I have seen so many businesses get shredded by the current COVID-19 crisis. How can you protect your business during this downturn of our economy? More importantly, how can you maintain a monthly recurring revenue when times are tough?
The answer lies in strategic partnerships. This is key to making monthly recurring revenue that will eliminate the need for you to start from zero every time.
Overview & Episode Content
- How to Stay Afloat in Business Despite Losing Customers
- Your Industry Can Lead to Your continuous Revenue Stream
- You Do Not Need to Have the Actual Offer or Service to Build Monthly Revenue
- Building a Recurring Revenue Stream is Like Playing the Cashflow Game
How to Stay Afloat in Business Despite Losing Customers
One of my friends, who is also a part of my business, is in the food and restaurant industry. That particular industry got hammered really hard by the effects of the coronavirus on the economy. They got affected to the point where they ended up shutting one of their stores down.
It was crazy how they went from being a humming business to doing things completely differently. They had to implement alternative ways to do business such as take-outs only and no dine-ins, among other things.
Aside from the food and restaurant industry, he is also involved in the consulting industry with me. In fact, we have a consulting service during this downtime economy. And that is a very difficult business to do during this time.
People are struggling to stay afloat. Businesses are already struggling to stay alive. Of course, they are not going to need a consultant, right?
Generally, consultants are the first ones to get cut off. Businesses would naturally want their funds to go towards people who are absolutely necessary for the organization.
So, although he is a very smart consultant in the food and restaurant industry, several clients cut him off. However, he worked on different things that have allowed him to have recurring revenue despite having most of his consultation work gone.
Your Industry Can Lead to Your Continuous Revenue Stream
The fact is, it was his consulting that led him to a new recurring revenue stream that he enjoys today. It has allowed him to have large amounts of cash generated upfront. I really think it’s genius.
Even Pro Sulum started the same way — consulting upfront and then a recurring model as a separate service. This allows your service to thrive in just about any economy.
Now, is it 100% fol-proof? No. But when this person had to give up his consultation to these companies that were struggling, he was still getting recurring revenue.
Imagine if he did not have that recurring revenue and it was only consultation work. His revenue might have dropped by 75%. But he is super-smart about creating a recurring revenue model for himself that I will share with you right now.
The model is like this. When we think of a service business for a design consultant, for example. The payment would usually be a flat fee per month. And that is usually paid in two installments at the beginning of the month and at the end.
Let’s say that you charge $20,000 from each client and you had 10 clients throughout the year. That means you had a $200,000 business year! Great! But what if you drop to 5 clients the following year?
With design consultation, for example, a client would probably not return after their branding had been set up. Now, you have dropped to $100,000 and you are constantly finding new customers.
Even with my friend who needed my services to set up his franchising, once that was done, that was it. There was not much else to do. If that is the only model in your business, that means you are constantly starting at zero.
You Do Not Need to Have the Actual Offer or Service to Build Monthly Revenue
You might be wondering, “But Dean, in my business, there is no way to develop a recurring model.”
Well, the answer to that may not be in your business. The answer might be through a strategic partnership.
With my friend, for example, he has two strategic partnerships. The first is with a company similar to Uber Eats where he gets his clients from that company for much cheaper and a better investment. The other is me — through ProSulum.com.
These are companies who have really tight margins that my friend works with. They need to keep their payroll down as much as possible. So, these companies would naturally prefer staff members whose rate is at $9.50 per hour. No payroll tax and no insurance. That is in contrast to, normally, $15 per hour in California.
That is exactly what we offer at Pro Sulum. People sign up with us through my friend because he is also my business partner and he gets a commission for each customer who signs up.
His business is normally more on the consulting side. He is a hero because he is referring to these companies that he has strategic partnerships with but he also gets recurring income from those other companies.
Now, he has a recurring model. So, the idea is that you do not need to have the actual offer or service. Just like a strategic partnership, you can refer your customers to a company or service that you love in exchange for a commission on a regular basis.
Building a Recurring Revenue Stream is Like Playing the Cashflow Game
I think about the Cashflow game in my mind. You pay your bills and then you get to the point where you buy houses or businesses. Those investments give you a certain amount of money per month — it is cash flow.
The idea of the Cashflow game is to get your monthly cash flow to meet your monthly expenses. This is the same thing.
Let us say I make $10,000 off of design work. And then I have two strategic partners who could give me an additional $200 per month each for a total of $400 a month.
If I have 10 clients per year that I can refer to my strategic partners and 5 of them signed up, that would be a nice chunk of change right there.
Would your referrals stay the same? No. It’s like a stock market ticker. The line does not go up in a straight line. There are high points that should be greater than and lows if you keep doing the referrals.
So, the idea is that you must have your big service upfront like mine, which is Systems Consulting. That service is basically about automating the entire business and they can get one of my Virtual Systems Architects, the monthly-recurring side of things.
My friend in the restaurant consultation industry partners with my VSAs and the Uber Eats-like company. Just like him, you must develop a system that will give you a hedge. Something that will give you a revenue stream coming in per month.
I have seen so many businesses getting shredded by the current COVID-19 crisis.
The better you are at creating a recurring income that is outside of what you are offering, the more that you can create a hedge that will protect your business and give you wealth overtime. You are not going to start from zero every time.
What can you offer on a monthly basis? Who can you strategically partner right now that you can send your existing clients to that will give you monthly recurring income? I challenge you to do these things and implement them as soon as possible so that you can avoid a lot of the disaster that people are facing right now with this whole pandemic.
Resources and Links
This is Dean Soto of Freedom In Five Minutes. Go check out FreedomInFiveMinutes.com or Google “Freedom In Five Minutes Podcast” and subscribe through your favorite podcast app or player.
Also, do not forget to visit ProSulum.com and I will see you in the next Freedom In Five Minutes podcast episode.