Want to Recession-Proof Your Service Business? Aim for Recurring Work

A recession is a normal part of the business cycle, but it can be a worrisome time for small business owners. 

The period preceding a recession is marked by high inflation and reduced profits, causing leaders in many industries to take contractionary steps to ensure their businesses’ survival. While it’s wise to cut back on unnecessary spending and protect your cash flow in a tight economy, there is one thing you can do to make your business more financially secure even in good times: Establish recurring work!

Here, we’ll get into:

• The primary reasons recurring work is a favorable arrangement for both parties
• How to prepare for managing recurring business
• Perks of using software that can automate and accurately bill for retainers

Recurring Work = Stability for You and Your Clients

Having clients pay for your services on an ongoing basis benefits you and them. 

Recurring payments are a source of dependable revenue, of course, but it’s also important to note that said revenue tends to grow the longer a client stays. Bain & Company reports that repeat customers, on average, spend 67% more in months 31–36 than they do in months 0–6. In the long run, keeping existing clients is generally a better investment than seeking new business.

There are other internal advantages of developing a solid ongoing client base:

• You’ll better understand clients’ needs as your relationship grows. 
• With more time to gather and act on feedback, your team will have an opportunity to fine-tune your services. 
• Your business will be worth more if you have a long list of recurring clients, which is impactful if you want to sell or lure investors in the future. 

At the same time, clients in a recurring service arrangement get a better experience: 

• They get to lock in a price for the duration of their service agreement — a particularly helpful factor if they’re worried about the effects of a recession. 
• Automatic payments can reduce billing hassles and ensure they never miss a payment.
• They’ll have access to your expertise for longer, meaning they have more time to see the tangible outcome of working with your team.

What To Consider Before Moving Clients to Retainers

Most professional services businesses use retainers to manage ongoing work. Before you try to convert as many of your clients as possible from one-time to ongoing, we recommend creating a plan for how you’ll manage recurring contracts.

Your method for handling contract renewals should be reliable and require as little time as possible. Seamlessly managing retainers means:

• Understanding the types of retainers that apply to your industry and service category
• Setting up workflows by determining the tasks and assignees required for each step of contract renewal and the ongoing client work you’re promising
• Establishing a goal for monthly recurring revenue (MRR) and knowing what percentage of clients needs to be on retainers for your business to achieve that goal

Upfront due diligence can go a long way in helping you streamline and reduce the burden of retainer management while maintaining the benefits of regular revenue.

READ NEXT: Retainer Management: It's More Than Recurring Tasks

How the Right Software Can Help You Manage Ongoing Work

Some of the gains you’ll experience when you transition clients to subscriptions could be lost if you don’t take care to maximize efficiency in the process. Replacing manual work with powerful tech-fueled automation could be just the step you need to see increased profits and build stronger client relationships for a longer average duration.

Great retainer management software can:

Which will allow your business to:

Create weekly, monthly, quarterly or annual retainer periods

Customize ongoing payments according to each client’s needs and business cycles

Handle both prepaid and postpaid payment structures

Match retainers with your current contract and payment preferences

Track your team’s billable time for both one-time projects and recurring work

Balance staff efforts and wisely allocate time to both types of clients

Automate preset recurring tasks

Save considerable manual hours which can instead be dedicated to profitable work

Set up internal alerts for upcoming contract expiration

Prevent exceeding a client’s budget or misaligning work with agreed-upon timelines

Send automated email reminders about contract expiration

Stay in touch with clients regularly and help them avoid accidental payment oversight

Generate accurate data about the profitability of each recurring contract

Make confident decisions

Replace manual billing with automatically linked work completed on projects and tickets

Send accurate invoices that represent accrued work based on time logged

READ NEXT: How one digital agency has been successfully managing retainers in Accelo for 10 years

You need unique software to help you achieve all of the above. Unlike most work management systems, Accelo is built to help you effectively — and profitably — manage recurring work. Schedule a demo to discover how the platform could work for your business.