The importance of a recurring revenue model in a modern media company and why it matters in all industries.
Donut Media is not only one of the biggest car channels on Youtube, but it has quickly become one of our most successful clients. Managing the accounting and providing CFO consulting for such a rapidly growing company has given us with some valuable insights.
No matter what industry you are in, the more you focus on recurring revenue, the easier growing a healthy business will be. For Donut Media, as they’ve scaled on platforms such as Facebook, Instagram, Snapchat, & Youtube, the focus has always been on a business model that provides multiple streams of recurring revenue. Why is this so important? Recurring revenue is the best way to off-set fixed operating costs and allows them to focus on finding other profitable revenue streams.
At Punch, we like to call it ‘calculated scaling’ and this is something that Donut Media has done exceptionally well. One of the biggest mistakes we see owners make is that they are too focused on growth at all costs. While this can be good in some situations, attempting to run a profitable business as soon as possible should be your goal.
Growing their base of recurring revenue has provided them with consistent revenue to cover operating costs.
They’ve strategically grown by focusing on cash flow and hiring incrementally and controlled.
We implemented an accounts receivable collections process that escalated tiers of management, as needed.
By taking on long-term licensing deals, Donut has been able to recognize revenue following GAAP protocol and according to the revenue recognition guidelines.
Punch has been an invaluable partner as we’ve scaled Donut Media, from the financial review to the cash management they have really helped us make data driven decisions.