Welcome to the Scale With Speed Podcast. I’m Matt Manero with my man Judge Graham.
Super excited. Today is an amazing topic to do. Today is your topic, right? The book, right? Mastering recurring revenue. Today. We’re talking about how you can fix one of the biggest problems that exist in every single business, which is how do I trust my revenue? And you fix it by having recurring revenue, but dude, you and I are busy the next couple of days. We’ve got a strategy session with coach Burt. He’s coming into town today. We’ll do the strategy session here for our scale with speed event that we’re doing in Vero beach. It’s coach is a mansion down there. I’ve never been to Viro. Yeah, I’ve never been to the Bureau either, but, um, it should be a good time. That’s an October. If you want to learn about that, go to coach Berg, click events and find the scale with speed events that we’re doing.
And then tomorrow we’re speaking at the 8% nation conference, which will be weird because I don’t know that there have been many 800 people or a thousand people in person conferences this year. No, it’s going to be interesting. I was, I was even thinking on the way over there, like it was everybody wearing a mask. We all get tested. We get in temperature. So we’ll, we’ll figure that out tomorrow, right? Maybe we ought to just, you know, make sure we stay on this day, but you know, I’m excited, right? I mean, we haven’t, uh, been able to do a live event besides the burn, the ships, which are much more intimate, right. 30 to 40 people, but to be up and fire up, you know, a thousand people in an audience is going to be cool. It’s cool, Jordan, Belfort’s the keynote guy. Marshall Siler.
The hypnotist from Vegas will be there. Tim story speaking, coach bird speaking. There’s a whole, it’s a good event. It’s a good group laundry list. But we’re talking about the difference between culture and a growth culture. We believe growth culture is the movement, not goose culture. Culture’s important, but add growth to it. And you really get something dynamic. But today we’re talking about recurring revenue, uh, because the judge wrote a book, mastering recurring revenue. We will put a link to it, but you can also go to Amazon for the ebook if you’re interested, but you can go to Amazon type in mastering recurring revenue and by judges book, quick, easy read, but it fixes a huge problem because in the end there were really only two types of revenue. There is recurring revenue and there is transactional project. One time, one time, one, and done one, or you can count on it over and over and over, over.
And by far, the most important of the two types of revenue is recurring revenue. And so many businesses that we talked to judge really don’t have a recurring revenue model figured out they don’t have a product that works. And in today’s podcast, we’re going to actually give you a calculator that the judge has created, that we’re going to give to you for free. And we’re going to walk through some examples of what recurring revenue could look like in your business. But first I want to stress why you need recurring revenue. What are some of the reasons for the benefits of having recurring revenue? So judge, let’s just go through it real quick. Yeah. But before we get, I mean, the reason I wrote that book,
I mean the number one reason is, is I lost my first company and went back
Because you were project based,
Did not have recurring revenue. So in, in, on paper and in theory, a multimillion dollar company, uh, highly emphasis in web design and development now also lost my way, started doing some other things. That’s a separate podcast about niche, but the primary product offering was one in Dawn. We sell it, we deliver it. It’s over. Right. And so what happened is we just scaled Matt, right? We, we, we built out a million dollar facility. We had 30 full time employees and we
Took out super fancy offices. I went to the officer’s you remember when you did that field trip, crazy concrete walls coming down. And for us it was nuts.
Lines of credit, right. Was winning small business of the year. You know, just thought that this, this, this, this will never end. Right. And, uh, it quickly Babby every month that nut got bigger and bigger and bigger and we couldn’t keep up. Right. So, you know, you’re, you’re having to sell, you know, hundreds of thousands of dollars every month, every single month again, and you don’t have that cushion or that repeatability, it’s at some point the movie is over. Right. And depending on how your, how big you are is how, how hard the crash
And what was, what was the, the sort of, you know, day of reckoning there was it the Oh eight recession that, that began to slow down the demand for the services
I’m always battling on time. I don’t, I just remember, you know, the feeling right. Bless the date. I truly think that as in any business things shift, right? So we were selling websites for, you know, 30, 40, 50, $60,000 at the segment that we were going after, which was small to medium sized businesses. And then there was a shift with technology, right. And those small to medium sized businesses. Now we’re being able to get it done for 10, 15,000. Right. So not only did my price and margin shrink, I had to get more volume because of what tech did and it just, yeah.
And behind it, you had adjusted the fixed expenses way up too.
