Recurring Revenue: How To Build A Solid Business Model For The Future

Posted by Karen Erdelac on Dec 8, 2021

Recurring Revenue: How To Build A Solid Business Model For The FutureUnlike one-off sales, recurring revenue is predictable, stable, and will occur at regular intervals in the future.

A recurring revenue stream is the goal of many businesses, but how to achieve it? Recently, the RSPA published a blog post outlining The Ultimate List of Recurring Revenue Products and Services.

Alternative business funding can be another reliable source of ongoing revenue for many VARs and ISVs. Many small businesses, especially restaurants, struggle to access business funds from traditional lenders. The process can be long, the paperwork complicated, and the approval rate is typically less than 30 percent.

A business cash advance is a traditional loan alternative. It’s not a loan but a sales transaction – the purchase of a small portion of your merchant's future credit card sales.  No complicated paperwork or collateral is needed. A merchant can use a cash advance for nearly anything that will benefit their business. For example, funds can be used to purchase your software or hardware, hire staff, expand or remodel.

Here is a breakdown of the cost of the advance and the amount you will receive for your commission. At the standard referral commission of 8% of GM and standard factor of 1.359 -

$15,000 funding equals $5,385 GM - 8% = $430.80 commission.

$20,000 funding equals $7,180 GM - 8% = $574.40 commission.

While this sounds like a one-time commission payment, it's not. You'll receive your commission each time your merchant renews its funding.

Let’s work through an example.

If you averaged just two new $20,000 funding deals a month over 12 months, the commission would be just under $14,000. Now, factor in the renewals. Most merchants renew after 90 days. To keep the example simple, we’ll use the same funding amount for the renewals. Commissions over a year would increase to nearly $40,000.

To learn more about how establishing a recurring revenue stream through Quikstone can benefit your business, contact Serena Smith, Director of Partner Development at Serena.Smith@QuikstoneCapital.com.