Tiana Garrison, Women in Research
You've built something real. A business, a team, a vision. But when someone asks, "What's your ROI on this initiative?" or "How does this project look on an NPV basis?" do you feel confident in your answer, or do you find yourself deferring to someone else in the room?
You're not alone. Financial planning tools like ROI, NPV, and IRR are rarely taught outside of finance programs, yet they're used every day to determine which projects get funded, which ideas get greenlit, and whose proposals get taken seriously. When women don’t have a foundational fluency in these tools, we're at a disadvantage, not because we lack the ability, but because we haven't always been given access to the language.
Financial planning isn't just about budgets or annual forecasts. At its core, it's about making confident decisions with limited resources. Every organization -- whether a startup, a nonprofit, or a Fortune 500 company has more ideas than money. Financial planning is the discipline that helps leaders decide which investments are worth pursuing and which ones aren't.
It works at two levels: short-term planning, which focuses on managing cash, controlling costs, and meeting near-term goals; and long-term planning, which is about directing capital toward initiatives that drive sustainable growth. Both matter, and understanding how they connect gives you a complete picture of your organization's financial health and future.
At the heart of long-term financial planning is the capital budgeting process, which businesses use to evaluate major investments and projects. Should you open a new location? Invest in new technology? Launch a new product line? Capital budgeting gives you a rigorous framework for answering these questions.
Rather than relying on gut instinct or whoever argues loudest in the room, capital budgeting relies on data. It forces you to ask: how much will this cost, how much will it return, and when? These are powerful questions, and they're ones that women in leadership are more than capable of answering with the right tools.
Three financial metrics sit at the center of most investment decisions. Here's what they mean and why they matter.
1. Return on Investment (ROI)
ROI is the most straightforward of the three. It measures how much return you get relative to what you invested:
ROI = (Net Benefit / Cost of Investment) x 100
For example, if you spend $50,000 on a marketing initiative that generates $75,000 in new revenue, your net benefit is $25,000, and your ROI is 50%. Simple, clear, and immediately actionable.
ROI is a useful starting point because it's easy to communicate and compare across projects. But it has a limitation: it doesn't account for when you receive that return. A 50% ROI over one year looks very different from a 50% ROI spread over ten years; that's where NPV and IRR come in.
2. Net Present Value (NPV)
NPV is built on a foundational financial concept: a dollar today is worth more than a dollar tomorrow. This is called the time value of money, and it's why businesses "discount" future cash flows to understand their value in today's terms.
NPV calculates whether an investment will create value by comparing the present value of expected future cash flows against the upfront cost. Positive NPV means the investment is expected to create value. Pursue it. Negative NPV means the investment is expected to destroy value. Reconsider. NPV of zero means the investment breaks even at your required rate of return.
NPV is particularly useful because it forces you to think carefully about the timing and size of returns, not just whether a project looks profitable on the surface.
3. Internal Rate of Return (IRR)
IRR is the flip side of NPV. Instead of calculating a dollar value, it calculates the rate of return a project is expected to generate. You then compare that rate to your organization's cost of capital or minimum required return, often called a "hurdle rate."
If a project's IRR exceeds your hurdle rate, it's worth considering. If it falls short, the investment isn't generating enough return to justify the risk. IRR is especially useful when comparing multiple projects of different sizes, because it levels the playing field with a single percentage you can evaluate side by side.
Women founders receive less investment funding, face more scrutiny when pitching ideas, and are more likely to have their financial projections questioned. This is a systemic problem, but one of the ways we push back is by showing up prepared and fluent in the language of financial decision-making.
When you can walk into a room and say, "This initiative has a projected NPV of $180,000 at a 10% discount rate and an IRR of 22%, well above our hurdle rate," you're not just presenting a number. You're demonstrating command. You're leading.
Fluency in capital budgeting doesn't just help you evaluate investments for your organization; it helps you advocate for your own ideas, defend your strategies under pressure, and build credibility as a financial decision-maker. Short-term planning keeps the operations running. Long-term planning determines where you grow. Knowing the metrics that connect the two gives you the ability to turn your vision into a defensible, data-backed strategy that others can get behind.
The next time your organization is evaluating a new initiative, try walking through these three questions:
These aren't just questions for the finance team. There are questions for every leader at the table, including you.
Our Accelerate Finance Foundations program is designed with the unique needs of women professionals in mind, sharing tips on how to read, interpret, and apply financial frameworks to real business decisions, with practical tools you can use right away. Register today and start making more informed financial decisions for your organization.
