Making More Money in Your Business: Lessons From a Video Game AddictionThursday, September 25, 2014
Right now at Accrisoft, the entire office is in a hysteria over Clash of Clans. It’s a real problem, and I blame Mark. He started playing the game a few months ago and recruited everyone else to join his clan. I’m still pretty new to the company, so I’ve been able to avoid the whole ordeal — but I have a feeling my day is coming.
Morning meetings now include updates on minions and battles. And when a new player joins the game, the Accrisoft clan goes nuts over all the mistakes New Guy keeps making.
The less experienced players all follow the same pattern: they don’t know what to expect later in the game, so their strategy is short-sighted. They struggle to contribute to the long-term growth of the clan, so in a lot of cases they get stuck (and mocked by Team Accrisoft).
It’s pretty serious, you guys.
In some ways, running a business works the same way. When you first started taking on web development clients, it was difficult to think ahead because you didn’t know what to expect. So you probably started filling your calendar with projects, and working out the details as they came up (I know I did).
The Problem With Projects
Tom launched his web development business about four years ago. He started out slowly as a freelancer, but now he usually has a few projects going on at a time. His clients are always happy with his work, so he gets referrals often — but he’s feeling burned out and frustrated.
Some months, he’s working on so many projects that he barely has enough time to finish all his work. Other tasks, like invoicing, and sourcing new project leads, get moved to the back burner so he can focus on the projects at hand. As a result, he doesn’t always get paid when he’s supposed to and when the work slows down, he has to scramble to find new projects and pay the bills. Have you ever been in this situation?
One of the biggest reasons businesses fail is because they don’t know how to plan for growth. But if your business isn’t scalable, you’re setting yourself up for burnout (or worse).
You have a finite number of productive hours at your disposal each day — so if you’re only working on a project basis, your income potential is limited to the volume of work you’re able to take on manually. You can scale your business by hiring employees or contractors to help with the workload — and you should, if it makes sense for you.
But what if you have a few dry months, in terms of projects booked? What if you lose your biggest client? There is a way to protect yourself against the business roller coaster, and it’s called a recurring revenue model.
A Better Way to Make Money
Recurring revenue is just a fancy name for stable, predictable income that is likely to continue for the foreseeable future. Think about the work you do today — if you only make money off of a one-time project your client books with you, you’re not building a recurring revenue stream. On the other hand, if your clients are contracted into a monthly payment for your product or service, you can anticipate this income and plan for it.
By creating a recurring revenue stream, you relieve the pressure of constantly needing to hunt for new contracts to pay your expenses and save money. Plus, being able to predict your income three, six, or even twelve months in advance makes it possible to plan for business growth and life events.
Recurring Revenue in Action
Remember Tom? He wanted to stabilize his income, so he’s been working on a subscription resource for marketers who want to learn how to build email marketing templates. He launched the subscription three months ago, and enrollment has been growing steadily.
The resource took a lot of upfront work to build — but now that it’s finished, Tom can run the subscription on autopilot while his students learn at their own pace. As a result, his income stream is less chaotic and he can take on fewer projects without worrying about his cash flow — which allows him the extra time to run his business and create new, more advanced resources for his students (and, let’s be honest — more time to play Clash of Clans). This, in turn, increases his income potential even more.
By developing a recurring revenue model into your business, you’ll protect yourself from burnout and build a stronger foundation of predictable income. Don’t wait until you’re at a breaking point to make healthy changes to your company — you can start small, and continue to scale as your income and workload stabilize. Here are a few ideas to get you going:
- Offer a design subscription. Once your client’s website is live, they will benefit from having you available to update their graphics and social media banners to reflect seasonal changes and promotions.
- Does everyone tell you you’re a good writer? Start ongoing content creation — email marketing, blogging, and social media are always in demand.
- Keep your clients active with ongoing support. You can handle website maintenance, web hosting, and other technical issues as needed. This is a great opportunity to collect a monthly payment in exchange for serving as their emergency contact.