Dec
19

The Power of Savings-To-Investment Ratio

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When teaching I almost always reserve a section of the presentation for financial metrics.  One of the most overlooked metrics is my favorite one to use: savings-to-investment ratio or SIR.  It’s also one of the most effective to use if you frame it the right way. 

The Power of SIR

Let’s say you’re in a meeting, and you know what the savings-to-investment ratio (SIR) of your proposed project is before you start talking.  Let’s say it’s something generous, like 5:1. You say, “Just out of curiosity: if I offered you an investment with reasonable certainty that you would make $5 for every dollar you invested today, would you want to know more?” 

A prospect would have to be crazy to turn that down.  After that it’s about showing them your financial analysis and the numbers to back it up.  In fact, you might as well be telling them your project is like a magical ATM that will give them $5 for every dollar they put in!  How many dollars would you put into that machine?  Probably every dollar you could get your hands on, right? 

This metric is essential when it comes to illustrating savings; however, it’s often left out of major decisions.  One of our students is so fond of the metric, she wrote it on a Post-It note and stuck it to the front of her proposal so it wouldn’t be missed.  Her company’s financial proposal template didn’t include SIR, so she went the extra mile to make sure that very compelling ratio would be seen.  

The same could be said for many meetings and proposals.  If it’s a tool you can use, find a way to insert it into the discussion. 

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Posted by Mark Jewell