When starting a new business, ensuring a long-term income is a  main priority. Even if a business starts out strong, it may not last; one 2021 study from the Bureau of Labor Statistics shows 65% of small businesses don’t last to the 10-year mark, 45% close within five years, and 20% go out of businesses within two years. A new business is a venture you should plan ahead for, and one of the best ways to do that is with a recurring revenue model.

What is Recurring Revenue? 

Recurring Revenue is a business model where the business’ revenue is predictable, stable, and ongoing. While a business can be prone to change, this business model is designed to maximize your business’ regular cash flow. 

A key to starting a business with recurring revenue is offering a continual services payment option. Recurring revenue business ideas are based on customers paying for a regularly provided service or product. Examples of these payment options include: 

• Service retainers 
• Subscriptions 
• Hard contracts 
• Online memberships

The Benefits of Recurring Revenue

Running a business with recurring revenue helps ensure you have a loyal customer base and makes growing your business less risky. Because your existing business has a steady cash flow, you can recoup growth expenses and any losses simply by waiting them out and rebuilding your financial reserves. It also makes it easier to manage your finances, predict future earnings, and scale your business.

Industry Examples

To make the recurring revenue model work, you need to work in an industry with continual business. A business with recurring revenue has to have a consistent demand for the products or services being provided, so one-time purchase concepts, like car dealerships, don’t fit the model. However, service businesses are well suited for it, especially if regular maintenance is the service. For example, while a car dealership might not fit a recurring business model, a vehicle repair and maintenance service offers something its customers are guaranteed to need at some point during their time owning a vehicle. 

Home services is a great industry for a business with a  recurring revenue model. Anybody who’s owned or maintained a home or other property knows there’s a wide range of regular maintenance and repairs that are needed, both indoors and out. Cleaning services are a prime example. Homes are tough to keep clean inside and out, and some people would rather pay to have somebody scrub and vacuum their homes than have to do it themselves on a regular basis. 

This recurring need makes home services well suited for regular payments in return for regular visits and services. If home services isn’t your preferred industry, there are other options, including: 

• Healthcare
• Fitness
• Telecommunications 
• SaaS

Start Cleaning Up Regularly with Window Hero

If you’re interested in starting your own home service business, then Window Hero may be the right fit for you. We’re a window and exterior cleaning franchise that helps franchisees like you manage your cash flow and build revenue. We also provide coaching, marketing services, and employee recruitment assistance. If you’re interested in learning more and have questions about franchising with us, download our eBook today.