Welcome to a complete overview of the steps to launch what I call a Services Arbitrage business. If you’re not sure what this is and you’ve never heard the story behind how I launched an online editing company, make sure you read Part 1 and 2 first. Here are the links:
The following seven steps represent the key phases you need to work through to not just launch a profitable online business, but a business that you can step away from because it will run itself, if you set it up correctly.
Follow this process and you will create an income stream that continues without you. A true Laptop Lifestyle business.
I present these steps in the order I recommend you work through them. I assume you are starting from scratch. You don’t have to be an expert at anything, or have any business experience — you don’t need to have experience delivering services either.
I’m confident this will work for you, because I’m basing these steps on what I did to launch, grow and automate my own editing business (which I later sold for six figures). I was not an editor, nor had I ever sold editing services before starting the business.
This is a very simple business model, you will understand how it works. The challenge, like with any business, is you have to go out there and get customers. Thankfully the internet is a very big place, and people are very much used to buying services online.
Step 1: Research What Service You Can Offer
If you have never offered services yourself or never hired someone to complete a service for you online, then the first thing you need to do is become familiar with what is known as the ‘outsourcing marketplace‘.
To outsource simply means to hire or contract a person to complete a task for you (you are NOT hiring an employee). Jobs can be small, like creating a one-minute audio voiceover that costs $5, all the way up to full-blown software development projects, that can cost tens of thousands of dollars.
I recommend if this is completely new to you that you go through the process of hiring someone to do something for you. Pay someone $10 to $100 to complete a task and see what it is like to communicate with and hire a contractor.
This shouldn’t be a random task. Think about something you need, like perhaps designing a logo for your business, or creating the header graphic for your Facebook page, or hiring a bookkeeper to update your accounting records, or a cook to prepare a weekly meal plan, or a researcher to find data you can use in the blog post or book you are writing.
Make it something meaningful to you so you can accurately judge how much value the service provides. You need to experience the power of outsourcing to understand what you are eventually going to sell with your own Services Arbitrage business.
To find people you can hire, here are five outsourcing sites I have used:
One word of warning: To find good people takes time. You need to carefully search to find people who appear competent, then take them through a hiring process and finally a test. I’ll teach you more about the process as this training series continues.
If you are already familiar with outsourcing (or after you complete a test job for the experience), the next step is to narrow-in on a top ten list of services you could build your business around. Ultimately you will only choose one service, but for the purposes of this step, you need to create a short-list of potential services.
To begin this process, visit the five outsourcing sites I have listed above, and look at all the categories and contractors currently listed. You will find more than enough ideas just looking at what is on offer.
To help you narrow down to a top 10 short-list, consider factors like –
- Are there services you already know well because of your previous or current employment?
- Do you know people in your social circle who might need certain services?
- Are you more personally excited/interested in a specific service?
- Is there an emerging industry that will spike demand for certain services?
- Which services have more potential for larger profit margins or recurring income?
To complete this first step, you should end up with a short-list of ten services that could become the basis for your new business.
Step 2: Look For Your First Potential Customer
At the same time as you research potential services to offer, you should also look for your potential first customer.
A friend/family member/colleague may mention someone they know is looking to get a website designed, a mobile app built, a podcast set up, t-shirts printed, a book edited, video created, wants to find a babysitter or petsitter, hire an assistant or countless other potential needs.
You may also read an article or watch a video about someone selling a service perhaps as a freelancer or building a business around a service in another country.
Spend some time digging into sites like the following and you will find many inspiring stories of people creating businesses selling services:
There’s no reason why you can’t copy other people’s ideas and apply them to your local area (my editing business began with a focus on Australia after reading about an editing business in the USA), or you can adapt them to similar markets.
Your job is to open your ears and eyes to these potential opportunities to create a Services Arbitrage business. They are floating around you right now, but you’ve never looked for them before. Now that you are thinking like an entrepreneur who sells services, you’re going to see opportunities everywhere.
Ideally, an opportunity will open up to you that directly leads to your first customer, so you can move on to step three. If this doesn’t happen, take your short list of ten services from the previous step and starting looking for customers. Here are some places you can go to find them:
- Attend local networking events/conferences and when appropriate, talk about what your business does
- Join facebook groups and look for people asking for help
- Become a member of coaching/mastermind programs and look for other members asking for help
Other social media platforms like Twitter and LinkedIn are also great opportunities to find your first customer because every day people are trying to solve problems. You need to look at other people’s problems as your business opportunities.
Your goal for this step is to locate your first customer. From there, it’s time to move on to completing a test job with them.
Step 3: Complete Your First Test Job
My first test job when I launched my Services Arbitrage business was a language translation project, not an editing job as my business eventually focused on.
Bare this in mind when you complete your first test job. It may not end up becoming the service you build your business on.
