Are you Stuck in the Non-Recurring Revenue Model? Try this Instead
Is it us or is it too damn cold today?
Anyways, coming back to the writing mode!
Our college friend started a landscaping business two years ago. The first few months looked promising. However, he was constantly having cash flow problems.
So, one day, he talked about everything, and we noticed he had made a mistake: He was using a non-recurring revenue model.
If you can relate to our friend’s story, it’s understandable as many home service businesses face this problem.
But what if you could create a steady, predictable stream of income—one that lets you plan ahead, grow your business, and reduce the headaches?
Let’s break down what you should try instead of a non-recurring revenue model for your home service business.
What is Non-Recurring Revenue?
If a business sells umbrellas in the rain, business will boom, but when the sun comes out, business sales will dry up. That’s the essence of non-recurring revenue.
It is the money you earn from single projects, services, or sales, typically without any long-term commitment from the client.
For home services businesses, this often looks like fixing a leaky pipe, cleaning a client’s gutters, or repairing an HVAC unit.
While this model can generate quick cash, it has a big downside: instability. You have to start from scratch each month, and constant effort is required to attract and secure new customers.
So, What to Try Instead?
If non-recurring revenue feels like a constant uphill battle, the recurring revenue model is the downhill ride you have to use. This approach focuses on creating a steady stream of income by offering ongoing services or subscription-based solutions.
For example, a landscaping business traditionally offers one-off lawn care services. Instead of waiting for clients to call, they have a monthly lawn care subscription plan. Clients receive regular lawn mowing, fertilizing, and seasonal cleanups for a set fee.
Recurring vs Non-Recurring Revenue
Let’s see how recurring revenue compares with a non-recurring revenue model
Features | Non-Recurring Revenue | Recurring Revenue |
Stability | Depends on one-time jobs | Steady monthly or yearly income |
Scalability | Time and resources cap revenue potential | Scalable with subscription tiers or add-ons |
Cash Flow | Peaks and valleys, making planning difficult | Aiding growth and expansion |
Importance of Recurring Revenue for Home Services Business
According to BIA Advisory, returning customers pay 67% more than new ones. It’s no surprise—when customers commit to ongoing services, they’re more likely to stick around and less likely to shop elsewhere.
Let’s break down why recurring revenue is essential for your business.
1. Predict the Future
One of the biggest challenges for home services businesses is uncertainty. You constantly wonder how many clients will call next week or whether you’ll hit your monthly revenue target.
With a recurring revenue model, you gain something priceless: predictability.
When customers commit to regular payments for ongoing services, you can forecast your income. This makes it easier to plan for expenses like payroll, inventory, and marketing without the stress of sudden shortfalls.
Pro Tip: You can use accounting software like QuickBooks to track recurring payments and analyze trends in subscription growth.
2. Manage Cash Flow
Cash flow problems are the silent killers of small businesses. When your income depends on one-off jobs, you constantly ride the highs and lows of seasonal demand and client interests. However, with recurring revenue, cash flow problems can be managed easily.
By securing steady, predictable payments through subscription plans or ongoing service agreements, you can maintain a healthy cash flow year-round. This stability allows you to cover operational costs, invest in your business, and plan for growth.
For example, a home cleaning service offering monthly or bi-weekly plans ensures that revenue flows consistently—even during slower seasons.
We have covered cash flow problems and their solutions for small businesses in a detailed guide. So, make sure to check it out here, after reading this.
3. Helps in Scaling
Scaling a business can feel daunting, especially when your revenue model relies on chasing jobs. The recurring revenue model makes it easier to grow without overextending your resources.
With predictable income from recurring payments, you can invest in growth-promoting activities such as hiring additional staff, expanding your service offerings, or upgrading your equipment.
Recurring revenue also allows you to test scalable strategies, like introducing premium subscription tiers or bundling additional services, with less financial risk.
For example, a pest control business transitioning from one-time extermination services to quarterly maintenance plans can scale much faster. Why? The predictable income reduces reliance on constantly acquiring new customers.
Final Thoughts
So, there you have it! Now you know why recurring revenue works best for your home services business. If you’re tired of the constant chase for new clients and want predictability in your business, now is the time to move from non-recurring revenue.
Speaking of predictability, isn’t it good to hire an expert who can tell you where your business is headed?
Tangent Consulting has years of experience working as a business coach and CFO with construction businesses. You don’t need to hire an accountant or business coach separately when you can get both in one place.
PS If you are reading this, it means you can have access to our free consultation for your home services business. Avail this for free today before we change our mind
FAQs
How do non-recurring charges affect a valuation multiple?
Non-recurring charges can lower a valuation multiple as they indicate unpredictable income, making the business less attractive to investors or buyers.
What is a recurring Profit System?
A Recurring Profit System is a business model that generates consistent, predictable profits through ongoing revenue streams like subscriptions or service contracts.
How to track recurring revenue?
You can track recurring revenue using CRM (customer relationship management) or accounting software like QuickBooks.