The recurring income model. It’s my hero.
What do I mean by recurring income business model?
One of the things that I look for with my business coaching clients is to find a way that they can charge the same clients a regular fee for ongoing work.
In business, cash flow is king. It rules your entire life like some feudal lord with control over his serfs.
I want my clients to rule their own lives and not have to worry about cash flow, so I’m always looking for a way that they can make sure that they’ve got regular money coming in.
That’s where the recurring income business model comes in.
This might mean repositioning the business so that it offers packages of work, rather than one-off projects. Or it might be the retainer model, where your client agrees to pay a regular fee to access a certain number of hours of your time or a certain set of services each month.
Alternatively, you offer a discount to the client if they book so many sessions over a full year, something like a “buy 12, get two free” offer.
Why would I give them a discount?
You’ll see elsewhere on the blog that I don’t really approve of giving discounts.
I see giving discounts as lazy marketing or what people do when they’re not so confident about what they’re offering. But, one time that it is good to give a discount is where that brings in regular work, or makes your company look more like the recurring income business model.
It’s better to have regular work, and therefore regular billing then to absolutely maximise the amount of your billing. Your business will be more healthy if you’ve got 5K coming in every month, and you know that you’ve got 5K coming in next month. That’s actually better for you than getting 65k in February, and then nothing for the rest of the year.
That recurring income helps you plan and invest in the business, and it boosts your confidence.
Some examples of recurring income model businesses
90% of my business mentoring work is on a recurring income model, and I’ve set this up on purpose because it makes me feel much more confident and healthy. Clients pay me a monthly set fee, and they get a package of services. Some clients just come along to meetings and I have never hear from them in between. Others phone me and email me a couple times a week or more.
Overall, this tends to even out and I know by now the average number of hours I spend on the average client.
How the recurring income business model works for other businesses
A car mechanic might want to increase her monthly recurring revenue by offering quarterly tune-ups and servicing.
Most people only get their car sorted out if there is either a problem or if the MOT is due. think most mechanics are missing a trick by not offering a quarterly service to keep the car in tiptop shape. This would be better for the owners because any niggling little problems would be dealt with before they became big problems or potentially dangerous, plus the car would be running at its maximum potential.
Our mechanic might even include an upsell on the deal of a cleaning or valet service at the same time as the tuneup.
Recurring income business model for lawyers
Most lawyers are only called in when there’s a problem or a big change. Again, I think they’re missing a trick. A good lawyer would be forging a great relationship with her clients by having a monthly or quarterly meeting. Or maybe being a board adviser. She could offer the legal perspective on the challenges their business faces. And she would be in a great position to sell in her one-off services of negotiating or checking contracts as they went along.
If I was a legal firm I’d offer this at much less than my standard hourly rate, just to be able to get the relationship with the client.
What about the copywriters?
Copywriters are usually called in when somebody is re-writing their website, or they have a new brochure to write. This is a great opportunity to suggest that as well as the new website, your clients will need content written every month. Plus someone to check the website and make sure that it’s all up to date and working properly.
And the bookkeepers?
If you run a bookkeeping business, you probably already have monthly recurring revenue because your clients need you every month. But maybe they also need something beyond just keeping their books up to date, maybe they need a monthly report on the health of their business or the state of their investments.
This could be a very nice extra source of recurring income.
How can your business change to the recurring income business model?
I think you get the idea – you need to transform your business if you’re not already getting regular fees from clients. And you might need some help to do just that
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