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The first things that spring to mind when you think of Netflix are Sunday box-set binges or searching to find a new series or film to immerse yourself in. Netflix has achieved significant UK growth, hitting 1m subscribers within months of launching in 2012. By 2015 subscribers had increased to an estimated 4.5m and over the last decade they’ve achieved consistent growth, almost quadrupling their subscriber-base to an estimated 17.5m at the time of writing.
Netflix have long been at the forefront of the shift to streaming services and their growth is a validation of the quality of their product but also the solidity of their business model. Behind all the entertainment and hype is a powerful business model that underpins their growth and there’s a valuable lesson here that sole traders can learn from: the importance of recurring revenue.
Netflix relies on monthly subscription fees rather than one-off purchases and this business model provides consistent, predictable income which can provide important lessons for sole traders looking to achieve stability and growth.
The Importance of Recurring Revenue
For sole traders, much like all self-employed people, income can be sporadic. Some months can be very busy and others the opposite. Seasonality can also have a big impact and these peaks and troughs can make managing your cash flow and meeting your obligations a challenge.
If you rely primarily on one-off contracts, you’ll also have to contend with the grind of winning new work. Networking, prospecting, marketing and pitching to potential clients can all incur a cost and eat into your time and, frustratingly, it’s not always successful.
By positioning your offering to be more reliant on recurring revenue, you’ll have clients that will pay you on a regular cycle, whether that’s weekly, monthly or even annually. This provides a consistent and predictable income stream, promoting financial stability and more accurate budgeting. Read on as we explore some of the key points regarding recurring income.
Keep Things Simple
One of the reasons Netflix is so successful is simplicity. Users pay a flat recurring monthly fee and get access to all available films and programmes. There are tiered packages to remove ads or to add extra devices or to get Ultra HD offering users a degree of flexibility, and these are principles that can be adopted by sole traders.
How this could work in practice depends on what you do but here are some examples:
- Copywriters: Offer a fixed monthly fee for a set amount of blog posts, newsletters or words
- Web Designers: Provide monthly maintenance, hosting and optimisation packages
- Personal Trainers: Offer a monthly membership for a set number of personal training sessions, workout plans and nutritional advice
- Tutors: Offer sessions in a monthly subscription format such as 4 per month
- Gardeners: Provide monthly maintenance plans with add-ons for additional services
Consider how you can pivot your offering to create a subscription or retainer model that your clients or customers can easily understand that meets their needs whilst providing value to them and consistent income for you.
Utilise Automation
Automation is a key reason why Netflix has been so successful. Subscribers pay automatically each month and they won’t even think about it. The payments go out and they carry on enjoying the content.
For a sole trader, setting up automated recurring payments for your services, either through direct debit or through accounting software such as FreeAgent, can make a huge difference. You’ll know exactly what’s coming in, payments will be received on-time and the process will be frictionless for you and your clients.
Retention vs Sales
Netflix places huge stock in customer retention with investment in original content, algorithms to surface relevant content and a focus on flexibility and personalisation to keep subscribers happy. They understand it costs less to retain a subscriber than to acquire a new one and sole traders can apply the same principle.
Instead of investing significant time and money to attract new clients, keep a focus on the clients you have to nurture your relationships and build what you offer them. Also think about how you can transition one-off clients to recurring. Regular check-ins, providing a great service, going above and beyond, always meeting or beating deadlines can all help keep them happy and happy clients will stick around. They can also help you with word-of-mouth recommendations so new clients come to you!
Adapt to Your Clients
Netflix is always evolving with the introduction of tiered pricing, new features and expanding and adjusting their content library to meet their subscriber’s needs. Staying responsive to the needs and demands of your customers is key to retention and recurring revenue.
Sole traders can do similar, albeit on a smaller scale. It’s important to deliver what your clients want, solve their problems and provide value and predictability. Tracking feedback from your clients, monitoring trends in the market and changes in client behaviour can give you valuable insight to refine and improve the model you offer.
Stay Focused on Value
A significant factor in the growth of Netflix is that it offers such a strong value proposition. A small monthly fee gives access to thousands of shows, films, exclusives and original series that keep subscribers loyal and engaged.
Sole traders should also follow this principle and make sure that your recurring customers are getting consistent value. Part of this involves regularly reviewing what you charge to ensure your pricing is competitive but also ensuring that your offering exceeds their expectations so they stick with you in the long-term.
How An Accountant Can Help
One of the benefits of recurring revenue is that it reduces the amount of admin you need to do. If the majority of your income is from recurring clients, you don’t need to spend a significant amount of time pitching for new work, doing ad hoc invoicing or chasing for late payments. It also gives you peace of mind and more time to focus on growing your business rather than juggling paperwork.
Recurring revenue provides a stable, steady business model and by working with an accountant you can further reduce your admin whilst ensuring compliance and benefitting from expert advice and guidance. Alongside managing your accounts, we can also help you plan for growth, improve cash flow, and structure your business in a way that supports long-term success.
With our fixed-fee all-inclusive sole trader accountancy package, you work with your own dedicated accountant who will be on hand to provide unlimited support to expertly manage all your business and personal accounting needs.
We also provide you with FreeAgent or Xero accounting software which can, through automation, take care of your invoicing, bank reconciliation, tax calculations and more further drilling down the admin you need to do. They are also both Making Tax Digital compliant so you can get ahead of the curve and be ready for when MTD for Income Tax begins in April 2026.
Get in touch today to learn more about our sole trader accountancy service.
