How to Build Your Business With Recurring Revenue

If you’re waking up without guaranteed revenue of recurring income, you run the risk of losing your business.

Recurring income sets you up for security and cushion. It sets up the foundation to invest some of that income into building your empire greater and greater.

Why Having Predictable Revenue Will Allow You to Sell Your Business Later On

When I first started as a personal trainer, I was selling 3, 5, 10 session blocks a month.

And I had, say, 15 clients each month.

When those sessions ran out, I would have to put the sales hat back on and sell them another block of sessions.

Sometimes they would say yes, other times they would say no. Or they would say “I need to think about it.”

And if someone tells you they need to think about it, they ain’t coming back.

My mentor and former personal training client, Jim Franco, asked me one day “I wonder if you could build a business similar to the gym. The gym takes money every month to give them access to the equipment.”

Jim didn’t know how to workout. To him, all this gym equipment meant nothing. That’s why he was coming to me to train him.

So Jim tells me “I wonder if you could sell me on a program on an ongoing basis. That would keep you from having that awkward conversation every time you have to sell more sessions.”

Later, I went on to open 5 personal training gyms throughout San Diego – all based on 12 month contracts.

The reason I was able to sell all of my gyms was because I had those clients on recurring, predictable revenue. Which showed the buyer income was coming in every month.

When you have recurring income and a membership base, a buyer looks at that as predictability.

If there’s no recurring income, and they buy your business from you, it’s not guaranteed that they’ll have customers tomorrow.

When a buyer comes in, and sees you have 5,000 clients paying $69 a month, they think, “great”! Because that buyer has another 100,000 people they can expose this to.

Because you already have a recurring model that works, the buyer doesn’t have to split test it. They can plug their audience into your business model and triple the membership base.

Use Recurring Income as Insurance

Recurring income allows you to follow daring ideas with income to back you up.

When Craig was in the fitness industry, he built a product that sold 100,000 copies.

Of those people who bought copies, they all joined the recurring revenue part of the business to get even more value.

When Craig retired from the fitness industry, he built a brand new business from scratch.

He didn’t have to go into debt because he had income to fuel this new business from the systems he built in the previous business.

How to Break Down Your Business to Incorporate Recurring Revenue

There is no limit to recurring revenue.

Whether it’s the wine of the month, a mastermind, or a software, when it’s time to sell your business the determining factor is the valuation.

Let’s say you have an online information program, and you sell your product for $99 as a one time fee (like my Close Clients program).

At any given time, you could take that product and turn it into a $29 a month program where you give all the information up front.

Then, for an additional $29 a month, you can put people into a private Facebook group where you do live videos and share even more value.

Take the product or service you have, and break it down into modules that you can serve on a weekly or monthly basis to justify recurring payment.

Recurring Revenue Options Exist in Every Industry

For anyone thinking they’re not sure if their product could be recurring, think of it this way: some things are almost a forced continuity.

If you’re a guy, and you shave, the razors you buy from these companies are designed to wear down so you can buy more.

Recurring revenue can either be forced on people based on consumption, or by way of giving them the option for convenience.

When you build your business with recurring income, you’re literally multiplying the valuation of your business if you ever plan on selling it, while also giving yourself insurance and reliability.

Which, by the way, you should be building your empire up to be sold one day.

To hear Craig and I cover all of this and more, check out our podcast here.