Andy will be speaking on the subject of ‘Profit’ at three ‘Love Business’ breakfast workshops to be held in Leicester, Nottingham and Derby on the mornings of 23rd, 24th and 25th June 2015 respectively, and he has written a series of blogs to set the scene for the workshops. If you’re in business entry is free. Each one will be packed with dozens of ideas around the theme of doing great business in the new age of the millennial buyer. Click here for more details and a registration form.
Most businesses survive on their next order. If the order doesn’t materialise, their business is dead.
But it doesn’t have to be this way. There is usually scope to focus on building recurring revenue as the route to higher profits, greater predictability of income, and more capital value in your business.
What product, service or benefit will your customer enter into a contract with you to provide? Could you make your life – and, more importantly, your customer’s life – easier by agreeing the details now?
I’m constantly amazed by how many businesses completely fail to capitalise on this future revenue stream. For example, for many years we have used the services of a heating engineer to carry out an annual gas safety check on property we own.
Has the engineer ever suggested a regular contract to guarantee that this important check will never be missed? Perhaps offering priority attention in the event of breakdown or emergency? Maybe even special ‘favoured customer’ terms on other work?
You can guess the answer.
We’ve periodically required our offices to be refurbished and painted. Has the contractor ever offered to schedule future work in advance to an agreed schedule on a regular monthly payment scheme? If so, might there have been other work that could have been included on the schedule – other properties, or maybe our home?
I’ll let you speculate on whether this ever happened.
When we’ve taken a car for service, did the garage recommend a service plan to cover the cost of future work and guarantee a high standard? No – although the very same garage offers a five year service plan on a new car we bought from them.
I could go on and on (and as my wife tells me, I often do!).
But you get the idea.
Some businesses don’t lend themselves to this type of regular-payment arrangement, but in my experience they are the exception, not the rule .
So let’s say you achieved this, and were successful in getting a substantial part of your work onto a recurring, contractual basis. What implications would that have for your work scheduling? For your staffing needs? For your ability to seek efficiencies in delivery as a result of your new focus on consistently repeated processes?
Being able to predict revenues, costs and profitability in advance, what effect would there be on the value of your business to a potential purchaser?
Of course, if you’re going to make promises you need to match them with great performance. Don’t offer what you can’t deliver.
But for many customers seeking great service from a business they can trust, entering into a long term contract is one less thing to worry about. And one more step towards your highly successful business.