Why Recurring Revenue Matters (a Visual Explanation)

September 30, 2014

Why is it important to work at creating recurring revenue for your business?

New freelancers often just plan for one month of contract ahead, then renew monthly.

Do you have any idea how it translates visually?

Here is what they get using WiseCash monthly breakdown cash-flow forecasting chart, which sum the planned expenses and income, monthly, for the 12 coming months:

No recurring income

This chart often comes as a shock to them. It is so unbalanced. So much red in there!

Is that depressing? No, because now you see that you have to change your situation. Unless you have a lot of runway, such a chart means your business is fragile.

Let’s improve that.

First, what happens if you just plan your gigs further ahead in time?

This is good for you because of cash-flow visibility. But this is good for your clients too, because they have an increased assurance to have your skills around further in the future.

So why not ask your clients and book maybe four months ahead instead of one month?

If they refuse, you know you can chase a new gig. If they accept, well, you get this much more balanced chart:

Planning ahead

But let’s not stop there.

Maybe some of your clients would also be willing to be sure that you are around the whole year, even just a couple of days per month to help them.

Adding even small volume yearly retainer agreements moves your situation to this:

Retainer agreement cash-flow

Much better, isn’t it? And much more future-proof.

So make sure to discuss this with your clients. They may be more willing than you think to setup recurring gigs, no matter if they are real retainer agreements or not.

It is a win-win. For you, more cash-flow visibility. For your clients, more assurance that you will be around to help them with your mad skills in the coming months.

Thibaut Barrère (WiseCash founder)

@thibaut_barrere

thibaut@wisecashhq.com

Thanks for sharing this article around!


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