How Valuable Is Your Revenue? Changing Your Model to Recurring Revenue Can Boost Your Business’s Worth 🚀
So, you’re making good money. Sales are strong. Customers seem happy. But every month, you’re back at square one, hustling for new deals just to keep revenue flowing.
Sound familiar?
If so, you might have a business that looks great on the surface but struggles with long-term stability. And that could be costing you millions—especially if you ever want to raise investment or sell.
The Problem: Great Sales, But No Stability
Meet Blue Horizon Consulting, a successful but stressful business. They had £5M in annual revenue, a solid reputation, and a team of 40 consultants. But there was one big problem:
Every single month, they had to start from scratch.
Their revenue came primarily from one-off projects, meaning their sales team was constantly chasing new deals just to keep the lights on. Some months, they pulled in over £500K. Others, they struggled to hit £100K. The unpredictability made it impossible to:
Plan for long-term hiring (because they never knew if cash flow would hold up).
Secure funding (because investors want predictable revenue, not rollercoasters).
Sell the business (because no buyer wants a company that could tank next quarter).
Meanwhile, their competitor, ScaleUp Growth Advisory, was pulling in the same £5M per year—but 80% of it was locked in from retainers. Their CEO knew that when January 1st rolled around, they already had £4M committed for the year. No last-minute sales scrambles. No panic when one client dropped off. Just steady, predictable cash flow.
Guess which company got a 10x valuation multiple when they went to sell? (Spoiler: It wasn’t Blue Horizon.)
How a Fractional CFO Would Have Turned This Around
A Fractional CFO wouldn’t just ‘advise’ Blue Horizon to build recurring revenue—they’d actively make it happen.
🔹 Audit the Revenue Model – The CFO would dig into historical sales to identify:
✔ Which services clients were coming back for regularly.
✔ Where pricing was too transactional and could be bundled into retainers.
✔ What competitors were doing that Blue Horizon wasn’t.
🔹 Build a Subscription Offering – Instead of selling consulting project by project, the CFO would:
✔ Introduce monthly retainers for ongoing strategy & support.
✔ Offer tiered packages, giving clients incentives to commit long-term.
✔ Test a pilot program with key clients before rolling it out company-wide.
🔹 Pitching to Investors with a Stronger Story – Investors love businesses with predictable revenue. A CFO would:
✔ Build financial forecasts showing ARR (Annual Recurring Revenue), rather than one-time sales spikes.
✔ Demonstrate how a 5% increase in retention could mean millions in extra value.
✔ Make sure the company could command a higher multiple if they ever sold.
The Outcome?
Within 18 months, Blue Horizon had shifted 60% of their revenue into retainers. Investors who previously turned them down were now offering funding at premium terms. The valuation of the business doubled overnight.
Most importantly? The CEO stopped waking up at 3 AM wondering how they’d make payroll next month.
