Learning about Franchising? Lesson #1: Secure a predictable, recurring revenue.
Imagine having the ability to positively influence lives, help to shape our future leaders, all while enjoying financial independence. At Core Education & Fine Arts (CEFA), you can do that. The first six years of a child’s life are key to their development and will have a huge effect on how they will embrace learning for the rest of their lives. CEFA gets an A+ in terms of offering intrinsic value and meaning if you want a franchise that delivers on difference-making, with the bonus of financial independence. Due to the nature of the business, there is a financial model of recurring revenue that is largely predictable given the enrolment conditions and the duration of a child’s participation in the CEFA curriculum.
Recurring revenue allows for predictability
Lifetime Value or LTV is an estimate of the average revenue that a customer will generate throughout their lifespan as a consumer. This ‘worth’ of a customer can help determine many economic decisions for a company including marketing budget, resources, profitability, and forecasting. At CEFA, there is greater predictability in LTV since revenue is recurring in a tuition-based school environment. Every month, the child’s tuition is paid (in advance!), giving you a recurring revenue model that is relatively simple to manage. By having a large percentage of your revenue as monthly recurring revenue, you’ll have peace of mind knowing there’s a steady stream of cashflow from month to month. Barr certain unforeseen catastrophic events, businesses operating on a recurring revenue model rarely miss their monthly forecasts because their financial planning is much more accurate. Unexpected changes in business won’t completely blindside you if you know where you’re starting each month and where you expect to end up each month. Monthly recurring revenue lets you make decisions a year in advance. If there are any changes that occur, you’ll usually have plenty of warming and time to adjust.
Financial goal setting is possible
With a known amount of monthly recurring revenue, it’s possible to set profit goals as well, especially when you know your costs. With monthly recurring revenue, it is easier to adjust variable expenses to match revenues. This is a very comfortable place to be financially. Having this kind of security in terms of being able to predict the month-to-month revenues allows you to focus on developing your team and delivering your product or service. At CEFA, this means you’ll have the peace of mind, and time, to make a difference in your community, have an influence on the most important time in a child’s life, work with incredible teachers, and contribute to the economy. Financially and emotionally, CEFA scores top marks!
Relationships become more meaningful
In a recurring revenue model, tighter relationships are created between the company and its existing customer base. This means you are likely to develop a strong relationship with CEFA parents, who represent a high LTV. It is wise to foster those relationships, especially in a school environment, as referrals play such a big role in driving future enrolment (ultimately contributing to more recurring revenue). The recurring revenue model allows companies to focus on improved customer retention through better customer service and improved customer relationships, so make them meaningful and deliver on your promise. Instead of developing project plans or focusing on products or services, companies who operate with a recurring revenue model can get more aligned with their customer’s needs, strengthening the offer all around.
While success in business is never a guarantee, franchising is very attractive for those who are looking to start something turn-key and help avoid some of the risks and mistakes independent businesses make. However, not all franchises are created equal so be sure to pay attention to the detail…the franchise agreement, training materials, processes or marketing support being offered…but most importantly, pay attention to the financial forecasts and security that the Franchise can offer. Recurring revenue is predictable and can bring the peace of mind you may be seeking.
If you’re looking for financial independence and are interested in making a difference for yourself and others as a CEFA Early Learning School Franchise Partner, contact CEFA today.
CEFA was established in 1998 and teaches award-winning, proprietary curriculum in over 30 schools across BC and Alberta, with expansion into Ontario in 2021/22.