For a business to be valuable, it needs to be generating revenue. However, not all revenue is the same. Recurring revenue is income that your company can count on to roll in month after month, and year after year. The cellular phone industry uses recurring revenue models exceptionally well and the benefits have been noticed. The current trend is that more and more businesses are seeing the importance and value of recurring revenue models, and focusing their resources on creating consistent revenue streams. Businesses operating solely on income from project to project, beginning each month with zero revenue, are functioning at a large disadvantage. Having recurring revenue that can be expected each month is critical to the success of your business for several reasons. Below are the top five reasons why.
1. Recurring Revenue Increases Revenue
Recurring revenue allows companies to be more strategic, and allows a focus on generating new revenue streams, without having to spend all your time simply trying to reach the same level of revenue from the previous month. The ability to count on recurring revenue each month means less time is needed to generate enough business just to remain afloat.
2. Recurring Revenue Increases Customer Loyalty
By providing your customers with products and services that hold ongoing value is also a great way to build customer loyalty. While it’s important that you truly are offering your customers value and great service, those customers that you can count on month after month will begin to feel a relationship with your brand, and will have the desire to keep coming back to you instead of switching to your competition.
3. Recurring Revenue Works for Any Business
Though cellular phone and other technology companies may be the best known group for capitalizing on this model, more and more businesses in a wide range of fields are making the shift. Using some creativity, and understanding your clients’ needs, can arguably allow any business providing a product or service to develop ways to generate recurring revenue. Monthly service plans, are one great example that even a product-based company can use to begin making recurring revenue work for them.
4. Recurring Revenue is More Than Just a Fad
There are a lot of systems and methods that companies invest in only to find the ROI is less than stellar, and hanging on to these fads can prove far more harmful when a business is unwilling to move on from it. In the case of recurring revenue, the experts agree about the importance of building this into your business, and that it is not something that will lose value as time goes on.
5. Recurring Revenue Increases Opportunities
Companies that partner with other companies to create collaboration models can be very beneficial and the transparency that a recurring revenue model provides enhances opportunities for collaboration.
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