because it brings in cash now.
But they don’t stop to ask “Will this be worth it after all the time and cost?”
So they end up busy but never actually getting ahead.
It usually goes like this:
You accept an opportunity.
Your team gets pulled in.
Deadlines pile up.
And other priorities fall behind.
By the time it's done the return feels small for the effort you invested. You worked hard but your bank balance tells a different story.
Do this a few times a year and progress slows. You cannot tell which projects grow the business and which simply drain energy.
You do not need complex financial models.
You need two basic tools that show you the real return of any project or investment.
NPV
IRR
They help you answer a simple question. “Is this worth doing or not?”
NPV means net present value.
It shows the dollar value of a project after you consider timing, cost, and the return you expect.
Here is the simple approach:
You estimate the cash the project brings in.
You estimate the cash it requires.
You look at when these happen.
You set the minimum return you want.
If NPV is positive the project beats that minimum.
If NPV is negative it takes more than it gives.
IRR means internal rate of return.
It tells you how fast the project pays you back each year.
High IRR means the project returns value quickly.
Low IRR means your time and resources are tied up for a weak payoff.
Use both.
NPV shows the total value.
IRR shows the pace.
This helps you compare two opportunities objectively.
One might look impressive on the surface but deliver a slow return.
Another might look smaller but produce steady fast value.
With NPV and IRR you stop chasing every chance that shows up.
You stop loading your team with work that drains them.
And you start selecting projects that bring real value.
Which project gave you the best return this year?
Also, if you'd like a free tool to calculate NPV or IRR message me or reply to this email.
To your financial success,
Jake Erickson
The Finance OS
For CFO Services: Book a Right-Fit Call | www.dreamsidefinancial.com