Focus on Monthly Recurring Revenue
The. Hey there I'm Eric Olsen. And I'm heaven days. Join us on our journey to building a one hundred million dollars company. Late in two thousand seventeen between Christmas and New Year's I sat down, and I did a financial projection of each of our areas of business, and how it was going to look going into two thousand eighteen so I looked at our custom software looked at our website. I looked at our website support. And I looked at our digital marketing. And what I did is based on everything I knew at that moment, which I've gone back and confirmed it was December twenty seventh two thousand seventeen based on everything that I knew at that moment, the people that we had in place as far as our expenses and whatnot and wages and revenue and projects that we had already lined up. I knew that out of those four areas only one of them was going to be profitable. If nothing else changed. So if nothing else changed we were going to have to go find and contract and deliver. Seven hundred thousand dollars worth of custom software in two thousand eighteen it was just when I realized that and the fact that we didn't have all that many leads was like, this is crazy like I don't even know where we're going to find all these leased never mind the work and actually do it, but I've got all these expenses. So at that moment in two thousand eighteen we were negative seven hundred thousand dollars we had to go. Find seven hundred thousand dollars of new customers offer development work and climb out of that hole. It was similar with web design were press sites. But not nearly as much and then also support of of all of our websites. The one thing that jumped out at me was digital marketing digital marketing at that moment was projected to be profitable for all of two thousand eighteen if nothing else changed. So if our expensive stayed the same in our income revenue say, the same we would make a profit and based on that analysis, I thought, wow, this is great as digital marketing thing with this recurring revenue is really enticing business owner. I wish we had more of that. And based on that analysis, we started to put more and more effort into building our digital marketing department, and it lead to us changing to being one hundred percent digital marketing as the whole company is base is is a digital marketing coming to this point. And it was all because of the magic of recurring revenue. It really has. To mentally changed. Everything that we do here from tracking time, which we don't do anywhere. We do not track employ hours. What projects they work on because we don't need to. We don't Bill by the hour. We don't Bill by the project. Clients, right. We've it's reestablish the expectation with clients that we're going to have deliverables not deliverables at a certain cost or if there's costs over GE's and all that all that crap. Just kind of just gone went away, and it gave us the ability to project out finances. So monthly recurring revenue is the only thing that we worry about we actually restructured our new contracts that we don't have the ability to take on non recurring revenue work. It's all retainer work one hundred percent. And it has just changed everything that we do and because of that because of that focus on recurring revenue in two thousand eighteen and I record this now at the tail end of January two thousand nineteen but in two thousand eighteen we increased our recurring revenue by about a factor of seven, right? We I mean, it was just amazing. It completely transformed. Everything that we do as a business. Owner I implore you. You have got to figure out how to shift from hourly to project from project to retainer work. Retainer work is the key. You gotta figure it out. It changes everything. Thank you for listening. I hope you heard something you can implement in your business right away. Finest online at journey to one hundred million dot com.