What’s the Difference Between an Expense and an Investment?

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I was checking out Joe’s fabulous Return on Investment (ROI) Calculator (you really MUST use this!) and realized there are likely many people who have never used a tool like this before. I wondered if perhaps some people would view the ROI Calculator as an “income minus expenses” calculator rather than for what it’s really intended for, which is to determine how many weeks it will take you to get the expected number of new clients for your practice. It’s literally how many weeks it will take you to pay yourself back on what you invested in your practice!

That being said, how do you know the difference between an expense and an investment?

Expenses are typically considered ordinary and necessary. Expenses that are ordinary and necessary in our industry is something common like office rent and telephone expenses each month. Once it’s paid, it’s gone. In other words, there’s no getting back a past month and you won’t earn anything else on it once it’s over.

An investment is something entirely different. “Your Brand” is something very much worth investing in—over and over again. What’s “Your Brand” you ask? Let’s say you do CBT in your practice. Let’s say all your colleagues in the entire universe do CBT in their practices too. In fact, let’s say you’ve all had the exact same training in CBT.

“Your Brand” is the special, unique way you do CBT with your clients, your distinctive way of treating your clients, how your passion is demonstrated in your work, and how you spend money on the things that help to differentiate you from the rest of the CBT universe. It’s how you—and only you—share your gift with the rest of the world. There is no one else on Earth that does CBT the way you do it even with the same training. No one has the same character, the same kind of caring, the same kind of commitment to your clients that you do.

The ROI Calculator: Investment Opportunity

Your gift is your investment in your practice. Martha Graham, the famous choreographer, said “There is a vitality, a life force, an energy, a quickening that is translated through you into action, and because there is only one of you in all time, this expression is unique. And if you block it, it will never exist through any other medium and will be lost. The world will not have it. It is not your business to determine how good it is nor how valuable nor how it compares with other expressions. It is your business to keep it yours clearly and directly, to keep the channel open.”

See the difference between an expense and an investment?

Now, when you use the ROI Calculator and come to the Investment Opportunity part of the tool, think about all the things you spend money on that help to bring your gift to the world. This is the Cost of Investment part of the tool. Make sure to use the total amount, not a monthly figure.

Think about the total cost of your investment. Is it advertising your practice using Google AdWords or improving the Search Engine Optimization (SEO) of your website? Is it training on your specialization? Are you consulting with Joe? Are you doing conferences that showcase your gift? Are you spending money on a virtual assistant to help you publish an e-book? Enter a total amount for all the investment opportunities you are engaging in to improve your practice thereby sharing your gift.

The ROI Calculator: Expected New Clients

Now’s the time to plug in the number of new clients you expect to get from this investment. Add or subject from the Expected New Clients amount to change the number of weeks it will take you to make a return on investment. This will allow you to discover how many weeks it will take to pay yourself back on your investment! How? It’s because each client you have is worth money to your business, and calculating the cost of that client with the cost of your investment tells you how many weeks it will take you to get the Expected Number of New Clients you calculated in the ROI tool.

It’s important for you to know how long it will take you to share your gift with the world. It will guide your business decisions, lessen the anxiety about your business, and motivate you to move forward in building your practice in a more focused way! Go for it! The world is waiting for you!

-Susan L. Taylor, DBH, LMSW

Doctor of Behavioral Health
Licensed Master Social Worker