Transforming a Stop-Go Business into a Recurring Revenue Model – Pawel’s Story
Introduction
Pawel (not his real name) was the epitome of a self-made entrepreneur. Ten years ago, he started his business with nothing but a dream, determination, and an unwavering work ethic. Through relentless customer acquisition and a passion for what he did, he built his company to an impressive 230 clients and annual revenues exceeding £1.5 million.
Despite this success, Pawel knew his business could achieve more. He had ambitious growth plans but wasn’t sure how to transition to the next level. After some deliberation, he made the strategic decision to bring in a Virtual Finance Director (VFD), Josef, to provide the financial oversight and strategic insight necessary to scale the business sustainably.
However, as Josef reviewed the company’s financials, it became clear that the business was not as strong as it seemed on the surface.
Situation
Pawel took pride in his large customer base and consistent revenue. Even though turnover had been flat for three consecutive years, he believed this was an achievement, given economic challenges. However, Josef looked deeper and discovered key vulnerabilities that were holding the business back.
The biggest issue? The business operated on a stop-go model, where revenue was unpredictable, dependent on one-off sales rather than reliable, recurring income.
Other key concerns included:
- An overestimated customer base – Of the 230 customers Pawel believed he had, nearly half had not made a purchase in the last three months, meaning the active customer base was closer to 140.
- High customer churn – 39% of customers from the previous year had not returned, highlighting a lack of customer retention strategy.
- Revenue stagnation disguised deeper problems – The number of new customers acquired was actually lower than the number lost, but higher spending new customers masked this issue.
- Heavy reliance on a single large client – One key customer accounted for 10% of total revenue, making the business highly vulnerable to a single contract loss.
- Declining profit margins – Product costs had risen significantly, but Pawel had not adjusted prices, believing lower pricing would drive volume and profitability.
The business was working harder, but not smarter—constantly chasing new sales to plug revenue gaps instead of building a sustainable income stream.
Obstacles
Josef identified several critical issues that needed to be addressed:
- Stop-go revenue model – The business had no recurring income, making cash flow unpredictable and sales efforts exhausting.
- Unreliable customer base – Many customers were one-time buyers, with no strategy in place to encourage repeat business.
- Pricing problems – By not increasing prices in line with rising costs, profit margins were being eroded.
- Over-reliance on one customer – Losing just one major client would significantly impact revenue.
- Lack of financial visibility – Without structured financial reporting, Pawel had been making decisions based on assumptions rather than data.
Without urgent intervention, the company would continue its cycle of revenue peaks and troughs, making long-term growth unsustainable.
Action
Josef, as Virtual Finance Director, implemented a strategic financial overhaul to shift the business from a stop-go model to a recurring revenue model:
✔ Introduced a recurring revenue strategy, creating subscription-based service plans to provide predictable, consistent income.
✔ Rebuilt customer engagement, implementing a loyalty programme and structured customer retention initiatives.
✔ Refined pricing strategy, increasing prices to reflect real costs while maintaining competitiveness.
✔ Diversified the client base, reducing dependence on one major customer.
✔ Implemented structured financial reporting, giving Pawel real-time insight into business performance.
✔ Trained the sales and finance teams on recurring revenue principles, ensuring a cultural shift in how business was done.
This shift in strategy moved the company away from relying solely on new sales and towards a sustainable, predictable revenue model.
Result
✅ Predictable, recurring income streams – The introduction of subscription-based services and contracts meant the business had guaranteed income every month.
✅ Reduced churn, increased customer retention – With structured engagement initiatives, repeat business grew, strengthening the company’s revenue base.
✅ Stronger profit margins – Adjusting prices ensured sustainable profitability, rather than relying on high-volume, low-margin sales.
✅ More balanced revenue streams – Dependence on a single client was significantly reduced, making the business less vulnerable.
✅ Improved financial oversight – With structured financial reporting, Pawel could make data-driven decisions rather than relying on assumptions.
✅ Less stress, more stability – The business was no longer in a constant cycle of panic-selling to meet short-term revenue targets.
Conclusion
Pawel had always measured success by revenue and customer numbers, assuming these were the best indicators of business health. However, Josef’s intervention as Virtual Finance Director uncovered deeper structural weaknesses—the business was trapped in an unpredictable stop-go cycle, constantly chasing sales to sustain itself.
By shifting towards a recurring revenue model, the business became more resilient, more profitable, and better positioned for long-term growth. Instead of relying on one-time transactions, the company could now depend on predictable income streams, making planning and scaling far easier.
This transformation taught Pawel that growth isn’t just about winning new customers—it’s about keeping them, building loyalty, and ensuring financial stability. With better financial visibility, structured reporting, and a stronger revenue model, the company is now on a secure path to long-term success.
