Erik was recently asked what the biggest lesson learned was in getting to $2M a year in recurring revenue. Erik is not a big fan of questions like these because it forces you to generalize years of experiences and mistakes into one simple statement. It’s almost impossible to do. However, he decided he would give it a shot.
After thinking about it he decided that the common theme was to question everything. Question everything you do and question everything your industry does.
We started questioning the way we did things and it led to some pretty radical changes in the company. One of the first big changes was we stopped tracking time. We used to track our hours so we would know what to bill our clients. A lot went into calculating how much to charge to cover labor, overhead and everything else. It was time consuming but that was the way we had always done it and we didn’t know another way. But we decided to try billing per project instead and that worked better. Even better than that was when we decided to move to recurring revenue. That changed everything.
Even though we were no longer billing by the hour we were still keeping timesheets. It didn’t really make sense to continue doing that since we weren’t billing by the hour so we got rid of that too. We very rarely used the information from timesheets so it made sense to move on. Similarly, we stopped call tracking for ourselves and our clients. We found most of the calls were spam calls and it didn’t make sense to keep investing time in that.
The moral of the story is question everything. Question what you’re doing and if it’s not working change it.