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Cash flow can be tricky for a growing business, with sales figures surging one month and sinking the next. Leaders put a tremendous amount of effort into growing their brand, and a bad month can cause long-term problems—possibly even putting a company out of business.

A recurring subscription service is one of the best ways to strengthen income, making budgeting much more predictable. Traditionally reserved mostly for service-based businesses, this income model means customers pay a small monthly fee rather than purchasing items individually. In recent years, product-based businesses have discovered that through the use of subscription boxes they can normalize monthly cash flow. Whether your business offers a subscription for a type of service or a box they receive in the mail each month, here are a few tips for making this model work for you.

Have the right product

Subscription models fit well with consumables since those items need to be refreshed on a frequent basis. Magazines, beauty items, and pet treats work well for subscription boxes, as do services that customers need daily such as cloud-based software. If your products don’t work well with monthly boxes, consider an “of the month club,” where customers receive one of your signature items each month for a reduced rate.

Bill carefully

After launching a subscription service, many businesses find they must suddenly deal with chargebacks. Customers, not recognizing the name of the business on their bank statements, contact the bank to dispute the charge. Businesses then must pay chargeback fees in addition to losing any merchandise or services that were provided. By making your business name clearly identifiable on bank statements, you can avoid those unnecessary fees and keep customers happy. 


Handle cancellations promptly

Nothing can lead to customer service issues like a member who can’t cancel a subscription. If a customer follows your opt-out procedures, only to continue to be charged, expect angry phone calls and, even worse, negative online reviews. Those reviews will scare off potential customers, costing your business a large sum of money over time. 

Set up a cancellation procedure that allows your members to request an end of service immediately, and acknowledge that confirmation with written notice that the credit card associated with the subscription will not be charged again.

If your business is searching for more stable cash flow, a subscription model can help. With the right products or services, customers will eagerly sign up and refer friends, allowing you to grow your business.