What Focusing on Recurring Revenue Does to You as a Business Owner

Want to know what focusing on recurring revenue does to you as a business owner? Building recurring revenue is a high priority for many businesses for good reasons. Recurring revenue will help your business to increase overall revenue, have more predictability around revenue (which is great for cashflow management), and it will increase the value of your business (should exiting be something you are aiming for). The benefits of recurring revenue from a business perspective are clear, but recurring revenue won’t just benefit the business, it will benefit the business owner too. Keep on reading to find out what focusing on recurring revenue actually does to you as a business owner.

 

 

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WHAT FOCUSING ON RECURRING REVENUE DOES TO YOU AS A BUSINESS OWNER

 

1 – It changes how you feel on the first of every month

 

If you don’t have any recurring revenue in your business then it is likely that on the first of the month you’ll be sitting down and thinking “How much revenue is my business going to make this month?” and “How am I going to make those sales?”. Starting the month zero predicted income means there is a lot of question and pressure at the beginning of the month. And this isn’t something that goes away as your monthly revenue increases. When there is no predictable income, even if you’ve achieved the same multiple months in the past there will also be a doubt about whether this month will the same.

 

But when you have recurring revenue in your business the first of the month feels different. You’ll be able to look at your finances and know how much money should (and I say should as of course people do occasionally default so nothing is 100% guaranteed) be landing into your business’ bank account. Not starting from zero makes a massive difference. Instead you could be looking at your revenue goal for the month and know that a percentage of that is already expected to come into the business and new sales will just be filling the difference. That will absolutely change your relationship with how you feel about money on the first of the month and how you feel about sales throughout the month.

 

 

2 – It changes how you make investments in your business – you’ll make them faster and with more confidence

 

To grow your business you need to make investments. Every business owner knows that. It can be investments specifically for the business (technology, team, marketing) or for you as a business owner (courses, coaching or mentoring). As a business investment you’ll want to consider the return-on-investment. When your revenue is up-and-down it can be harder to feel confident about what you foresee your growth being in the business and therefore calculating your return-on-investment. Whereas, with recurring revenue you’ll feel more confident about what your business is currently expected to make over the next 3/6/12 months and, as a result, feel better about estimating what value the investment could bring. Understanding your return-on-investment will help you to make a decision quicker of whether it is or isn’t worth it for your business. And time is precious. You want to be making fast decisions as a business owner and then moving on.

Not only will you make faster decisions, but you’ll also have more confidence around your investments. This confidence will be a result of two things. Firstly, you’ll have confidence in the potential return-on-investment. But secondly, you’ll have the confidence from a financial position about being able to make future payments. A major reason why business owners don’t invest in the long-term investments they need (like masterminds, coaching and mentoring) is because of the doubt about being able to afford it month after month. However, with recurring revenue, you’ll have more confidence about the reveneu your business is going to generate 3, 6 and even 12 months in advance. That will mean you can then have more confidence in making the investments to grow your business even further.

 

 

GET THE BUSINESS MENTORSHIP TO GROW YOUR SERVICE-BASED BUSINESS ON YOUR TERMS My one-to-one mentoring will give you the strategy, support and accountability so your goals become a reality. I’ll be by your side every step of the way to help ensure you are thinking strategically, taking intentional action and analysing your business’ performance so you can keep on optimising. Your business can only grow as much as you do. With my by your side, both you and your business will grow. For all the information and to apply (I only take on a limited number of 1:1 clients at any time) please click here.

 

 

3 – It changes your capacity to think long-term

For long-term success in business you need to be thinking long-term, but it is difficult to think long-term when you are constantly worried about whether you are going to make enough money this month and next month. If you are experiencing revenue rollercoasters where one month revenue is high and the next it is low, and at the beginning of the month you have no idea how a month will end it is easy to be stuck in tactical thinking mode. But the success of your business depends on you taking the time to think long-term.

 

Building your recurring revenue means as a business owner you’ll have more capacity to think long-term. For example, I recommend that as a business owner you should be taking one day per month out of your business to create an annual plan. For those that are stuck in fire fighting mode and worried about their next sales this is difficult. Whereas business owners with recurring revenue know that one day is the minimum. In fact, many will take themselves off for a multi-day retreat to think and plan for the future of their business.

 

Recurring revenue not only gives business owners the confidence to think they can take at least one day out to plan for the year ahead in their business, but it also means whilst doing that planning and thinking long-term they can bigger, bolder decisions. When your revenue is unpredictable you can be trying to plan for a future, but not really confident it is going to come true. With recurring revenue, there is more predictability. Less of your planning feels like it might happen. You’ll have more certainty in some aspects, which will give you confidence to go for it in others.

