Find or attach a compounding vehicle to a one-time sale

1. Why a one-time sale makes growth hard

What you are looking for. The aim is a part of the business that, once built or bought, keeps bringing in money, or could, if executed properly. It can be recurring, like a subscription, or reoccurring: something people come back and buy this week, next week and the week after.

Some businesses have one by nature. Insurance premiums get paid every month. Banking, wealth advice and payment processing work the same way, as does software for managing customer relationships, and so does servicing heavy equipment, which needs doing year after year. Most businesses, though, have none, and most often where what they sell is a one-time product or service, or a permanent solution that leaves the buyer needing nothing more. A roof that might last 30 years, a book once read, a supplement taken once and forgotten, a pair of glasses, a sandwich, lead generation for small businesses: as they stand, all of them are poor vehicles. There is nothing wrong with that, and a vehicle can still be built that sits apart from the product.

What it changes. Without one, a business that wants $100 million a year has to sell $100 million of new business every year, and then start again. With one, $5 million a year of new sales, kept and repeated over 20 years, might reach $100 million a year with no rise in how fast you sell. The sum assumes every customer is kept, and is given as an illustration. Making $5 million of sales a year is real work, but it is far easier than adding $2 million of new sales every week, year after year.

The bar. Whatever you find has to keep 80 percent or more, the bare minimum given; SOP 199, section 2, carries it. A true one goes on as long as it keeps giving value.

2. The four places to look

Four places are named, in this order, and there are probably more:

Where	The question to ask
The product itself	Is there anything that would make it more permanent?
Something adjacent	Can something people keep needing be tacked on as a back end?
Who sells it	Can any of the people or businesses selling it become permanent?
Who buys it	Can any of the buyers become more permanent?

2.1 The product itself

Add connection. People quit gym memberships all the time; give the membership a community and it is worth more, because members come to keep each other there. Add something always new and needed: daily news the customer can only get from you might keep them.

In one example, for a business that teaches a fast-changing skill, three versions were named: news the customer needs in order to use the tools, a tool of your own that they come back to on a regular basis, and a community close enough that people stay for each other more than for the teaching. Teaching that does not change has little left to sell once it is learned. People who start taking something they consume tend to stay on it; coaching, in the view here, is never sticky.

2.2 Something adjacent people keep needing

Tack on what the product goes on needing: a service contract for heavy equipment or a car, a warranty or insurance for hardware, the ink for a printer, the blades for a razor, a yearly check on a roof or on solar panels. The profit on the front-end sale often exists only to offset what it cost to get the customer; the gross margin comes from the recurring piece, which stacks year over year.

You can also attach a one-time product to something that does recur: a book about insurance might bring in insurance buyers. Worked plans built onto a one-time job are in section 2 of SOP 231 — Build the next sale into the offer and anchor high. A large payment up front with a small one after is section 8 of SOP 74, and rolling every buyer into a low-cost continuation is section 8 of SOP 77.

2.3 Who sells it

The people and businesses who sell your product can each become a node of revenue: wholesalers, retailers, resellers you certify, creators and affiliates, a door-to-door team. As long as the product moves, each keeps producing, and adding more of them grows the business. A door-to-door team loses some people, but someone past month six, let's say, typically stays long enough to count as a node; grow that team and you make more money.

Referral partners. Partners who send you work count too. In one example, a restoration business got its referrals from plumbers by trading jobs back to them, which does not scale, because the work will not run one for one. The fix offered: pay partners in money instead, so that more of them can send work and keep sending it. The first attempt probably will not work; built over time, a steady base of partners is a valuable asset.

Swap introductions. A partner in another trade can also send work through a list swap: once a month, you introduce them to your email list and they introduce you to theirs. Done too many times, the swaps can wear on your audience; maybe pay cash on the sale instead.

