As the UK prepares for more restrictive measures, Cloud9 Insight CEO Carlene Jackson reveals her favourite key to business survival
Businesses crave certainty but there’s been precious little of that this year. There might not be many more things to bank on next year, either; even in normal times the life of an entrepreneur tends to be unpredictable.
Like most, my business has had its ups and downs this year. There’s been a lot of upheaval and challenges. However, the one thing I’ve come to really value is the benefit of having some dependable, regular income coming in. About 60% of our salary costs are covered by our recurring revenue (support contracts and licensing), which means i don’t have to worry about selling to net new clients to cover my overheads/salaries. Having regular income has been a lifesaver this year and, as I look across my client list, it’s clear it has been for others, too.
Creating sustainable revenue streams
Sales should never be taken for granted. When there’s a recession, people have to be confident to justify new spend. But when things change, so do habits, and it’s all too easy for someone to hold on to their cash rather than spend it with you.
Subscription based businesses create sustainable revenue streams that are stable and dependable, so as long as their services are valued and relevant, there is a low risk of clients making the decision to cancel that committed monthly spend. You just set up your direct debit and focus on delivering value, not sales.
Subscription models for any business
I recommend that you review your current subscriptions for both your business and family life. As you do so, you might realise something that I’ve noticed. Virtually any kind of company can be a subscription business. Software as a Service (SaaS) has long used this model, as do many providers of non-tangible products and services like insurance. However, with home deliveries a mainstay of 21st century life, there are many product-based businesses selling very traditional products via direct debits.
The veg box is a well established service, much loved by foodies. The boom of craft beer, while massively impacted by lockdown, has still found a lifeline, with beer companies like Beer52 delivering crates to the door. What I like about some of these companies is that, while the payment is regular and the same each month, they’ve actually managed to persuade their customers to accept a degree of randomness with their actual offering. You aren’t 100% sure what veg or beer will arrive, but you’ll probably like it, or find someone else who will.
A stable model
Almost any kind of business can run a subscription and I recommend that all business owners explore the possibility to give stability to their business. There are companies selling socks and others selling chocolate on a monthly direct debit commitment. Even traditional stores like John Lewis and Apple are responding to the trend of reduction in consumerism by offering furniture and iPhones on a rental basis, giving the business a recurring revenue stream.
You don’t have to be a big company like Netflix to make money in this way, although I do think it’s a great way to grow a business. Having regular and fairly predictable income makes planning and scaling a lot easier and gives you more confidence to invest going forward. Imagine starting the year with 80% of your future revenue already committed – that would be a great feeling.
Know thy customer
We really don’t know what the future will bring. No-one is sure where their customers will be tomorrow. However, getting someone to commit to your business services and products is the perfect chance to build future revenue streams.
In this data rich age, we should all know what our customers are buying from us, how often and for how much. A subscription based business, combined with an integrated data management system, will ensure you have that information in real time. The crisis of 2020 has accelerated our business transformation. It’s time you subscribed to a new way of thinking and ensure your customers do, too.
Whether you’ve adopted a subscription model yet, or are still finding your way, Cloud9 Insight continues its mission to level the playing field between SMEs and Corporates using vision and technology. See how we do it
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