Would Subscriptions Work For Your Business?


Written by CMG News Contributor, Doug Carleton


Is that Ed McMahon knocking at your door? Well, it’s not, one because he has already passed through the entrance to the great beyond, and two, he never worked for Publishers Clearing House and never went to peoples’ doors with a big check. Nonetheless, Publishers Clearing House did sell subscriptions to magazines and other items. And even though Ed is not at the door, the pandemic has exploded the subscription business model in popularity. Because people couldn’t get out and buy things or go to places like restaurants, subscription services stepped in to bring the products and services to them. The poster child for the subscription service phenomenon has been restaurants and other food-related items. Home delivery of restaurant-prepared meals has skyrocketed. One restaurant group offered music playlists with their subscription meals. Blue Apron has been delivering meal kits for a long time as a subscription service. Also, we have long seen wine-of-the-month subscriptions.


There are the more familiar subscription services – Netflix, Amazon +, Disney +, etc. Now, car wash packages have become a fast-growing business. Hotels are offering some number of nights at any one of their properties for a monthly fee. Ever had a fantasy about owning a boat so you could get out on the water and be free? Since that’s not possible for most people, there is a franchise with now 285 locations around the country where for a modest fee (modest meaning $3,500 to $5,500 membership fee and dues of $265 to $325 per monthly dues) depending on which membership tier the customers choose. This franchise allows members to enjoy boating as often as possible without the hassle of maintenance, slip fees, repairs, winterization, and whatever else you have to do if you own a boat – besides throwing money at it. And then, there are more and more health care providers offering services for a monthly membership fee.


So if you have a product or service that might lend itself to a subscription model, what’s in it for you? One is potentially upfront revenue – the product or service is paid for before it is delivered, which can lower the amount of working capital that you might need regularly. Another benefit is you have the potential to sell customers additional products or services. But the most crucial benefit of a subscription model is that it can give you detailed and ongoing data about your customers – when they buy, what they believe, whether or not they respond to special offers etc. That customer data can be tremendously valuable in many ways.


So you no longer have to knock on the door. You can do it digitally.

This blog entry is a slightly edited excerpt from Doug Carleton's 'The Daily Life Of A Small Business Owner' series. Doug was a mentor with SCORE, Startup Virginia, and Lighthouse Labs, and has 25+ years of experience in small business finance including 12 years in SBA lending. To contact Doug directly, please email him at sbaloanspecialist@comcast.net.