We have built a hybrid business model with both project-based consulting and recurring software subscriptions, but buyers are discounting our consulting revenue. How do we reallocate our operational capacity to maximize the high-multiple recurring engine?

Question

Tyler Smith · Accepted Answer

Buyers value predictability above almost everything else. While project-based consulting brings in large cash injections, it is transactional and expensive to replicate. Recurring software subscriptions, on the other hand, represent highly predictable future cash flows, which is why they command much higher valuation multiples.

To shift your operational capacity toward the recurring revenue model, you must use the ONE Thing philosophy. Stop trying to grow both sides of the business simultaneously. Identify your recurring engine as your primary focus and align your entire leadership team around this target.

Adjust your Accountability Chart to reflect this strategic pivot. You may need to transition resources from consulting seats to software development, customer success, and product-led sales seats. Ensure the leaders in these seats GWC their roles and are focused on metrics that drive recurring revenue, such as monthly recurring revenue and net revenue retention.

Track these metrics on your weekly EOS Scorecard. If consulting requests continue to pull your team away from software development, bring this to your weekly Level 10 Meeting. Use the IDS tool to decide whether to turn down low-margin consulting work or spin it off entirely. By systematically starving your consulting division and feeding your recurring engine, you build a clean, high-multiple business that buyers will pay a premium for.