The key to a profitable & predictable business

This weekend I was enjoying some Margaritas with my friend Chris. He is one of the greatest entrepreneurs I know (and I know many, many entrepreneurs). You have never seen him in the news or on the front of a magazine, and that's because he wants it that way.

Chris's company throws off a 37.6% net profit, every month. And when I say net, I mean NET. This is the money left over AFTER all business expenses, all salaries (including his), after depreciation, after interest and after taxes. Oh yeah, and I forgot to mention his company does over $1M... every quarter. Just in case you haven't had your coffee yet, that is $4M a year business, with a net profit of $1,400,000 every year. Like clockwork.

With enough Margarita's Chris grabbed my arm, and with a slight slur (Margarita's will do that to you), told me the "secret' to his success: Recurring Monthly Fees.

Recurring monthly fees are the secret to predictable, profitable businesses. It works for Chris, and it works for me. Now, you need to do the same.

It doesn't matter if you sell a service or a product; there is a way to implement a Recurring Monthly Fee immediately. And, when done right it will benefit BOTH you and your customer. Here are some examples:

1. Offer a monthly, all included, maintenance service - The customer wins because they can budget for costs, and don't need to worry about any problems; big or small. You win, because you make money no matter if there are problems or not, and you are motivated to make sure there are no problems.

2. Start an "of-the-month" club - Do you sell a perishable or consumable product? Well start an "of-the-month" club. Cigar-of-the-month, wine-of-the-month, facial cream-of-the-month, condom-of-the-month, massage-of-the-month; the list is endless. The Recurring Monthly Fees can be endless too.

3. Extended Warranties - Have a product or service that is a one time sale? You can convert it into a recurring model by offering an extended warranty.

Recurring fees are so effective for running a healthy business, because it results in a predictable income stream. With a predictable income you can adjust your costs accordingly and position yourself for profits month in, month out.

Chris's final words drive it home:

"I start the first of every month, in the black. Any additional income during the other 30 days, and there is always some, is simple the icing on top!"

Now you have two things to do. First, implement Recurring Monthly Fees in your business. Then when you are done, pour yourself a Margarita.