Will This Be the Year You Seriously Drive Up the Value of Your Company?

If you want to drive up the value in your business, think about your future cashflow. One of the biggest factors in determining the value of your business is looking to the future and how much revenue the business will have.

Strategic planning, reducing expenses, marketing and investing in growth are all essential to increasing your business value, but one aspect that will increase your business value even further is developing a recurring business model.

A recurring business model creates constant and consistent revenue and is a much more stable business model. With this steady, predictable stream of income projecting into the future you will increase the overall value of your business.

As opposed to a transaction business model where customers only pay once for your product or service, a recurring business model is where customers pay on an ongoing basis.

The value of your business will increase with a recurring business as potential buyers can see a forecast of ongoing income and cashflow.

There are a few models to consider when you decide to create a recurring business model.

Subscriptions

If you sell a product that has a shelf-life, consider offering it on a subscription base. Think wine box deliveries, Thank You toilet paper etc. This is where having a loyal customer base can be extremely beneficial. A subscription model allows your loyal customers to repurchase your products again and again, on autopilot.

Memberships

If you are a service-based business, a membership model may be a great option for building recurring revenue. This is a high growth area as more and more business owners are sharing their knowledge inside a membership container. It can also all be based online, if need be, to gain access to more and more customers.

Contracts

In order to create more predictable cash flow, you could start to offer services on a fixed monthly fee. If you currently charge for hours of your service, switching to fixed fees will even out your cashflow and make it more predictable for forecasting. Contracts may also keep your customers ‘locked in’ for a further amount of time, allowing for more stable future predictions on revenue.

Upsell

This one you have probably heard of before. Make the initial sale, then see if any complimentary products or services can be sold. If you do not currently have any complimentary products or services to the core offerings you have, now may be the time to think about them.

Rentals

If you offer a product or service that may only be needed occasionally in some circumstances, then consider a rental option. If your products can be rented instead of purchased, there is more stable and recurring revenue coming in.

Creating a recurring revenue stream requires you to look at your business from a different angle. Be open to new ways of doing things and see where you can best add value for your customers.

Adding recurring revenue will improve the value of your business quickly and could change your business forever.