Value Driver Series #6 – Recurring Revenue
Recurring revenue is guaranteed revenue. It makes your company more predictable, extends the lifetime value of a customer and makes your business more valuable.
So, what are some ways to add recurring revenue to your business?
- Customer Contracts: Products or services that require a contract for a pre-defined term.
- Automatic Renewal Subscriptions: Products or services where a fee is automatically charged monthly.
- Sunk Money Renewable Subscriptions: Products or services that require an initial investment then an ongoing user fee.
- Renewable Subscriptions: Products or services that are paid in advance for a defined period of time.
- Sunk Money Consumables: Disposable products that require an initial investment.
- Consumables: Disposable products that a customer purchases regularly where there is brand loyalty.
You, as an owner, will need to evaluate your existing revenue streams and where possible, implement additional forms of recurring revenue. This will likely require you to think outside of the box and get creative with how to offer your products or services to clients. But you must stay competitive to grow your business. Being able to demonstrate a solid platform of recurring revenue will reveal to a third-party buyer where your sales will come from in the future. This is one of the best ways to add value to your business while instilling confidence in a potential third-party buyer.
This blog article is for informational purposes only. It does not create an attorney-client relationship and is not intended to be regarded as legal advice.