How To Earn Extra Income With Service Arbitrage Business

 

 

A Little Background Story

A few years ago, both my husband and I just lost our jobs unexpectedly. The company that we both worked for suddenly closed down. 

So, we needed to make some money quickly to help pay the bills.

After some research, we know that the fastest way to make money is to sell services.

But, there was one problem – no sell-able skills.

Then, an idea struck us.

Why not we sell other people’s skills?

Look around us, a lot of businesses actually operate in this way.

Hospitals sell the skills of their doctors.

Hair salons sell the skills of their hair stylists.

Creative agencies sell the skills of their designers.

Then, I noticed that there are literally hundreds of thousands of freelancers selling their skills on the freelance websites such as Fiverr & Upwork.

And, a lot of them are always looking for more freelance work.

So, why not get clients for the service they offer and outsource the work to them?

And we call this side business service arbitrage.

Here’s how it works.

First, you find in-demand services that freelancers are already offering at a super low price on freelancing websites. Then, you market their services to businesses that need it. Once you get a sale, you hire the freelancers to deliver the work for you.

How you make money is that you quote a higher price to your clients than what your freelancers quote you to pocket the price difference as your profit.

This can be considered another variant of freelancing. The only difference is that you are outsourcing the work to other freelancers instead of doing the work yourself.

Who It Is Suitable For

Service arbitrage business is suitable for people who

• Have no sell-able or marketable skills
• Have sell-able skills but want to outsource all the work to freelancers instead of doing it themselves
• Feel not confident about their skills to offer the service by themselves
• Have little time for side business

How You Can Get Started 

Now, I am going to walk you through a simple but proven 5-step system which I have used myself to earn extra cash from my service arbitrage business. And I hope that you will find it helpful.

Step 1: Find a profitable service to offer

So, how do you find an idea?

First, you go take a look at all the services that are already being offered by freelancers on popular freelancing websites such as Fiver and Upwork.

From there, you can see if there is any service that you would like to do service arbitrage in.

Once you have come up with a list of ideas for your service arbitrage business, what you have to do next is to validate your idea.

How?

There are two ways you can validate your idea.

Idea Validation Method #1:

You can simply go to Google, type in your service and see if there are already people who are offering these services.

This might seem counter-intuitive, but competition sometimes is not a bad thing. If you have competition for what you want to offer, it means there is market for it.

Idea Validation Method #2:

First, you go to freelance websites such as Fiverr.

Next, you search for the type of service that you are thinking of selling.

Let say, you want to offer logo design service.

So, you search for logo design service on Fiverr.

It will then show you all the logo design gigs being offered there.

What you do next is that you sort all of them by customer reviews. Then, you click on the first few gigs to see how the gigs have been performing so far.

There are Two Important Numbers you need to look at:

1. The total number of orders that have been placed since the very beginning
2. The number of orders there are currently in queue

It will help you determine if there is high demand for this type of service.

From the image above, you can see that close to 40 thousands orders have been placed for this guy’s logo service so far. What is more is that he has more than 180 orders in queue currently. That means there is a lot of demand for such service.

Step 2: Find Clients

Once you have decided what service you want to offer for your service arbitrage business, it’s time to get clients!

There are two ways of finding clients:

• Free leads
• Paid leads

Here, we’re only going to talk about how to get free leads for your business because it is an entirely different game for paid leads. To master paid leads, you need to learn how to do it correctly first, then you need money to test different ads and find out which ads works and which doesn’t.

For now, we will just stick to free methods to get leads.

So, if you are just starting out, the very first thing you should do is to let everyone in your network know what service you are offering for your new business.

The purpose of doing this is that they can help you spread the word and refer clients to you.

Here are two other proven ways to generate free leads for your business:

Free Classified Ads

There are many Free Classified Ads websites around where people post ads to promote their services.

Some of the popular ones include Craigslist and Gumtree.

Once you have written your free classified ads, what you do next is to post ads in the relevant sections on these Free Classified Ads websites.

For example, if you are offering logo design service, then you post your ads under the “Creative” category in the “Services” section on Craigslist.

Direct Email Approach

This method is probably the most effective if your target clients are businesses. This would mean you are offering a Business-to-Business (B2B) type of service such as web design, programming & coding services, graphic design and etc.

When you are trying to get your offer in front of potential clients , there is no better way than letting them know directly what you can do for them.

Instead of posting five times a day on Twitter, Facebook and Instagram, your time is better used contacting them directly with your offer.

So, here’s how you contact companies who can use your service.

You can either go to online directories or use Google to find the contact information of such companies.

And it’s not the general contact information that we need. What we are actually looking for is the the email address of the person in charge of hiring your service.

Because you don’t waste your time promoting your service to someone whom cannot make the final purchase decision.

