Why return matters to a first-time founder
Return helps founders and investors compare what an investment produced with what was put at risk. The figure is incomplete without a time period and a clear treatment of fees, cash distributions and changes in value. A high expected return usually comes with uncertainty rather than a guarantee.
Examples of return
An investor puts ₦50 million into shares and later sells them for ₦57 million after receiving ₦1 million in dividends. Before fees and tax, the gain is ₦8 million and the simple return is 16%. The annualised return would differ if the investment lasted more or less than one year.
Common misunderstanding
Return is not the same as revenue, profit or cash in the bank. It measures the outcome relative to an investment. A quoted percentage may be expected or historical, realised or unrealised, and before or after costs. Those choices can make apparently similar figures unsuitable for comparison.
When to use it
Use return when comparing investments, evaluating capital allocation or explaining investor outcomes. Always state the period, formula, currency and whether fees, tax, dividends and unrealised gains are included. Do not present an uncertain projection as promised performance, and include risk alongside any forecast return.