The First Shift To Creating Recurring Revenue
As freelancers, we all face many of the same challenges and I love nothing more than to share the things I’ve learned along the way to help you grow your business. When I switched my focus to creating recurring revenue, it changed my business. I have, personally, made all the mistakes one could make in this business, so if I can help you avoid those mistakes and learn from the things I’ve done, hopefully I can contribute to the success of your business in some way.
My journey from $0 recurring revenue to $50,000+ annual recurring revenue is one I am excited to share with you.
I truly believe anyone can do what I’ve done and I’m going to show you exactly how I did it over a series of blog posts, but first let’s cover the basics by talking about how important it is to shift your mindset to focus on recurring revenue.
Focus on Creating Recurring Revenue
If you’re going to be a successful freelancer, you must have a mindset for building recurring revenue. It is virtually impossible to survive without it. And at iThemes, we have been talking about building recurring revenue for a long time. Freelancers without recurring revenue are completely dependent on a consistent steady flow of leads and sales. Consistent sales are the holy grail for freelancers, but the reality is, sometimes we’re busy and sometimes we aren’t.
If you’re still not convinced, let’s take a look at a few common statements from struggling freelancers. Do any of these sound familiar to you?
- I often don’t sleep well at night because I’m worrying about where / when my next client will come from.
- I have accepted projects that I shouldn’t have because I felt desperate to have money coming in.
- It’s so frustrating when a client stalls out in the middle of a project, leaving you at the mercy of their timeline to gather content and move forward.
- Even when I feel good about my annual sales, I have to start over from $0 every January.
Creating recurring revenue can balance out your life and really bring peace and stability to your freelance business, which ultimately adds stability and quality to your personal life.
Recurring revenue can balance out your life and really bring peace and stability to your freelance business.
Let’s dig in a little deeper so that it all starts to make even more sense.
Consider this analogy for a moment:
- Client #1 gives you $1 (WEBSITE SALES)
- Client #2 gives you $1 the first day, $1 the next day and $1 the day after that (RECURRING REVENUE)
Suddenly, the first dollar the second person gave you is worth more than the single dollar from the first person! In other words, the more predictable a dollar is, the more valuable it becomes.
Stick with me because I know it takes time to shift your mindset from generating revenue from 1x website projects and while building a website is great and can be very profitable, it is still a “one off.” You build the website and the project is mostly finished. However, when you sell a maintenance plan it slowly begins to build wealth month after month after month. When I look at my business financials every month, the most valuable dollars on that report are the ones that come from maintenance contracts and recurring revenue because I know they are there month after month.
Recurring revenue is anything but a get rich quick plan.
Over time you will start to feel the stability building in your business. It doesn’t happen overnight. Creating recurring revenue is anything but a get rich quick plan. It requires focus, but it can and will transform your business!
Let’s look at a couple of businesses we are all familiar with and compare their strategies to continue to drive home the impact of recurring revenue.
How many of you are old fogies who remember Blockbuster Video?!
When I was a kid, it was the highlight of the week to go to the video store on Friday night when my sister and I were allowed to pick out a few movies for the weekend. Those were the days! How many of you have a Blockbuster within driving distance? Anybody? The business was overtaken by Red Box and Netflix.
Let’s deconstruct the business models of Blockbuster vs. Netflix:
- Blockbuster was based on repeat sales and relied on customers coming back every week to rent more movies.
- Netflix, however, is based on recurring revenue. You probably all know that whether or not you watch Netflix, you’re still charged the same amount every month.
Many web developers are operating like Blockbuster, thinking, “If I provide a great experience for my clients, they will keep coming back.” The problem is most clients only need one website. Sure, they might need upgrades every now and then, but you can’t sell websites that often.
If you’ll focus on creating recurring revenue, it’s going to give you more consistent, more stable income.
The concept of recurring revenue applies to virtually every industry. Consider the auto industry. Successful car dealerships, for example, rely on the service department to attract customers on a regular basis and in between the purchase of a car. This example highlights the hidden benefits of selling maintenance contracts to your clients. When you’re talking to your client on a regular basis and they’re paying you monthly for a service, it creates a partnership. You become more than just a vendor and having an open door to naturally communicate with clients every single month not only keeps you top of mind with the client, but also increases referrals.
If you’ll focus on creating recurring revenue, it’s going to give you more consistent, more stable income, but it’s also going to give you incredible peace of mind for predicting revenue for your freelance business!
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