From Inc.:
If you knew with absolute certainty that you could put one dollar into investment and get two in return, what would you do? Chances are, you would pour as much money as you could into that investment as quickly as possible and smile all the way to the bank. This simple scenario is an example of an arbitrage opportunity, in which you can buy something at a low price and sell it again at a higher price with minimal risk.
Arbitrage opportunities are essentially precursors to growth, especially in a startup. They signal when and where you should spend your money in order to produce the largest return on an investment. The challenge is knowing definitively that every product you sell and dollar you spend is going to contribute to a positive bottom line.
How do you decide where to put your money?
From our perspective, looking at how you compare to your peers is the key to optimizing your company’s performance. Not only does this put your numbers in proper context, it can give you strategic insights you might otherwise miss.