Victoria and I agreed on a lot. But our arguments? Those are where we made our money. We cried. We fought. We went to our respective corners and came back swinging. And somewhere in the wreckage of those conversations, we almost always landed somewhere better than either of us started.
The retainer vs. project work debate was one of them. Victoria wanted the security of recurring revenue from day one. Build the retainer base, cover your expenses, then layer project work on top. I wasn’t convinced we could be that disciplined when clients were dangling good money for good work, and our payroll wasn’t going to pay itself. We fought that one out. Victoria won. And that decision, the one that felt like a cage at the time, is a big part of our future success.
What “lumpy” revenue actually costs you
Project work feels like winning. A client signs a contract, a check clears, and for a few weeks or months, you’re covered. Then the project ends. And the scramble starts again. That’s lumpy revenue. It’s high one month, gone the next. You can be doing all the right things, great work, happy clients, solid reputation, and still find yourself staring at a bank account that makes your stomach drop every January.
The problem isn’t the project itself. It’s that your expenses don’t care about your project cycle. Payroll runs on the first and the fifteenth. Software subscriptions don’t pause while you’re prospecting. Your payroll costs don’t flex because your biggest client wrapped up in November. When we built Clermont, we structured the business around retained clients, steady, recurring monthly engagements. Accordingly, we built our entire forecasting model around that base before we ever counted a dollar of project revenue.
Here’s what that looked like in year one: ten retained clients at average monthly billings between $9,000 and $12,000. A slow build — $8,000 in January, $17,000 by February, $33,000 by March — but a predictable one. We knew the trajectory. We could hire against it. We could make decisions against it. When project work came in on top of that? Gravy. But we never built expenses around revenue we couldn’t guarantee.
The rule we lived and died by
We had one financial non-negotiable at Clermont: expenses had to be covered by recurring revenue before we hired anyone new. Not project revenue. Not “expected” revenue. Not the deal we were pretty sure we were going to close. Recurring revenue, The kind that hit our bank account whether or not we were actively selling that month. This rule saved us from ourselves more than once, including one hire we almost made before we had the cash flow to support it. We had to rescind that offer. It was one of the worst professional moments we’ve experienced. And it happened because we were running on project optimism instead of recurring reality.
If you don’t know exactly how much money is coming in next month, not approximately, not probably, then you don’t have a stable business yet. You have a revenue sprint on a loop.
So which model is right for you?
This isn’t an argument against project work. We did plenty of it at Clermont. But we sequenced it correctly. Retainer base first, projects on top. Start by asking whether your business model can actually support retainers. Coaching, consulting, marketing, PR, legal, financial advisory, content creation, and bookkeeping translate naturally into ongoing client relationships. If your clients have recurring needs, you can build a recurring revenue model around them.
Then build the model before you need it. A basic monthly waterfall, what’s coming in, what’s going out, what’s the gap, will tell you exactly how many retained clients you need before you can breathe. And if you ever want to sell your business, or just want to stop re-earning every dollar from scratch every year, know this: when we sold Clermont, buyers paid a premium specifically because of our retained client base. Recurring revenue is the single most powerful valuation driver in a service business. The moves you make on revenue structure today are what your exit looks like in five years.
The bottom line
Project revenue feels like momentum. Retainer revenue is momentum — the kind that compounds, that lets you hire with confidence, that lets you make clear-headed decisions instead of desperate ones. We built one business without understanding this. Then we built another one with it at the center of everything.
Victoria was right. I’ll give her that one. The difference between 1x and 6x wasn’t luck. It was decisions like this, made early and protected fiercely.
Build the base. Then build on top of it.