Step 3: Close the sale

Now, how do we close the sale?

This is something that a lot of people struggle with.

Why?

Not everyone is a natural salesperson.

Not everyone has sales experience or training.

For me, I had no sales experience prior to starting this business. To be honest, I even felt guilty about asking for the sale.

Maybe you feel the same way.

But, I was able to overcome my fear and learnt the art of selling from my experience of growing this business. And I want to share with you what I have learnt.

So, what is it that I do that allows me to be my natural self and not feeling bad about asking for the sale?

A mindset shift.

Yes, all you need is to change your mindset from selling to genuinely helping and serving.

This way, you stay true to who you really are.

Also, it takes away the pressure on you and your client.

When you are genuinely trying to help your clients regardless whether they will hire your service in the end, they can tell that you care and not just go after the money.

If you want to be good at selling, you need to understand two things:

• We only buy from people whom we believe can solve our problem and get us the results we desire
• We only buy from people whom we trust and like

Once you can internalize these two points, you will find it is not so hard to close a sale.

Step 4: Find Outsourced Worker To Deliver The Work

Getting a good outsourced worker to do work for you is vitally important. You don’t want to end up with one who is unreliable. Worse, they take your money and disappear.

Here, I have laid out the following for you to ensure that your outsourced worker is reliable and will do a fantastic job for you.

Here’s what you should look out for:

• Work Samples

This is very important. You always want to know what your outsourced worker is capable of.

So, the first thing you should always request for is their past work.

Ask them for as many samples as possible to get a better idea on their skills and capabilities.

• Rating

For most freelance websites, there is a rating system where past customers will review and rate the freelancer’s performance on their job.

This will give a very good indication of what your outsourced worker is like. Generally, if there is a bad rating, I’d like to know why.

Then, before I finally make a decision whether to use him for my project or not, I’d like to have a chat with him first and more importantly, find out how fast he responds.

• Response Time

To me, this is very, very important.

In fact, it is critical.

Why? Sometimes my client may need me to make some changes quickly.

As such I need to get hold of my outsourced worker as quick as possible.

So, what I’d do is to message him and see how fast he responds.

As long as it’s within 24 hours, I’m happy with it. Sometimes your outsourced worker may take a couple of days to reply you. That is a warning sign to me. So, only choose outsourced workers who have a habit of replying you quickly.

• Language Fluency

Equally important is that he or she must be fluent in English because I live in an English-speaking country.

Sometimes you may get outsourced worker whose native language may not be English.

If your outsourced worker is not able to understand you, it could be difficult to give instructions to him.

I once had a freelancer who I thought was rather fluent in English, but I had a hard time communicating with him for a project as he wasn’t able to follow instructions.

Needless to say, I had to find another freelancer to do the job in the end.

• Have A Conversation

It is important to speak with your outsourced worker and explain to him what you need him to do.

Sometimes, my clients have very specific requests, so it is important to tell him about that request and see whether he will be able to do the job.

If he says he can and you feel comfortable with him, then go ahead and hire him.

Normally I will ask at least 5 different freelancers and see whose answer I feel the most comfortable with before I go ahead to hire him for the job.

• Too Many Orders

Certain freelancing websites such as Fiverr allow you to see how many jobs your outsourced worker is working on.

The more work your freelancer has piled up for him, the less likely he is going to finish your job quickly, unless you have spoken to him and he has specifically said he can finish your job within a certain time.

However, I have found that even if your freelancer says that he can finish your job by a specified date, he may not necessarily do revisions quickly.

So, I tend to find freelancers with fewer jobs in queue for his services. That being said, the freelancers that have many people queuing up for his services must be good at what they do.

• Interview Them

One of the most efficient ways of getting a good outsourced worker is to interview them. This is only if you have a really big project that can potentially make you thousands of dollars and on a recurring basis.

If you have such a project, then I strongly recommend that you at least get them on skype and speak with them. Because you have a big project on hand, it is vitally important that you find an extremely reliable and trustworthy outsourced worker to do the work.

Of course, you most likely will have to pay him much more as well. If you choose to get a good freelancer for the job, I recommend Upwork. Don’t use Fiverr for high-end jobs as you will only land yourself in hot soup if your Fiverr worker disappears.

Step 5: Hand Over The Completed Work 

So, we have come to the final step of this five-step system for starting your own service arbitrage business.

This step should be the easiest of all.

After your freelancer has completed the work and your client is happy with the result, it’s time to collect the remainder of the full payment from your client before you hand over all the deliverable.

If possible, always ask your client for a testimonial and referrals at the end of the project. If you have done a good job, your client should be okay to do this favor for you.

Now, it’s time for you to use the methods I’ve shared with you to find your service idea and then start getting your first paying client! Let me know how it works for you in the comments below.