 

 

BE THE CEO YOUR BUSINESS NEEDS – SPEND THE DAY CREATING THE ULTIMATE ANNUAL PLAN WITH ME SO YOU CAN GROW YOUR BUSINESS WITH CONFIDENCE AND ON YOUR TERMS My Strategy Day are designed specifically to help business owners achieve their business growth for the 12 months ahead. Together we can map out exactly how you plan on achieving your growth goals, taking into consideration your offer suite, pricing, marketing, sales, operations and more. All you have to do is set aside a day, you’ll have me as your planning partner, and I’ll guide you through my signature annual planning framework that guarantees by the end of the end you’ll have a clear roadmap to achieve your goals and be excited for the year ahead. For all the information and to book a Strategy Day click here.

 

4 – It changes the amount of time you can take off and how you feel while taking time off

A massive advantage of focusing on recurring revenue is being able to take more time off. If you are like most small business owners you aren’t taking enough time off and even when you take time off, you struggle to properly switch off. Building your recurring revenue will help with both. Firstly, let’s address the issue of taking more time off.

Most small service-based business owners don’t take enough time off for two reasons – they don’t want to ‘lose’ money by not working and they are worried that with no marketing whilst on holiday they’ll also return to slow weeks. Recurring revenue helps address both of these issues. Depending on what offers you sell in your business to generate a recurring revenue the reality is that you can take a week or two off in a month without not being able to successfully deliver what is required from you per month in return of the monthly payment someone is making. For example, in my business, I have a 12-month programme where, in terms of live delivery commitment ,I have 1 to 2 calls per month. Therefore, as long as I organised my time off around those calls I will meet my commitments to my clients, receive the monthly revenue and be able to take time off.

Secondly, in relation to being worried about returning to slow weeks due to lack of marketing whilst taking time off, recurring revenue helps. Because even if you haven’t made sales whilst taking time off (although there are absolutely changes in your marketing and sales you can make so this doesn’t have to happen) you’ll be returning to work, and revenue, because of the offers you are delivering that are generating that recurring revenue. You are no longer in a world where the work you are doing next week or next month is dependent on sales in the last two weeks.

Taking time off is one thing. Properly switching off can be another. If you’ve ever found yourself on holiday, but constantly checking your emails or social media profiles or just worrying about business, that’s very common, but focusing on recurring revenue will help you to avoid this. For the clients/customers you are already working with you’ll have been able to notify them in advance (because you are thinking further in advance) and so you’ll have confidence that you have dealt with current clients/customers in a way that isn’t going to impact how they think about you and the business, and you can take time off and return with no implications. Also, you won’t be worrying about coming back to work and there being no work. You know with your offer suite, you’ll have work to return to and money will be coming in. And you may have the added bonus that recurring revenue has enable you to build your team so even though you aren’t working other people are working and ensuring the business is ok.

5 – It changes your confidence around hiring 

Hiring people to work in your business, whether that be as a freelancer or employee, can feel especially risky if your income is unpredictable. This can put business owners in a tricky position. They know they need more people in the business to grow, but they feel unconfident about making those hires when they don’t know what they expect to be making next month, the month after that and so on. This is where recurring revenue can make a massive difference. By building your recurring revenue you have more confidence about the money you’ll be generating in future months, which will give you more confidence in hiring people to grow your team. And depending on what those hires are it might be that directly bring more money into the business (marketing and sales), they free you up from certain tasks so you have more time (which you can then focus on other income-generating activities or have more time off) or they are looking after the business so you do feel you can properly switch off at times.

 

That’s it. You now know what focusing on recurring revenue does to you as a business owner.

 

There is no denying that focusing on recurring revenue is good for your business. And now you’ve seen how focusing on recurring revenue is good for you as a business owner too. Whether you want to be less stressed about your business finances, take more time off or feel like a CEO who invests and hires intentionally,  focusing on recurring revenue will help that to be your reality.

I hope you’ve found this blog post helpful and it has inspired you to take building a recurring revenue in your business seriously.

So now what? Building recurring revenue means having the right offer suite and pricing strategy, having the right marketing and sales process, and ensuring your have the operational setup to deliver. And I help business owners ensure they have all 3 of these things inside my one-to-one mentoring. 

For more information about my one-to-one mentoring, and if you think it’s a good fit you can apply,  click here. 

 

GET THE BUSINESS MENTORSHIP TO GROW YOUR SERVICE-BASED BUSINESS ON YOUR TERMS My one-to-one mentoring will give you the strategy, support and accountability so your goals become a reality – and in the most strategic way possible. I’ll be by your side every step of the way to help ensure you are thinking strategically, taking intentional action and analysing your business’ performance so you can keep on optimising. Your business can only grow as much as you do. With my by your side, both you and your business will grow. For all the information and to apply (I only take on a limited number of 1:1 clients at any time) please click here.