The worked sum. Say each partner sends you one job a quarter and you have 20 of them: 80 jobs a year. The game then becomes going from 20 partners to 200, which is not easy. Employer partners with a steady flow of new starters are a worked case in section 1.1 of SOP 50 — Choose an affiliate integration model. The cost of creating one permanent node is section 8 of SOP 177.

2.4 Who buys it

Move to buyers who stay. The same product sold to larger businesses rather than small ones could keep them, because switching costs them more. So could selling to chosen groups rather than to everyone. The simplest case: sell the same thing to richer buyers rather than poorer ones, and maybe the richer ones keep buying. Going up market is SOP 229 — Sell to richer customers and rewrite what you measure.

Chunk up a level. Sell to the organization that holds a stream of your end customers, so their churn happens on its books while it stays with you. In one example, a tutoring business whose students left after three or four months was pointed away from keeping each student longer and toward partnerships with schools that refer new students every year. The sum given, as an example: a school might cost $10,000 to win, once; if it sends 20 students a year, each worth $2,000, that is $40,000 a year, and it stacks. Education has the trap built in, because people graduate: the vehicle is the base of partners referring new students, not the student. In a second example, a software product that small businesses kept dropping was sold instead to agencies that resold it; the agencies' own clients came and went, while the agencies stayed.

3. Brand as a vehicle

What a brand comes to, in practice, is an audience with a history of good purchases from you. Even when each product is bought once, that audience buys the next one you launch, so it acts as a recurring base. A brand can also do the work of moving a product through the shops that stock it.

You can run more than one vehicle at once, and they stack: a product good enough that people keep buying it, a brand whose audience buys whatever you launch, and a base of retailers who keep selling it each compound on their own.

4. A second view: own the market

A second view, given for a business that sells to one trade, looks further out. Rather than asking how to get clients, ask how to get the market. Build, over three years and beside the main business, the body every buyer in that trade joins: a low-cost membership community or other organization, a registration body, a certification, an email list or an insurance program. It gives you two things: a steady stream of buyers who suit your business, at a much lower cost to win, and a gate that anyone else wanting to reach those buyers has to pass through. The price of the membership in that example was made up on the spot, and this page gives no figure for one.

5. Why most owners do not have one

Two reasons, in the view here. Owners have never heard of them; or they have, and lack the patience to build one. Faster money is almost always available outside the compounding route, and that is the trade. A second view puts the cost of switching to a model that keeps customers at margins of 15 to 20 percent lasting maybe twelve to eighteen months. Usually, on that view, owners cannot change how they work or wait that long; they will not turn down the quick money, so they hop from one opportunity to the next.

Do you have to have one? No. Without one, the business still makes money and can still be sold. It is significantly harder to scale, and it is worth less. Plan on it taking a lot of work. Once you have several, the view here is that growth shifts from impossible to inevitable: years of work stack on each other, and your results no longer reset to whatever the last 12 months produced.

6. What this page does not decide for you

• What to pay a referral partner. This page gives no figure for it.
• What a partner, school or node is worth in your business. The figures in the partner and school examples are those examples' own. This page gives no figure for yours.
• Which of the four places to try first. Not established on this page. When you build a new channel beside the one you run, one practice is to give the new project to someone already proven, not to a new hire, unless that hire has built the same channel before: section 9 of SOP 165 — Pick a second acquisition channel.

7. The checklist

Step	What to do
1	Check whether what you sell is bought once, or fixes the problem for good
2	Hold any candidate to the bar on SOP 199: 80 percent or more kept
3	Look at the product: add connection, or something always new and needed
4	Look for something adjacent that people keep needing, and tack it on as a back end
5	Look at who sells it: resellers, retailers, a sales team, referral partners paid in money
6	Look at who buys it: larger or richer buyers, chosen groups, or the organization one level up
7	Treat your brand as a base of buyers for the next launch
8	Expect it to take patience, and probably more than one attempt

8. What this page does not cover

Pricing the recurring plan itself is on SOP 74 and SOP 231. Law, tax and regulated health care are not covered on this page.