Advice For Service-based Businesses Working On One-Off Contracts

A common problem for small companies, especially service-based businesses working on one-off contracts is having a sole founder relying on irregular contracts needing to hire help. 

My advice is:

Switch to a Recurring Revenue Model ASAP

Recurring revenue is, by far, the best way to manage growth in a predictable manner and scale accordingly. Could be maintenance contracts, creating copy on a monthly basis, marketing or SEO campaigns, sorting out paperwork or whatever your business does.

Building (or outsourcing) a product may be a good alternative, too. Think about repetitive tasks that can be streamlined and offered in a maintenance package. Or consider investing in a custom product that you can charge for on a monthly basis.

Finding At Least 2 Lead Sources That Work Reliably

The other option is finding at least a couple lead sources that work reliably. A marketplace, a partner sourcing leads, a freelance network — all of those may be a good fit.

It’s an alternative form of recurring revenue after all. You can hire a salesperson or invest in marketing (which usually takes longer) once you’ve established a successful channel worth investing in.

Start With Freelancers or Contractors

In terms of handling the workload in the meantime, start with freelancers or contractors. Build a network of reliable experts available for hire, discuss hourly rates upfront, and loop them in before closing a project.

Once you can continuously book someone at 30h/week or longer, consider hiring them or look for a full-time employee who can join you in the long run.

You may consider bringing in a co-founder or come up with a profit share strategy. This would keep people engaged on a partnership basis.

Keep Your Revenue Distribution Balanced

Last piece of advice — be careful with clients who bring more than half of your revenue. Losing them would effectively mean shrinking your business in half unless you have a safety net or pending leads in the funnel.

This will probably be the case at first, but in the long run, try to distribute the risk across multiple clients and design a pricing model that leaves sufficient profit margin for rainy days, expansion, marketing, and other activities you need to invest in while scaling.