The purpose of the test project is to figure out whether you can make this service profitable, given you are hiring other people to deliver the service, and to experience what it takes to deliver above average value to your customer.
Your test job will likely be a very manual process. You won’t know what to charge, so you will have to negotiate with your customer and then go and find a contractor and negotiate with them on a price to do the work.
Later, as you learn more about your customers and contractors, you will be able to come up with fixed pricing packages to make things streamlined. For now, you’re going to test and learn.
Here’s how I recommend you complete your test project:
- Talk to your customer and find out everything about what they need done, including deliverables, timeframe, budget, what their goal is and what is most important to them. Take detailed notes and record the conversation too (with their permission of course).
- Turn your notes into a detailed job brief, breaking down what you need done, timeframes, budget, deliverables and everything your client wants.
- Search outsourcing websites to find two to three people to approach and ask for a quote. I do NOT recommend you post your job as a project where people bid for the work, instead you should hand-pick the best people and approach them (give them the job brief and ask for a quote)
- Take the best quote from your contractors and add a profit margin to it (the money you keep on top of what you have to pay the contractor). Return this new quote with your margin included back to the client.
- The client agrees, or you may need to continue to negotiate until you reach agreement, then the job is confirmed.
- You collect full payment or a deposit if it is a big job, then instruct your contractor to begin work and pay them a deposit or installment if required.
- The job is completed and returned to the client, you pay the contractor for the job and keep the profit margin for yourself.
Make sure as you go through this process that you have one clear goal in mind – how can you over-deliver value to your client?
You will see as you learn more about the Services Arbitrage model that customer service and client value are the key drivers to make your business successful (and profitable!).
My first test job went like this…
I found someone who needed a document translated from Spanish to English. I approached three language translaters I found online, gave them the job brief and they returned quotes. I choose the best quote of $200, then went back to my client and quoted them $300. They agreed and made payment. I told my contractor to start work. The job was returned, I paid $200 to my contractor and kept $100 profit margin.
Your test job experience may require more negotiation or may fail if you can’t agree on price, or you can’t find a good contractor. That’s okay, this is a learning process. Don’t give up until you complete your first test job.
Step 4: Gather Data Based On Test Jobs
Your first test job should be celebrated, but not for long. It is just a beginning…
From there you should continue to complete more test jobs. If the first one was successful, continue to seek out more projects delivering the same service.
If you struggled with the initial test job, or you change your mind or a new opportunity opens up that leads you to test a different service, that’s fantastic – testing and learning is the goal at this stage, even if you change services two or three times.
Ideally, you should complete at least ten test projects to really get a feel for what it is like to work with customers and your contractors. You need to discover all the variables that you can only learn about by actually completing jobs.
- What do your clients really want and how can you over-deliver to them
- Is there a type of client that is easier to work with
- Do you find it easier to get customers in certain industries
- How to structure a job brief and complete the hiring process to find the best service providers
- What fees do different contractors charge
- How much profit margin can you make (testing different prices is only possible when you complete more than one job)
… and so on and on.
There are so many insights to be gained, many that are indications you have the potential for a successful business, but only discoverable as you complete more jobs.
When I first launched my Services Arbitrage business I offered language translation, student editing, corporate editing and resume editing. Over a period of months as I began to complete jobs, I learned corporate editing work came with too much bureaucracy, but student editing jobs were generally much easier to complete. I didn’t get any resume work at all, and translations jobs were not coming to me as easily as editing work.
This experience showed me that student editing was the area to focus on. Of course, the learning was not over yet, but without experiencing what is it like to have customers and work with contractors, I couldn’t make crucial decisions about the direction of my business.
Your job at this step is simple – complete at least ten test jobs and learn as much as you can about the process. Make sure you bring in some profit during these test jobs, you can’t run a Services Arbitrage business without making a margin.
Step 5: Find A-Player Contractors To Deliver Services
Eventually, as you complete more work for customers, you will come to a conclusion. You either…
- A) Have found the service to build your business on
- B) Have determined it is NOT a good service to focus on and need to test something different
If the service proves too difficult to find customers, you can’t find good contractors or there is not a profit margin big enough, you may need to go back to your short-list of services and test something else.
Just be careful not to give up too easily. There will be struggles, you will face doubt, but you must keep thinking and behaving like a scientist — all you are doing is TESTING.
If you want help with this process, I’m here for you. I run a membership community called the Laptop Lifestyle Academy that includes direct access to me as your coach, and a training program specifically about how to set up a Services Arbitrage business. You can find out more about my Academy here.
At some point, you will find a service that works. Your test jobs are going well, you’re making a profit, now all you need to do is scale up.
Before you begin the process of getting more customers (see the next step), it’s important you’re ready to handle more customers. I recommend you always have more capacity to deliver value than you have customers, which means you need to be confident you have a team in place that can over-deliver in value.
