Whether you’re an entrepreneur at heart or just want to make some extra cash on the side, the Gig Economy is infiltrating our work lives and with it, the way we think about and manage our careers is evolving too. If you want to be your own boss but aren’t ready to set off on your own, or you want the best of both worlds (working for an employer with your side business humming along in the background), the key to this kind of flexibility and opportunity is establishing recurring revenue.
CNN Money cites that the average freelance worker loses out on $6,000 of work a year when their employers just don’t pay or don’t pay on time. Having customers on a set payment schedule helps to alleviate this stress by creating some cash flow stability. Establishing a reliable baseline of recurring revenue will help you towards a goal of supplementing your income, building a business, or growing an existing side or consultant business.
1 – Goal Setting: How much do you need to make each month?
Decide first and foremost, what is your goal? Do you want to make enough money on the side to take a trip to Europe every year? Are you working towards starting your own full-time business and aiming to grow to the income you would need to live?
Once you know the number you’re shooting for, you can start to factor in things like taxes, living expenses and other costs to work backwards and realistically determine how to get to that number.
Another way to think about this comes from Fizzle and the idea of a minimum viable income.
“This monthly number should not be incredibly comfortable — in fact, it might scare you a little, which is why the word “minimum” is in there — but it should be enough for you to keep the lights on without having an anxiety attack.” For more on this, read Fizzle’s ‘How to Afford an Entrepreneural Lifestyle Guide‘.
There is a lot of great information out there for building your “side hustle” or side business. To begin thinking about your services in this way, start with these resources:
2 – Package your services
For some business owners it can be a real challenge to sell a one-size-fits-all solution of your services, particularly for those working in creative fields like video production. If you are having trouble wrapping your brain around this concept…that’s because you’re human and this is not an easy thing.
The goal in packaging your services is to be able to sell a service that you can repeat on a regular basis within a timeframe that is predictable.
An example: A video producer might try to launch a standard package that involves the client sending no more than 10 minutes of raw video footage from their CEO every month. The video producer’s deliverable being a 30-second edited video that can be used in social media, internally, or for the board – for a set cost.
There’s a great article by CasJam that talks about the concept of “productizing” your services.
“A productized service is one that is focused on a single deliverable, packaged at a set price and scope, and delivers a compelling value proposition.”
This article is cited in another about building passive income from productized services by Josh Coffy of FlightMedia. His article dives into the idea of creating a reliable income stream based on manageable and scalable service offerings. Which is another way to look at your business and should be considered as you build your recurring revenue plan.
3 – Tools to help you sell
The conversation and buzz continues to grow around the “gig economy,” defined by Business News Daily as:
“A state of work characterized by an abundance of temporary positions filled by independent contractors on a short-term basis.”
Jargon and buzzwords aside, there are a variety of tools launching all the time to support this new way of structuring a career. From marketplaces, to portfolio sites – it’s worth doing some research on the tools already available, rather than spending time building from scratch for your services. To get you started, here are a few tools to take a look at, each with their own set of pros and cons.
LinkedIn Profinder is a professional services marketplace, piloting across the U.S. that helps employers find the best freelancers or independent professionals in their area, while providing quality leads to local freelance professionals.
- Easy to market your services with your existing LinkedIn profile
- Free for those looking to hire freelancers
- No percentage taken by LinkedIn for services sold
- No payment acceptance ability built in
- First 10 proposals are free to submit for service providers and then a purchase of LinkedIn Premium Business Plus ($59.99) is required to continue using the marketplace
Upwork helps employers find freelancers to hire and helps freelancers find relevant gigs. It claims to be – “The world’s largest online workplace where savvy businesses and professional freelancers go to work!”
- Built in payment acceptance and processing
- Free to sign up
- Large network with lots of exposure to potential employers
- Sliding service fee (20% / 10% / 5%) per transaction based on lifetime billings per client relationship
- Many reviews cite a lack of control over client relationships (for a more detailed pros/cons list check out this write up by Comparakeet)
Fiverr is a global online marketplace offering tasks and services, beginning at $5/gig. It is mainly used by freelancers to offer services to customers worldwide.
- It’s free to join Fiverr. There is no subscription required or fees to list your services
- Built in payment acceptance and processing
- Transparent pricing and a set minimum of $5/gig prevents some undercutting found in traditional bidding processes
- Fiverr keeps 20% of each transaction
- Similar to UpWork, while you have access to a big marketplace of potential employers, lack of control over your client relationships is something to consider
The risk with freelance gig marketplaces:
The risk of building your business in one of these platforms is the issue of: What happens when you leave that platform? The employers you worked with are part of that marketplace, not your personal client list and that’s something to consider, depending on your long-term goals.
A different avenue to consider, if you are concerned about having autonomy and control over your client database (while still being able to accept payments), is finding an online store or shopping cart solution for your services.
PaySimple’s Online Store gives you the ability to package your services with one-time or recurring payment options, in an easy-to-use store that can easily be shared on your website, in social media or email campaigns.
- Built-in payment acceptance and secure customer database
- Full control over item listings and pricing (including recurring billing options for repeat services)
- Sets the foundation for a long-term business and an easy way to market and sell services all connected to a customer database (you own your processes, a marketplace platform doesn’t)
- No built-in marketplace of employers
- More work upfront to build a customer base and marketing program
- Not free, PaySimple is $49.95 /month plus transaction fees (includes: payment acceptance, online store, appointments, recurring billing, customer retention tools)
Ours is one solution of a variety of shopping cart options out there, our online store was built with service-businesses in mind but may not be the right solution for all. Map out the needs of your business along with how you see it scaling (or not) to evaluate the best option for your business.
4 – Market yourself and your business
Since we’re only talking about building your recurring revenue plan here, think about the ideal customer you work with or would want to work with who would benefit from a recurring service structure. Focus on them, build your products around their needs and the time you want to allocate to this chunk of your business. With this customer in mind, create a simple marketing plan to start reaching out to them.
- Start with your email/LinkedIn contacts, literally scan through them name by name and make a list of the people/companies you’d love to work with. This is your initial target list.
- Draft an email to send to this group of people. Keep your list small so that you can write powerful, personal emails addressing the known pain points in your area of expertise for that company or person.
- Even if you only get one bite, use it to learn as you reach farther out in your network. As you gain customers, ask them for testimonials and referrals to your business that you can then use in social media and emails to people you don’t know as well.
To help you get started thinking about different marketing tactics you can use to get your side gig rolling, here are a few resources:
How to Start a Consulting Business – (great section on marketing in this article)
Recurring Revenue is Peace of Mind for Service Businesses
There are a lot of different ways to go about growing a side business. No matter the path that’s best for you, it should include a plan for establishing recurring revenue. Recurring revenue is the “secret” to cash flow stability for service-based businesses.