The same advice for building a healthy investment portfolio applies to your business: diversifying will lower risk and increase growth.
Adding a recurring revenue stream (or two, or three!) can provide a predictable, ongoing source of income which will improve the accuracy of your projections, increase profits, and provide a buffer for any unexpected sales dips.
Here are four simple ways to start earning recurring revenue for your small business.
The most tried and true recurring revenue model? The subscription that automatically rolls over each month unless cancelled.
Think newspapers, magazines, Netflix, and those delightful subscription boxes that arrive each month featuring food items, craft kits, cosmetics, specialty teas, books, or clothing. Some B2B examples are cloud based accounting software, document storage, anti-virus protection, and web hosting.
Customers depend on their evergreen subscription services because they make their lives easier or more pleasant. As long as they feel they’re getting value for their money, your customers won’t give the small monthly fee charged to their credit card a second thought.
Tips for getting started: Research what your competitors are offering, and talk to your customers about the kinds of products and services they’d be happy to pay for on a monthly basis.
If you’re an expert in your field, a membership site can provide a lucrative opportunity to serve more clients on the web—and earn more income.
In addition to paid, password protected content, your membership site can offer your clients an online community portal, where they can socialize and connect with you for group mentoring outside your office hours.
Ideal for location-independent minded entrepreneurs, coaches and consultants, a membership site allows the freedom to serve clients all over the world.
Tips for getting started: If your website is built on WordPress there are a number of membership site plug ins available to let you accept secure credit card payments and provide member-only access to certain content.
Unlike set monthly subscriptions, being an affiliate may offer a less predictable income stream, but, nonetheless, an opportunity to earn some passive income.
With the affiliate model, brand ambassadors are paid a set fee or percentage of each total sale for each successful referral. If you’ve built credibility and trust in your brand, some of your customers will likely be willing to pay for the products and services you recommend.
How to get started: Make a list of the businesses that you regularly buy from. Check each company’s website to learn how to become an affiliate. Once you’ve signed up, you’ll be sent a unique link to share with your customers. Every time a purchase is made using the link, you’ll earn a referral fee.
To learn more about the benefits of setting up recurring revenue streams, take a look at John Warrillow’s, The Automatic Customer: Creating A Subscription Business in Any Industry.
In addition to increasing sales and profit margins, recurring revenue can lead to better customer retention as well as greater growth for your business.
Now that you know a bit about recurring revenue streams, which model is right for you?