Around the world, the top reason for closing a business is lack of profits, according to the Global Entrepreneurship Monitor. And turning a profit starts with generating enough revenue—the kind that keeps on flowing and consistenly covers your overhead.
For many one-person service businesses, attracting this revenue is elusive. It’s not necessarily because they have a bad product or service. People who are top experts in their field or great at their craft aren’t necessarily comfortable marketing themselves or selling their services.
“The number one pain point we hear is the struggle to build stable and consistent revenue, particularly recurring revenue,” says David Shriner-Cahn, president of Tend Strategic Partners, a consultancy in New York City that advises ultra-lean businesses and runs a program called BestNetwork for Solopreneurs, focused on helping established entrepreneurs identify repeatable sources of income.
So how do you find recurring revenue for your business? Here are five strategies you can start using today.
Stand for something. There are many opportunities to make money but focusing on what you’re great at is the best way to attract customers who keep coming back and refer the right prospects to you. Saying no to the wrong kind of work is better than saying yes and trying to make the best of it, according Shriner-Cahn. “If you stand for everything, you stand for nothing,” says Shriner-Cahn.
Think systematically. The key to building recurring revenue is to move away from providing customized service to everyone who wants to work with you and standardizing your offerings a bit. Look for ways to create a system that suits you and your core customers and then seek out others like them, says Spencer Deering, co-founder of BestWork, which runs a three-day course called LifeWork Design to help participants find their ideal work 9 in New York City, and who collaborates with Shriner-Cahn on BestNetwork for Solopreneurs. “If you basically try to provide solutions to everyone who comes to you you’ll never create a business,” says Deering. “All you’ll be doing is providing your own personal service. That’s what I see solopreneuers doing, lurching at every opportunity.”
Learn how to clearly articulate what you do. Until you can describe what you offer to customers in one-sentence or less, don’t expect them to understand it or remember it. “When someone says ‘What do you do you?’ you should be able to state it, boom/boom/boom, with a beginning, middle and end,” says Deering. “You have to be very concise about what your ‘value add’ is.”
Just don’t be boring. Share some of your natural passion for what you do when you describe the services you offer. “At the end of the day, you are taking on a leadership role as a solopreneur,” says Deering. “You’ve got to convince clients to embrace the future, rather than clinging to the past.”
Diversify your income streams. Although it may be tempting to depend on a single client who sends you a lot of work, that can leave your cash flow at risk if the account dries up. The ideal number of clients for a professional services business is six to 12, says Shriner-Cahn, so if you’re shy of that range, keep marketing yourself.
“The more you can create a diversified set of income sources, the more you’ve protected yourself from the downsides of self-employment,” says Shriner-Cahn. “If you have even half a dozen clients and one drops off, ask yourself ‘Do you have enough income from the rest to support your ongoing needs?’ When that is set up, if one client drops off then you are not going to panic.”
Stay true to your vision. There’s another benefit to diversifying. It can allow you to stay very clear on whom you serve, how you serve them, what you sell and your pricing structure. “It means you are less likely to fall into the trap of doing whatever the client wants even if it’s not profitable or isn’t a good fit for your business,” says Shriner-Cahn. It’s hard to stay focused on those things, especially if you need revenue, but the more disciplined you are about this, the easier it will be to build a sustainable business.
Elaine Pofeldt is author of The Million-Dollar, One Person Business (Random House, January 2, 2018), a book looking at how to break $1M in revenue in a business staffed only by the owners.