Do you know what is perhaps the biggest shock to new business owners? You guessed it—the inconsistent income. When all you’ve known is a steady paycheck, running a business can feel much like a rollercoaster.
This unpredictability isn’t just inconvenient. It can also be stressful. Before long, you start making crucial business decisions based on fear or false confidence. When things are going well, you spend way too much of your income. Then, when things inevitably slow down, you start scrambling for cash, cutting corners, and doing poor work.
It’s not a sustainable way to live, let alone grow your company.
But not to fear—today, I’m going to introduce you to a concept that will transform your business, making your income much more predictable so that you can grow: recurring revenue!
What Is Recurring Revenue?
Recurring revenue is the money that comes in week after week, month after month, whether or not you’re selling to new customers. It’s steady, it’s predictable, and, as a business owner, it makes your life that much easier.
And it doesn’t just ease your stress; it also makes your business more valuable. If you ever want to sell or attract investors, consistent income is something they’ll look for right away. It signals stability—something that’s often in short supply when running a small business!
6 Ways to Create Recurring Revenue for Your Business
So, how do you create this reliable income stream?
You don’t have to overhaul your entire business to create consistent income. Often, all you need to do is adjust the ways you deliver your products or services. Here are a few effective strategies to implement:
1. Lock Customers in with Contracts
Think about the way phone companies operate. They don’t just sell you a phone—they sign you up for a two-year contract. You know that bill’s coming every month, whether you like it or not.
So, if you offer any kind of ongoing service people rely on, consider packaging it into a fixed-term contract. This gives you peace of mind, and it gives your customers what they need on time.
2. Offer Auto-Renewing Subscriptions
Subscriptions are the new norm. Just look around you—there’s auto-renewing cloud storage, software, subscription boxes, you name it! People value convenience, and auto-renewals make life convenient for everyone—including your business. If you have a product or service that people need regularly, try automating monthly payments.
3. Sell Support Agreements
If you sell something technical or complex, offer a monthly support plan after the main sale. This might include maintenance, troubleshooting, updates, or priority service—adding real value for your customers and, in turn, giving you reliable, ongoing income.
4. Lean Into Consumables
Do you sell consumables, a product that runs out and needs replenishing? That’s a built-in, recurring need. Make it easy for customers to keep buying them from you. You can achieve this with a plan or subscription that delivers them like clockwork!
5. Break Up Their Payments
Suppose you offer a service that’s billed once annually—like taxes or insurance. Rather than asking your clients to fork over a lump sum, offer them a monthly payment plan. It’s much easier on their wallets, and it gives you a source of steady income year-round!
6. Use Retainers
If you’re a service-based business, charge a flat monthly fee in exchange for a set of services—maybe a few hours of consulting, tech support, or even just guaranteed availability. Your customers will appreciate knowing you’re in their corner, and you’ll appreciate the dependable income.
Make Recurring Revenue Work for You
The idea here isn’t to change what you sell but how you sell it. To start, look at the things your customers already buy from you. What do they consistently need? What’s causing them frustration or stress? What are the ways in which you can make their lives easier?
You don’t have to make all of these changes at once. Simply start with one product or service and monitor the results. The beauty of recurring revenue is that it builds over time. Each new customer you bring into this new revenue model adds to your baseline, and before you know it, you’ve created a whole new floor of stability within your business!