--- title: Will this be the year you seriously drive up the value of your company? description: Recurring Revenue Equals Increased Value --- **[![](https://www.stonyhilladvisors.com/hs-fs/hubfs/images/logo-stony-hill-business-advisors.jpg?width=397&name=logo-stony-hill-business-advisors.jpg "logo-stony-hill-business-advisors.jpg")](https://www.stonyhilladvisors.com)** Looking to Speak with Someone Now? [![Call Us](https://no-cache.hubspot.com/cta/default/44760/61832c77-1aa9-4e59-b696-524f33057960.png)](https://cta-redirect.hubspot.com/cta/redirect/44760/61832c77-1aa9-4e59-b696-524f33057960) ## [Will this be the year you seriously drive up the value of your company?](https://www.stonyhilladvisors.com/blog/will-this-be-the-year-you-seriously-drive-up-the-value-of-your-company) Posted by [Paul Visokey](https://www.stonyhilladvisors.com/blog/author/paul-visokey) Fri, Jan 20, 2017 @02:43 PM - [Tweet](https://twitter.com/share)   If you have resolved to make your company more valuable in 2017, you may want to think hard about how your customers pay. If you have a transaction business model where customers pay once for what they buy and do not return, expect your company’s value to be a low single-digit multiple of your Earnings Before Interest Taxes, Depreciation and Amortization (EBITDA). If you have a recurring revenue model, by contrast, where customers subscribe and pay on an ongoing basis, you can expect your valuation to be a multiple of your revenue. Breedlove & Associates Sells for 6X Revenue In 1992 Stephanie Breedlove started a payroll company to make it easier for parents to pay their nannies on a recurring basis. It began small and Breedlove self-funded her growth, which averaged 20% per year. By 2012, Breedlove & Associates had hit $9 million in annual sales when Breedlove accepted an offer from Care.com of $55 million for her business— representing an astronomical multiple of more than six times Breedlove’s revenue. Buyers pay up for companies with recurring revenue because they can clearly see how your company will make money long after you hit the exit. Not sure how to create recurring revenue? Here are four models to consider: Products That Run Out If you have a product that people run out of, consider offering it on subscription. The retailing giant Target sells subscriptions to diapers for busy parents who don’t have the time (or interest) in running to the store to re-stock on Pampers. Dollar Shave Club, which was recently acquired by Unilever for five times revenue, sells razor blades on subscription. The Honest Company sells dish detergent and safe household cleaning products to environmentally conscious consumers and more than 80% of their sales come from subscriptions. Membership Websites If you’re a consultant and offer specialized advice, consider whether customers might pay access to a premium membership website where you offer your know-how to subscribers only. Today there are membership websites for people who want to know about anything from Search Engine Marketing to running a restaurant. Services Contracts If you bill by the hour or the project, consider moving to a fixed monthly fee for your service. That’s what the marketing agency GoBrandGo! has done to steady cash flow and create a more predictable service business. Piggyback Services Ask yourself what your “one-off” customers buy after they buy what you sell. For example, if you make a company a new website, chances are they are going to need somewhere to host their site. While your initial website design may be a one-off service, you could offer to host it for your customer on subscription. If you offer interior design, chances are your customers are going to want to keep their home looking like the day you presented your design, so they might be in the market for a regular cleaning service. Rentals If you offer something expensive that customers only need occasionally, consider renting access to it for those who subscribe. ZipCar subscribers can have access to a car when they need it without forking over the cash to buy a hunk of steel. WeWork subscribers can have access to the company’s coworking space without buying a building or committing to a long-term lease. You don’t have to be a software company to create customers who pay you automatically each month. There is simply no faster way to improve the value of your business this year than to add some recurring revenue. Topics: [Recurring Revenue](https://www.stonyhilladvisors.com/blog/topic/recurring-revenue) ### Follow Me # [All Blog Posts >](https://www.stonyhilladvisors.com/blog/all) # [FAQ's >](https://www.stonyhilladvisors.com/why_faqs) ### Do you own your own business? The US economy is driven by entrepreneurs - small and mid-market businesses, more than 20 million of them, many of them privately-owned. It is often difficult for owners to convert all of their hard work and ingenuity into an equity event. It is a complex and time-consuming process. Stony Hill Business Brokers has the experience and expertise to assist with selling a private business successfully. ![line break image](https://www.stonyhilladvisors.com/hs-fs/file-14106577-jpg/images/right_side_line_break.jpg) ### **Is it time for a change?** All of the partners at Stony Hill Business Brokers have been entrepreneurs in private businesses and have had experience managing and selling their businesses. We understand the grind of running your own show and the uncertainty of getting the most value for the business. ![line break image](https://www.stonyhilladvisors.com/hs-fs/file-14106577-jpg/images/right_side_line_break.jpg) ### **Are you looking for guidance?** We have particular experience with the small business market in eastern Pennsylvania, New Jersey and Delaware. We can provide advice on preparing a business for sale, even years in advance. We can help buyers find the right business for their circumstances. And we advise both sellers and buyers throughout the process to assure a quick, smooth transfer of ownership. Do you own your own business? The US economy is driven by entrepreneurs - small and mid-market businesses, more than 20 million of them, many of them privately owned. It is often difficult for owners to convert all their hard work and ingenuity into an equity event. It is a complex and time-consuming process. We understand the grind of running your own show and the uncertainty of getting the most value for the business. Stony Hill Advisors has the experience and expertise to assist with selling a private business successfully. Are you looking for guidance? We have experience in the small and mid-market business market with companies having revenues from $1M to $50M . We can provide advice on preparing a business for sale, even years in advance. We can help buyers find the right business for their circumstances. And we advise both sellers and buyers throughout the process to assure a quick, smooth transfer of ownership. In some instances, the parties to a transaction locate each other through informal industry or personal channels. These transactions include sales to unrelated third party acquirers, as well as management, family and partner buyouts. Stony Hill Advisors is frequently engaged to structure these transactions and navigate the many issues requiring attention from the initial stages to the consummation of the transaction. Often Stony Hill Advisors is engaged to provide Exit Value Planning to prepare a business for highest value when it is time to transition.   Are you interested in buying a business? Stony Hill Advisors assists companies, entrepreneurs and corporate executives develop and execute customized acquisition strategies designed to result in successful acquisitions. 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