If things went well during the testing phase you may already have found at least one A-player contractor to deliver the service. By ‘A-Player’, I mean someone who does great work, is a great communicator, charges a fair fee but not so much that you can’t make a profit margin and has capacity to take on more work.
You need to feel confident that if you go out there and bring in more customers, your contractor is reliable and ready.
I recommend you have at least two A-Players standing by, in case one of them can’t work and so you are ready for an influx of new jobs. My editing business primarily ran off the work of two of my best editors, who did 80% of the work that came in. I had several additional editors available, but I made sure my two best were always busy so they wouldn’t need to find work elsewhere.
You should feel that you have more capacity to take on work than there is work coming in, so you never have to turn any customer away. This is why I recommend you spend some time hiring before you begin expanding.
Bear in mind finding and hiring good contractors is a big job (and beyond the scope of this article). Which is why you shouldn’t focus on expanding your team until you know for sure you have found the service you want to grow your business around.
Step 6: Use These 3 Marketing Techniques To Bring In More Customers
Once you have A-Player contractors ready for work it’s time to scale — it’s time to bring in the customers!
Marketing is a big topic, beyond the scope of this article. However, I can provide you with the three most likely marketing channels that will lead to the kind of growth that will generate a $100,000 a year or more income from your Services Arbitrage business.
- Search Traffic
Google organic search delivered 50% of all new customers to my editing business. Bear in mind, during peak days my website received only 200 visitors — most days were closer to 100 — so we are not talking huge traffic. What matters is you go after targeted traffic, the specific customer perfect for your business, which you can do by creating the right kind of content for your website.
- Paid Traffic
Today the most common source of traffic for rapid growth is paid traffic. In particular, Facebook and Google ads. Both these networks allow you to target people using keywords, interests and demographic data, meaning once you get clear on your ideal target customer you can focus on them with your ad campaigns. Of course, you need money to pay for ads, so this option may not be available until you make some money.
- Referral And Repeat Customers
While organic traffic from Google provided my business with new customers, most of my income came from repeat customers, people who returned month after month with more jobs. Referral traffic, or otherwise known as Word of Mouth means your current customers bring in new customers. When you deliver a great service, you will earn repeat and referral traffic. Long term, you might find these two sources all you need to grow your business.
I recommend if your budget is small, you focus on free traffic sources like Google organic search, social media marketing, podcasting, blogging and youtube marketing. If you have a budget to spend on advertising and you’re confident you know who to target, Facebook and Google ads are definitely the quickest path to customers.
Remember long term, stability and growth comes from the work you do for your current customers. When you over-deliver value, people will come back and purchase again, and they will tell their friends and colleagues.
Step 7: Hire A Customer Support Agent To Automate Your Business
Once you reach this final step you are well and truly running a successful Services Arbitrage business. You’re making good money, you have a good team and repeat customers. The only thing left to do is take yourself out of the business.
Depending on what kind of service you sell, you may need to hire different people to replace yourself. As a bear minimum, hiring a customer service/email management assistant is a starting point. You may also need to hire people to take over sales and marketing roles to keep the jobs coming in.
With my editing business, the main role I personally did was forward emails between editors and customers, and interact with potential customers via email. Once my business was making enough money, I hired a customer service person who took over these email jobs. That left me with basically nothing to do on a day-to-day business to keep the money coming in.
This is the point where you experience true freedom. Not only are you living the Laptop Lifestyle, you’ve unlocked your life, creating financial and time freedom. What you do from here, is entirely up to you.
What Comes Next?
As you have read over these seven steps no doubt many questions surfaced in your mind.
For example, you might have thought – why would people choose to buy services from your business when they can just go to the big outsourcing sites and hire people directly?
Perhaps you were thinking, how much profit margin should I apply to each job? 10%? 50% 100%?
What about all the technical questions, like how do you build a website that sells your services for you, do you need an email list, should you start a blog, and what about social media, videos, and live broadcasting?
This is a simple business model, which is why I like it. All these additional questions are important but don’t become paralyzed by them.
What I can do now is present your next step to get more help…
I’d like to offer you two things –
- More Training: I teach a three-hour course on the Services Arbitrage business model, which you can take for less than $50.
- Access To Me As Your Coach: I also do regular live coaching webinars, where you can speak to me directly to answer all your Services Arbitrage questions.
How can you get access to this? Easy, become a member of my Laptop Lifestyle Academy.
However, you should know that the Academy is a lot more than just a place to learn about setting up a Services Arbitrage business. It’s the center point of all my coaching and training, including access to a community of people like you, mentors, and all the support and education you could ever need.
Rather than explain it all here, there’s one page you need to visit where all the details are revealed:
Head to that page and join my community. I’d love to help you grow your Services Arbitrage business.
If you’re still not convinced, head to the fourth and final chapter in this free Services Arbitrage introductory training series here – How To Charge More Money And Still Get More Customers Than Your Competition.
Living The Laptop Lifestyle