You want to get the maximum return on your investment from your business? You got to focus on recurring revenue. Today we're going to share with you the biggest revelation that you're going to have in the business sales process. And that is that buyers are buying future income.

They're buying future profit. So if you can reasonably predict what that future profit is going to be, you know how much you can pay for a business. If I'm going to get a return on investment from my investment in your business in three years without changing anything, without doing anything, then I can pay you a three times multiple of your profit for your business.

This predictability is a shortcut. If you want to sell your business for the maximum value, you got to become obsessed with recurring revenue. So let's talk about ways to add recurring revenue to your business.

The first is with subscriptions or service plans. If you have a product that people have to buy over and over again, or people want to buy over and over again, you should sell that product as a subscription. I'll give you an example that I use every month.

I have an Audible subscription. Audible is the audiobook subscription program. It's the audiobook program.

And you can buy an audiobook one at a time, or you can subscribe for credits every month. I subscribe for credits every month because I regularly listen to between two and five audiobooks every month. These credits that I subscribe to are exactly enough for four books.

So when I find a new book and I write it down and I finished the book that I'm currently listening to, I immediately have credits available to use to get more books. That's a subscription service that came from a standalone item. A one-time purchase of an audiobook became monthly audiobook subscriptions.

And what people realized is nobody listens to just one audiobook. If you're an audiobook fan, you listen to dozens and dozens. Another idea is car washes.

You don't just buy one car wash. If you're a car wash person, you probably get your car washed at least once a week. If you're in an environment where it gets dirty more frequently and you transport clients or customers or people you want to influence in your car, you may get a car wash three or four times a week.

Offering subscriptions instead of one-off car washes is a way for predictable recurring revenue to be introduced into a one-time standalone business. There are dozens of ways to create subscription revenue from one-time revenue. This is one of the ways you can employ recurring revenue in your business.

The second aspect of recurring revenue that you need to explore is a prepaid bundle. Many people call these retainers. I'm not a fan of taking money and then billing hours against the money.

What I am a fan of is taking a lot of money in advance and providing services against that money in advance regardless of the frequency of the service. I'll tell you what I've done with landscaping companies. That's right.

People who mow the lawn. Landscaping companies also offer pressure washing services. And a mowing of the lawn and trimming of the hedges and cleaning up the yard is the same as pressure washing the sidewalk.

And pressure washing the house is the same as mowing the lawn one time in this landscaping company's service offering. People get, people pay for a block of services each six-month period and they can use those six-month service blocks as often as they want. So they get the equivalent of 18 services over six months for let's say a block of $3,000.

Those 18 services can come one week after the other and when they use them up, they use them up. They all have to be used in that six-month window. If they don't use them in the six-month window, they lose them.

You can do three a month. You can do two in one week and then hold them off for the next month. However you choose.

But you pay the $3,000 up front. If the business owner doesn't call or if the homeowner doesn't call, they schedule every other week for the service and the business owner can call and adjust it or the homeowner can call and adjust it as they see fit. Prepaid bundles are a great way to create recurring revenue because you know every six months that card is going to be charged for $3,000.

Okay. The third way is contracted follow-up services. So you can turn an ongoing need for an upsell into a subscription model.

So if you're investing in let's say you're investing in software and the software comes with a monthly license that's already recurring revenue. You can offer an add-on service for $50 a month where a tech will modem into your system and clean up any data that is incorrectly formatted. They will look at your system's workflow and consult with the system's administrator to make sure the workflow is optimized for maximum productivity.

This type of service, this ongoing maintenance service, is something that is incredibly valuable and it's an add-on when people opt into it. If 20% of the people opt into it, you've increased your recurring revenue by 20% every month. You can also think about this in the HVAC industry, the heating, ventilation, air conditioning, and cooling industry.

Most people, most homeowners do not have a maintenance plan on their HVAC unit. Here where I live in South Florida, if your HVAC unit goes out in the middle of summer, you're in deep trouble. If your HVAC unit goes out in the winter, you're in trouble, but in the summer you're in deep trouble because it's 95 degrees every day with 100% humidity and it takes a week for someone to come out to be able to fix it.

You can offer a maintenance plan where twice a quarter someone comes out and they change the filters for you, they look at the inside of the unit, they put bleach in the lines and keep the unit lines clear, the drain lines clear so it doesn't back up into the system, and they vacuum out the AC closet where all the dust accumulates so that the unit doesn't break down that frequently. And this maintenance program also comes with priority service, so 24 hours a day there's someone who answers the phone and you're guaranteed to have someone dispatched to your home to fix your AC unit within 12 hours. And for that maintenance contract, maybe you pay $49 a month and you do not get a discount on service, you do get priority for service when it comes.

That's how you take contracted services and turn them into recurring revenue. These models are just a few examples. We at Exit Success Lab do this all day long.

We convert stagnant, one-off product revenue businesses into recurring revenue businesses and we double and triple the multiple as a result. If you want to get the maximum value for your business when you go to sell your business, you've got to become obsessed with recurring revenue. I'm Dave Lorenzo.

This is the Inside BS Show. We'll see you back here again tomorrow.