Yeah. Way up to write it in. Listen, if anybody’s listening, it’s really easy. You’ve got assets and liabilities. I had way too many liabilities, but that, that, uh, you know, that was my wake up call. And I said, never again, any business that I’m a part of or build has to have that piece have recurring revenue because without it, it’s not a rule book.
So good setup right there. Because, let’s go through four things that happen when your business does have predictable recurring revenue. And I think the first thing it does is it just simply lets you sleep better. Oh man. Well, let’s give people perspective,
Right? I mean, I was going to bed every night, going, I’ve got to sell $180,000 tomorrow. And if I don’t do that, that means the next day I’ve got to catch up and I got to sell 225 or, or whatever that number was. I mean, massive anxiety. But knowing you have clients that cover 90% of your not yeah, dude, life’s great. You got to go sell
Thousand of revenue over the whole month. It also changes the, the, the type of business you’re in. Right. Because when you have substantial recurring revenue, especially above the fixed expense, the pressure on sales for your sales team. Isn’t so great. Right? Yeah. So the first thing that recurring revenue does for you is it helps you sleep better at night. The second thing it does is it helps you make better decisions based on your future goals. How much do we have coming in and where can we now direct it? Where can we allocate it? Versus when you don’t have this nut covered every single month from a customer contracts, memberships, whatever it happens to be, you don’t really know what you can do, man. Can you take out the space? Can you hire that person? Can you buy that thing? Can you try this? It’s so much more difficult, right?
Yeah. I mean the recurring revenue from a money perspective,
There’s your crystal ball. Yeah.
I doubt that you’re making decisions literally blind. Right? Can I get that lease? Well, I hope my sales guy doesn’t get sick, you know, I hope we don’t lose him to another company. Right. But when you have that recurring revenue, it makes it much easier signing that file.
Yeah. The, the, one of the biggest problems without recurring revenue is you can’t trust the stickiness of the client relationship as well. Right. There’s no sort of, um, right. There’s no partnership really on transactions, but recurring revenue. There’s a relationship that relies on both parties. And that’s number three in the four that we’re starting with today is it makes your client relationships more sticky.
Yeah, it has to, right. I mean, you know, in, in, in the more sticky you can get, right? I mean, I used to have this analogy with our, uh, account people in, in my old SQL office, man. I think you’ve seen some of the pictures I had octopi nine-foot octopi hanging from right in, in the story with the octopi in the account people’s, uh, area. And it was, I want you so immersed in those clients’ businesses, those tentacles and the, like I said, it wasn’t an octopus settle leg, right? Tentacles and legs wrapped around that client that the idea of trying to fire us was so painful because we were integrated with the data we’re integrated with the sales reporting. We were so integrated that created that stickiness and that Octa pie mentality that recurring revenue, you know, would stay.
So as if the first three weren’t weren’t good enough reasons for you to really figure out how to include recurring revenue to your business. The fourth one should be because when you have real provable trustworthy, recurring revenue, it increases the value of your company.
Yeah. I mean, I think it’s almost, it’s not impossible, but if you’re a project based company or transactional based company, unless you have an amazing three, four, five year track record in a phenomenal sales team and it’s just like butter every month. Right. And they can see that in the financials, they’re going to pay up for that. Yeah. They’re going to, they’re going to pay up for that. You have to, to, to have that. I mean, if not, you know, they’re, they’re not, you know, you can’t say with confidence, I’m going into next year and we’re going to make X it’s. We believe based on last year, we can make X.
Yeah. We’re going to actually give you some examples of what recurring revenue does to evaluation here on today’s podcast. So I want you to stick with us till we get to that segment. Um, but let’s talk about examples of recurring revenue, because now we’ve proven the case of why it matters, but let’s give people fundamental reasons of what it could be for them. So, you know, the first one is a monthly membership kind of thing where you’re producing some value to the marketplace that allows them to want to buy it from you every single month. Now, whether that’s a video program, whether it’s a newsletter, whether it’s a newspaper, whether it’s a publication, a magazine, yeah. It’s a product offering on Amazon or it’s even if it’s a blog that people find so much value because of the unique research that you have for them, because you’re an expert in their niche. People might pay you for that. And again, when we do the recurring revenue calculator here in a minute, we’re going to show you what that actually looks like that monthly membership you might think, well, heck man, you know, maybe I’d only get 25 bucks a month in a membership. We’re going to show you 25 bucks a month on X number of accounts. Over three years, times a multiple actually means you’re going to be blown away by what, $25 a month in a membership judge take the, the, the next one,
The one that it’s really where, you know, I’ve made my money in the companies is, is some sort of service or maintenance agreement, right? So if you look at it from a professional service, this is your retainers, this is your annual contracts, right? Think attorneys, CPAs, marketing organizations, right. You’re signing a multi-year six month or a year contract for a certain amount of money that that client’s guaranteeing you to do based on services you’re going to provide, right. Um, or even a maintenance agreement. So think of things like, uh, AC or electric or roof or any, anything like that, how can you, a lawn service is a great one. Landscaping is a great one. How do you put somebody? And even if it is, it ends up being month to month, but it’s some sort of contract. I’m going to do this maintenance or service, and you’re going to pay me this consistently every year.
