The Retainer Email That Nearly Emptied My Client List

It seems an obvious thing. Many business lessons do. But I still had to learn it, and as usual, the hard way.

When I first set up my own IT consultancy and support business in Sheffield, I would deal with anyone, on a one-off basis. And I mean anyone. I picked up early home workers, long before COVID made working from home a national obsession. I had domestic users with money; I remember going to Neil Warnock's rather posh house to fix his IT, which was charmingly chaotic but super friendly, and a famous rocker over in Nether Edge. There was a massive factory and warehouse operation in Attercliffe, various shops, Graham Royle at home and in business, and the list grew rapidly until I had well over a hundred clients on my books.

Sounds great, doesn't it? A hundred-plus clients, phone always ringing, plenty of work. Then I sat down and actually looked at the accounts.

The penny drops

What the numbers told me was simple and slightly painful. I would be far better off keeping only the businesses that were willing to pay a regular monthly retainer, and letting everyone else go. There might even be a small dip in income while the semi-regular one-off customers drifted away, but in exchange I would gain a guaranteed minimum monthly amount.

And frankly, that seemed only fair. I was answering their calls, holding capacity for them, and popping out for emergencies at short notice. That availability has a value, whether or not anything breaks in a given month. The one-off model meant I carried all of that cost while the client paid nothing until something went wrong.

So I sent the email. The gist of it was this: sorry, but if you want to keep using me, you'll need to pay X per month, otherwise I can't help you. It was rather more polite and positive than that in the actual wording, but that was the message.

The Attercliffe call

I remember one response distinctly. The chap in Attercliffe ran a huge warehouse doing Chinese imports and selling on Amazon and eBay, well before everyone and his dog jumped on that bandwagon. To be fair to him, he was doing really well. He was growing a small team, including guys who sat on eBay all day long and were forever having IT issues. He was a driven entrepreneur, clearly smart and serious about his business.

He called me, quite annoyed. "But Liam, I've been using you for a year, you're good, but I'm not paying this, so can we just keep it as it is please?"

I firmly said no. This clearly aggravated him, and I never heard from him again. Which was a shame, genuinely. I liked him and I liked the work. But it was the right decision.

What the ten or twenty left behind built

Because here's the thing. From the ten or twenty clients I had left out of a hundred or so, I was able to grow a proper business. One with other staff, not just me. One that moved into premises, registered for VAT, and grew steadily, because there was a predictable monthly income sitting underneath everything else. That baseline was the foundation. Everything above it was upside.

And people still call us for one-off jobs, twenty-five years later. They don't want a support contract, but can we just do this migration for them, or whatever it happens to be. Absolutely not, and no thanks. There are plenty of others who will take that work, and that's great for them. It's just not the business we chose to build.

Not every business can, but most can

Now, I'm not pretending every business can operate like this. Some are always and forever one-off jobs by their nature. Our cabling contractor is a good example; a job done well means he might not revisit that site for another fifteen years. Restaurants, shops, hotels, dentists, they all live on transactions rather than contracts.

But the majority of businesses, including many of those, can pitch for and build some element of recurring revenue into what they do. Look at Costco. It's a shop, for goodness sake. People go in, buy stuff, and leave. And yet, and yet, they have managed to create a business model where people (myself included) actually pay to be a member just to be allowed to shop there at all. Winner. I am quite sure that charge, modest as it seems to me, adds up to a massive revenue stream for Costco, precisely because it's predictable and it's regular.

The closing thought

Recurring revenue changed everything for me. It turned a busy one-man band into a business that could employ people, invest, and plan. If you can get anything like that into your own business model, even a small slice of it, that really is the way to go. And if it means sending an awkward email and losing some clients along the way, send it anyway. The ones who stay are the ones who'll build your future.