Is building a paid community really worth it? Here's the truth

Building a community-based business with recurring revenue sounds like the dream, doesn’t it? Set up a loyal tribe, offer them some monthly magic, and watch the cash roll in while you sip mojitos on the beach. But let’s be real for a minute - is it really that simple? Spoiler alert: it’s not. The glossy promises don’t quite match the messy reality that most of us face when we dive into this world.

The promise vs. the reality

Here’s the pitch: Set up a system, charge a modest fee, and voilà - you’re set for life. Sounds like a winning lottery ticket, right? But here’s the reality check - getting a community up and running is a bit like trying to herd cats. It’s not just about setting up a platform and putting your feet up. No, my friend, it’s about constant engagement, content creation, customer support, and marketing that never quits. Instead of a lazy afternoon on the beach, think more like a frantic scramble to keep everyone happy - with you playing the lifeguard, bartender, and the entire volleyball team.

The truth is, this so-called “passive income” is anything but passive. You’ll find yourself on call 24/7, trying to keep your community engaged and feeling the love, while also juggling the rest of your life. That mojito? It’s going to get warm waiting for you.

Recurring revenue: consistent but limited

Recurring revenue promises stability, but here’s the catch - the price tag for this kind of business often has to be lower than your typical one-off service. Translation? You need a lot of subscribers to see that fat bank account. And let’s be honest - getting that many people on board isn’t exactly a walk in the park, especially when you’re up against a million other offers that sound just as enticing.

Let’s crunch some numbers. Imagine you’re charging £50 a month and you’ve got 100 members. That’s £5,000 a month, or £60,000 a year - not too shabby. But here’s the rub: you’ve got to keep delivering, manage churn (because let’s face it, people drop off), and keep attracting new members just to stay afloat. It’s like trying to keep water in a leaky bucket - you’re constantly topping it up just to keep it from running dry.

The myth of "only need 100 people"

Ah, the classic line: “You only need 100 people to pay you £97 a month to make £100,000 a year.” Easy money, right? Wrong. Getting 100 people to sign up and stay is no small feat. It’s more like trying to convince 100 cats to all sit still in a circle - possible, but only just.

First, you’ve got to attract these 100 fine folks, which means killer marketing, a knockout offer, and probably some serious reputation or brand power. Then, once you’ve got them, the real work begins - keeping them engaged, happy, and willing to keep handing over their cash every month.

The reality? People’s needs change faster than the British weather. Some will join out of curiosity and then realise it’s not for them. Others might love your community but start questioning whether they really need to keep paying. Even the die-hards might drop off if their circumstances change or if they’re not feeling the value. Keeping 100 people happy and paying is a full-time job, and it’s not one that lets you clock out at 5 pm.

The constant battle with churn

Churn - it’s the bogeyman of the subscription world. Even if you’ve got a low churn rate, say 5% a month, that’s 5 members leaving every month. Do the math - that means you’re losing 60 people a year. So just to stay level, you’ve got to find 60 new members every year. And that’s just to keep the lights on - forget about growth.

Attracting new members isn’t getting any easier, either. With so much noise online, you’ll need to keep reinventing the wheel - and probably spend a chunk of change on marketing to keep your community growing. It’s a relentless cycle, like being stuck on a hamster wheel that’s just a little too fast.

The reality: who’s really making the money?

Here’s the kicker - the real cash cow might not be the community business itself but the folks selling you the dream. You know the type: they promise you a simple, foolproof system to get that sweet recurring revenue. But while you’re sweating it out, trying to keep your 100 members happy, they’re laughing all the way to the bank.

These gurus have turned the idea of “community business” into their own personal jackpot, selling you the dream of effortless income without the reality check. They’re raking it in selling the system, while you’re left holding the bag - or rather, holding onto your members for dear life.

The hidden costs

And then there are the hidden costs. Running a community business isn’t cheap. There are software subscriptions, payment processing fees, content production costs, and maybe even hiring some help. These expenses can nibble away at your profit margins until they’re not looking so plump.

Plus, let’s not forget how vulnerable community businesses can be to economic ups and downs. When times get tough, a membership might be the first thing people cut, and suddenly your “stable” income stream isn’t looking so stable after all.

Is it worth it?

For some, building a community with recurring revenue can be fulfilling and profitable. But it’s crucial to go in with your eyes wide open. This model isn’t as effortless as it’s often portrayed, and it may not be the golden ticket to financial freedom you’ve been sold.

If your goal is to create a sustainable and scalable business, it might be worth considering alternative or complementary models. Think about diversifying your income streams - maybe combining a community with high-ticket offers, digital products, or other services to give you more stability and room to grow.

Know what you’re getting into

Community businesses and recurring revenue models are often hyped as the perfect solution for solopreneurs and small businesses looking for steady income. But the reality is they require significant ongoing work, and the income isn’t always as lucrative as it might seem. Before you jump in, make sure you understand what you’re signing up for and whether it really fits your business goals and lifestyle dreams.

The truth is, the recurring revenue model often works better for those selling the dream than for those trying to live it.