The perfect example is for that, for the person listening, who builds websites, and then you think you’re done, no dude, you need a monthly maintenance contract on top of the web build. So that you’re doing edits, you’re updating any software, you’re making some changes and it keeps the client needing you because you’re proactively helping them every single month. That’s a maintenance contract for the website that you built. And then the third one, and there were, there are others, but the three that we’re outlining today is a unique piece of technology. And this has actually never been easier, dude, we’re talking about it in another business in which we’re going to private label, a piece of tech that makes it look like our own. We’re going to build some things on top. Totally. We’re going to put some programming into it, not all, but the fundamental isn’t being built from scratch. We’re taking something out of the box and we’re adding our secret sauce into it and branding it as if it is totally our own in a unique piece of technology, which makes the client relationship super sticky. You can do that. Yeah.
And then you charge for that, right? I mean, it’s, it’s a monthly, you know, the, the, it, let’s back up a little bit mad at me. I wanna, you know, everybody one on, and I think Matt, we’re going to give away this book for free, right? It’s going to be an ebook checking that you book out or buy it, I believe. And Matt does as well. We don’t care what business you’re in. You can take one of the three things we did and you can either make it core to your current business on recurring or create something ancillary, but you must embrace this idea of recurring. Right?
Yeah. And, and, and we’re going to show you the numbers here in just a second, that will help justify this passion that we have for you taking the time to figure out what could I do in my business to add recurring revenue.
Let me give you an example because Mitch, the guy I work out with, right, I’m wearing the shirt West side, this Russia man. Um, so sort that, but he’s going to be at the next part of the shops, right? And he’s looking at how do I really amplify my recurring revenue? So he has these cool pieces of software that shows you how much you lifted, what you should be doing or whatever. He could literally overlay a couple of things, rebrand it, make it his, and for all of his clients, either one to many, or he works out with, Hey, for five bucks a month, you get this, this piece of tech and it shows you, I am put it all in, it’s your diet, it’s your program at your rest. It’s whatever. And it’s, you know, boom. Now you got five bucks a month, you know? I mean, it’s, it’s, we gotta be thinking that way and what most, what we do.
I’ve seen judges when people who come through the burn, the ship’s bootcamp, the first reaction is, well, I don’t think I have unique expertise that allows me to do it. I can’t do it. Or I don’t think I can really sell it for a price point high enough, because we show them in the recurring revenue calculator, how to do that. And then conversely, the people that have said, Holy crap, I didn’t even know I should be doing it every quarter. Now it’s changing their freaking business. It’s two HPAC guys that we have Victor and Jason,
I think the success, I mean, there’s multiple things that come out of burning the ships. But I think one of the most eyeopening sections is this topic. And when we look post three, four, six, seven months, 12 months on some of the alums, they’re like my life and business has skyrocketed because I implemented recurrent revenue.
The concept of recurring revenue is one of the examples of going from playing checkers to playing chess. Yeah. It’s an example of when you do it and you get recurring revenue, you never realized that business could be as easy as it is when you have recurring revenue, because you have built a business and you’re fighting cashflow every single month. You’re broke on the first of,
And, and I want to jump on LinkedIn. You know, a lot of the people say, well, they’re not gonna pay for that value. Listen, you have a unique value. If you don’t, it’s a problem, but it’s, it may be easy for you, but other people don’t understand it. So there’s value there and you can charge, right? I mean, so you need to understand your unique ability. And although it may feel simple and easy for you, there’s value there because the market doesn’t know how to do it. Therefore you can charge, but that’s a confidence thing. Yeah. Now listen to the market. The market will let you know the price. You go out too high, too high. You’re going to feel it. You go out too low. You may not feel it right, but I would go high in the cup towel.
