Recurring Revenue Will Change Your LifeDec 26, 2022
It was 2015, and I was starting my cash-pay PT clinic. Young and ambitious, I thought I was going to change the performance-based world…. Instead, I found myself in constant acquisition mode, always looking for the next client to sign up for the next plan of care. Each month was a rollercoaster with no financial stability because that was the revenue model I chose, as it is the norm for the industry. In 2016, the game changed for me. I started contracting with a company that was programming for clients all over the world, and I quickly saw an opportunity to improve my in-person operations by adding a digital management model, what I now call Prescriptive Exercise Programming.
At that time, I was deploying this concept with an excel spreadsheet until I achieved proof of concept that it was an offer my clients wanted. It was a major hit. In the performance realm, many of my clients didn’t need much oversight for the exercise portion of my treatment model, they simply needed my guidance and oversight to get them to their desired outcome. So, a new offer was born, a strategically deployed Prescriptive Exercise Program sold as a separate revenue stream to offset some of the constraints of my business. This new vision changed my life.
Over the course of the next year, I noticed a few trends:
- My clients were getting more complete outcomes because the treatment process expanded beyond the clinic walls.
- I had time to live my life in ways I never imagined as a Physical Therapist, where I was previously conditioned to think that making money equaled selling my time/service.
- Over half of my revenue collected each month was recurring. Meaning I had a SOLID base of financial support to build from each month.
Let’s spend a little more time breaking down point #3 above and expanding on what that offer could do for you.
In a given month, if you had four new patients per month and closed them to a plan of care (let’s assume you sell a 10-visit package and include your eval as one session to make the math simple), that’s $8k in “fee-for-service” revenue. To match that revenue the following month, you need to acquire four additional patients, add them to your treatment schedule, and close at 100%. To beat that revenue number, you need to add five new patients. The next month rolls around, same scenario, same game. A constant chase.
In scenario #2, you sell a Prescriptive Exercise Program as a recurring revenue stream. We will assume 80% of your clients enroll in this option, this was lower than my enrollment rate because of how I pitched it as a part of the client journey, at $300/month. So, each month you add $900 in recurring revenue to your operations. That’s almost half a new patient per month. After two months, you’re at $1,800 in recurring. three months, $2,700. four months $3,600. And so on! Let’s assume you have a six month lifespan on this revenue - this gives you a conservative base of $5,400/month in recurring revenue to your bottom line EVERY MONTH. Let me rephrase, instead of starting each month at $0 looking for new clients, you get to start at $5,400.
The bottom line, if you do not have a recurring revenue model in your business, you’re just making your life and business more difficult! The good news is that you can break out of this model with minimal invasiveness to your current operating procedure! If you’re ready to change the game for yourself, I’m ready to help. It’s time to reimagine your business and break free of the service provider trap.
Interested in learning how to apply this to your clients?