Monthly Reoccurring Revenue is a very important metric to focus on when building a valuable business

Transcript:

Let’s talk about one of the most important metrics in your business and that is mrr or monthly recurring Revenue so mirr is a super important part of building a successful business it basically means how much revenue do you get every single month reoccurring from from customers no matter what and subscriptions are a great way to do this not all businesses are going to apply to this but if you do have a business that where you can apply this it’s really a good idea to work on this metric now obviously gross sales and the net sales that’s going to be important that’s just how much money your business is making and then how much money it gets to take after paying all of its overheads expenses you know those line numbers are always important most people in business know about that but mrr is something that I think a lot of businesses could focus on that don’t so you could be it doesn’t matter what the business is sometimes there’s ways to create programs where you get a customer to sign up for a monthly recurring charge and then they get access to more benefits like a premium type of Club you get Services they get access to your exclusive support line things like that so there’s a ways to create that where you can create an mrr and what’s really great about it is that not all the customers are going to use it so you might have you know a 30 50 usage rate where the rest of it is not using it and that’s a great way to build your overall Revenue each month where you don’t have to work as hard to continue to pull in new sales so it’s less stress on the business and there’s also a part of the value of a business so when they when business uh evaluations occur they look at how much mrr is occurring because without mrr it’s considered revenue is considered what’s called Blue Sky especially in service-based Industries Industries so in a service-based industry it’s called Blue Sky so let’s say you have a lawn care business where you’re mowing people’s Lawns so it’s blue skies if you’re if you’re generating ten thousand dollars a month mowing people’s lawns it requires you to go out there get those customers and go mow those Lawns every single month to receive that ten thousand dollars and so that’s considered Blue Sky because if you were to quit the business and try to sell it you know you’re no longer going to be doing those most the the the customer knows you as the business owner and a lot of them will just switch to a new provider if you leave but with an mrr program you you sign them up for a subscription allows them to get let’s say they can get unlimited modes they can get their lawn mowers as many times they want but it’s 189 a month but it’s unlimited most they can get you know all the little bells and whistles that come with your mowing service unlimited they give as many modes as they want they just have to call you up schedule it get in and you sign up let’s say you’ve got a hundred customers paying you 189 a month so that total revenue you know is quite considerable and that’s something you can actually sell to another uh person who wants to take over the business has the full amount because those customers are in contract let’s say it’s a 12 month contract they have to commit to you can then sell that it’s much more valuable when you have a contract where customers are going to pay you 189 a month you’ve got 100 customers paying you that automatically goes through your billing uh Pro your processor so like you can use a processor like stripe.com and there’s other processors out there where you can set it up where it’ll automatically charge a customer’s card every single month that’s going to generate Revenue without you necessarily having to do as much work for it so that’s really the goal the the true goal of the business is to create Revenue in different ways doesn’t always require you to go and beat down and try to pull in new customers and and customer retention and things like that so it’s a lot easier to focus on mrr than it is to focus on brand new customer acquisition so this is something to definitely think about your business how can we be creative and create like a customer program exclusive customer program where they pay a monthly subscription fee but they get access to way cool benefits of the cost the typical customer wouldn’t get so this is Joe feel about Sky Point Studios hopefully this has been an interesting video I’d love to hear a little bit about how you’ve engaged mrr in your business and how you’re building that part of your business it’s really important and let’s continue the discussion thank you so much for watching my videos as always this is Joe from Sky Point Studios and I’ll talk to you soon.