I was watching this video, this guy, I can’t remember what his name is, but he’s a commercial banker right on YouTube. And he runs really simple videos of, of banking and money allocation and using leverage. And he talks about the video I was watching as he was showing his three cars and how he leverages the interest income off of the cash in the bank to pay for the car. It’s a pretty straightforward, simple decision. Right? But another video that popped up right after I watched that, by the way, his car payments are like 6,700 bucks a month or something like that. To me, to be honest with you, it seemed a little bit extravagant. No, it seemed a little chicken shit. The whole thing, like I think one was like a 2013 Mercedes SL 65 AMG. And he’s got a seven note on her side. I thought you said it was six, 6,700 per car payment. No, the total between these three was poor. She was a Ferrari and it was a Mercedes. Got it, got it.
Even. So, I mean, it didn’t seem like any of the aggregates seemed worthy, but, um, but the second video that popped up, which I thought was very interesting, and this is what I like about this cat. He literally runs the numbers as they exist in his life. So he said, how much do I make? Every time YouTube pays me for a million views on his videos. Okay. I think he has about a hundred thousand subscribers. Every episode gets somewhere between say 50 and 200,000 views. He showed the screen, the YouTube screen of when it hit a million, how much did he make? He makes 18,000 a month on, on a million views. So every time he has an aggregate of a million views, he’s getting a check for 18,000 a month. So whatever that is in America, 220 230,000, and let’s not forget this.
Guy’s a commercial banker at a bank. Right? But he had a hobby. He figured out a way to get some version of recurring revenue by leveraging what you were talking about with knowledge, which is the knowledge. Now what’s the knowledge dude. He’s not the faint, most famous commercial banker. He’s not the CEO of Bank of America and is a commercial banker in Southern California. And he’s making 18, big ones a month by getting a million views on YouTube. Okay. So let’s get into what we promise you, which is the actual numbers. Now, judge, I’ve run these out, but people can go to burn the ships.com, click resources and get their hands on this actual calculator. It’s a piece of tack. Literally, you don’t leave the website, you just pop it in and it shows you, so I’m going to walk you through it again, it’s burned the ships.com, click resources, upper right hand corner.
The recurring revenue calculator that the judge built will pop right up and just start putting in your own numbers. But we have three examples that we’ve done for you today. So you have an idea of what this looks like. So judge, if someone created a recurring revenue product for $25 a month, reasonable seems, seems fair. The million ways to get that it’s less than two Starbucks. Yeah. Are three Starbucks, whatever. So they, and, and they recruited a hundred people a month as clients over the course of a three year deal. Yes, by year three, that $25 at a hundred clients a month equates to $90,000 a month in guaranteed recurring revenue or $1,080,000 a year on a $25 product sold to a hundred people over a three year period of time. Yeah. Now the one thing in here is you gotta get a hundred every month and you’re not losing any for sure, but, but can you come up with the $25 product? Is there
Value enough for a hundred people? Dude, could you use an extra 90 GS a month
Now? Wait, wait till we sum this whole thing up. Cause we’re going to put a valuation to your business off of the recurring revenue here at the end. The second product that we ran in the example on is a $99 a month program. Right? Well, I don’t know whatever it is. You’re selling recurring revenue of $99 a month. And even, let’s just say you built an inexpensive website and you’re charging $99 for maintenance. And all you’re doing is once a month, you’re logging onto the back end or you’re looking at the dashboard to see that everything’s running fine, right? That’s not paying for edits. You’re not doing any design work. You’re just looking at tech that the, the, the, the, that WordPress offers you to see that all the updates are there. Okay. A hundred people a month. At the end of three years, you’re generating $346,000 a month or 4.1, 5 million a year.
Again, a $99 product, a hundred people a month over three years equals 4.1 million in recurring revenue. Amazing. Now let’s go just a little bit bigger. I, we’re not doing $2,000 a month. Recurring revenue things we’re talking about. The next one is a $249 a month program. Okay. You’re selling your university. You’re selling your training program, your whatever coaching via zoom, right. Or your monthly maintenance contract on the air conditioning unit that you just installed. Right? Okay. Or the, uh, the, um, the, the, the, the, the, what’s it called the weed thing where you prevent the weeds, whatever, whatever the weed treatment or the fertilizer in the beginning of the spring and the weed killer or whatever, it’s $249 a month hundred people a month for three years. It’s 896,000 a month, or 10 million, $700,000 a year. Now let’s go to the fourth example of what it looks like from a valuation standpoint, because if you apply to six X, multiple, just to the recurring revenue piece, judge, I’m not talking about the other revenue that the company is. Right. Which you would probably be able to hold the six because you’re not going to break it out on that last deal of 10,000,700 a year at a six multiple, your company has a valuation of 64,512,000.
