One truth in business that most CEOs and entrepreneurs alike tend to overlook: Not all revenue is created equal.

One truth in business that most CEOs and entrepreneurs alike tend to overlook: not all revenue is created equal. Sure, a dollar in sales is a dollar in sales. But the more predictable that dollar is, as in the more likely that you will receive that dollar from your customer every month, the more valuable it becomes. When you begin to multiply that dollar by adding new customers and creating an annuity of cash flow, you begin reaping the benefits of what is known as a recurring revenue stream. And people pay for that!

Examples of businesses that have built recurring revenue into their business models range from companies like Salesforce.com and Constant Contact, which charge their customers a monthly fee to use their services, to the online GoDaddy! and dating site e-Harmony, who make their services “sticky” based on the power of their communities of customers. The point is that these companies have found ways to keep their existing customers month after month and year after year rather than having to find a new crop of customers each quarter to keep the business growing.

What makes recurring revenue so valuable is that you can spend more of your energy growing your business rather than on trying to acquire enough new or repeat business just to hit the same revenue level you did the year before.

  • Easier to Grow
  • Predictable Costs
  • Higher Business Valuation
  • Small Steps Matter

Read the full article on Inc.

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