Yeah. If it’s off the rev. Yeah.
That’s great. If it’s off the recurring revenue at a six X multiple, so you spent X number of days, weeks, months creating a product that you sold for $249. You sold a hundred a month. In three years, you have a company. If a six X valuation is what you can pull and we believe you could pull it is we’re $64 million. Crazy. Maybe it’s worth taking time to think of recurring revenue.
Yeah. I mean, whatever it is. I mean, I always use the example. Uh we’re we live in Texas, right? I use this example all the time. There’s snakes. I hate snakes. And if somebody came up, they were called a snake prevention guy or something, and literally came to my house and said, for 50 bucks a month, hell, a hundred bucks a month, we’re going to come every month or, you know, once a quarter or whatever. And we treat the yard to prevent snakes coming in
So that when your kids are running barefoot, right.
And your wife, or you’re going to hear the trash or the dog or whatever, we’re keeping the snakes out, dude, that’s a home run. And then could you get a Salesforce that knocks and does some online advertising? And can you get to selling a hundred of those a month in Texas? I think so. Right now, you’re now you’re, you know, you know, $4 million business off of an idea to, to prevent snakes.
Yeah. That’s the message for today. Now, I just want to finish this because the podcast is called scale with speed and the product that judges and I sell is the burn, the ship’s bootcamp. And the reason that it’s called burn the ships is because there does come a point where you have to get rid of plan B. So maybe this is the point. Maybe you’ve listened to today’s podcast. And you’ve said, I have to burn the ships of my transactional project based business. And I have to create, recreate it in a recurring revenue model. And three years down the road you call a judge. And I, and say, man, I listened to that one podcast that burned the ships, by the way, bootcamp, you should come to the bootcamp to get, cause we go deeper in this and the bootcamp. And I just exited for $64 million.
Just like you guys told me, we would love that freaking call, man. Those are the things that we do it for. So we encourage you to do what we’re telling you to do, figure out a way to add a recurring revenue element to your product offering or your service offering start small, start big. It doesn’t matter because what, what judge you said earlier is the big piece of this. If you can’t create something of value that the marketplace would buy, that’s an area you need to dig into and figure it out. Totally. Right? Yeah. So we hope you liked it. Let’s give you some tools, burn the ships.com, click resources that get you the recurring revenue, go to Amazon type in judge Graham, mastering recurring revenue by the book. Judge. Do you know what the ebook is off of your, uh, do you know off the top of your head where you get the ebook is that Amazon to the ebook is yeah, but we’re going to drop it in the
Yeah. On, on Facebook. We will, but yeah, the ebook you can buy, uh, on.
Okay, cool. I want to throw one of the things out there. Judge is speaking at RP one, the marketing company that I’m involved in, in Keller, Texas on, um, Wednesday, September 30th at what we’re calling the whiskey Wednesday. If you’re in the Dallas Fort worth area and you want to come to that, come to the RP one event, go to [inaudible] dot com. Sign up for the event. It’s Wednesday, September 30th. Judge will be the guest speaker talking about mastering recurring. We’re calling it whiskey Wednesday. You come on, drink some whiskey on us and have some fun. Um, that’s it for today? Big guy.
Yeah, that’s it. It’d be nice. I think the, the, the other, you know, last plug, we always do burn the ships.com hit that bootcamp. Um, it’s time to burn them, right? I mean, it’s, it’s time. Let Matt and I take your company. That’s like a level. You got an idea. You don’t have the plan. We can get it for you. I, I,
I’m going to need the audience to help me and you to judge talk me off the roof on this one, because I’m so sick and tired of people allowing $4,000 to the cost of the bootcamp to get in the way coming to the bootcamp is driving me crazy man percent guarantee. It’s a hundred percent guaranteed. No one’s ever asked for it. This, you could spend $4,000 and come to our bootcamp and turn it into 4 million in a year. Well, people are doing it, but it just frustrates me when people are still afraid to spend money. When we’ve done everything we could. There’s dozens of testimonials on the website. It’s a hundred percent money back guarantee. There is absolutely no loss for you. And still some people still
That’s the concept, right? We don’t teach mindset. I mean, you have to know you’re ready and you’ve had enough. Yeah. Right. And so that’s a, that’s a personal preference. Right? You deserve more ideas, you know, are you willing to do what it takes?
All right, guys,
Appreciate you. Being with us. Judge, take us out as always.
See you next time!