This post is going to cover the topic of becoming a middleman and I don’t mean the monster alien fighting Men in Black style characters in the hit US comedy with the same name.
What I want to discuss is a business model that is used successfully by many people and in many walks of life. It is in fact a very profitable method of making money and one that can have less work to do than many others.
What a middleman is, essentially he is a broker. Someone who sits in between two parties and brokers the best deal for them and then takes a commission from the agreed price or someone who finds two parties that needs and supplies a certain skill and introduces them for a fee.
There are many ways to do this; you could set yourself up as a business offering to source people to do jobs for your new clients or as we are seeing all over the internet you set up a site dedicated to bring two sets of people together then take a cut from any work and transactions done through your site.
Think of Fiverr.com and Elance.com, they are essentially meeting places where people gather looking for work either to be done or to do the work. When two parties agree to a job, the money is placed in the secure hands of the middleman site who releases it to the rightful party once the finished work is accepted.
The great thing about Fiverr.com is that there is no working out of percentages of money earned etc. They know right from the beginning that all jobs are $5 and their cut is $1. Simple, I know there is the technology that will do it automatically and quickly but it probably costs more to buy/develop or use. At least with the simple one price fits all transaction their costs are low.
Fiverr.com is an awesome site which is very popular and gaining more popularity each week. Istock .com is another middleman site dedicated to media like photos, music and video. Slightly different method this time, instead of taking a cut of any transactions they sell credits for which you buy the media you require. Again they are bringing website owners, developers and graphic designers together with photographers and musicians.
For those of you who are not into gambling you may not be aware of Betfair.com, some countries do not allow their citizens to gamble online. Betfair is one of the worlds most used betting exchanges, it is not a bookmaker, it is an exchange, the difference is that you do not place a bet against the bookmaker stating that one thing will happen, an exchange is where people gather to place bets against each other.
Both lay and back bets can be placed between strangers. Betfair takes the money that was wagered and holds it until the time comes to hand it out to the winner taking out a percentage from the winnings.
There are many sites now that do similar things; they are set up with the sole purpose to introduce people from both sides of a need. Dating sites have been big business; again they earn money from introducing two lonely people looking for love.
Depending on what the site does, the cost of running a business like this could be low. Using Fiverr.com as an example, they have a website that isn’t over complicated. People upload a picture and some information of what they will do, the site has a messaging system between clients and a payment system connected to Paypal.
You will need a fair bit of storage and bandwidth, and people to maintain the site but as for adding content and trying to get the site ranked high in the search engines this isn’t an issue. The users and the gig postings is the content. The site has now become a brand, the name itself is searched for, keywords are not an issue, Fiverr.com is the main keyword.
It makes its money from transactions not advertising or affiliate sales. As I write this there are currently 810,000 gigs listed. Now I am sure you have seen many of them, how many actually get used is another question, but if all 810,000 were used at $5, and Fiverr took $1 for each gig they are how much better off? (do you feel like you’re back at school?)
Grupon is another middleman service, it takes deals from companies who are looking for sales and new customers and offers them to the people who want them, or at least want a bargain.
They get paid for putting the two together. The middleman system can be used in virtually any set up. Offline business have been doing it for years, people set themselves up as agencies finding staff for companies.
The online world however has made it easier and better for people to set up middleman businesses that can introduce larger amounts of people on a more automatic system. Incorporating email newsletters, Facebook and Twitter these businesses can get deals, offers and gigs to millions of people a lot easier than an offline business.
Hostelworld.com is another new middleman site that connects backpackers and travellers to cheap hostels and accommodation around the world.
Is there a middleman business that you can get into? Maybe an idea or untapped market is just waiting for you to exploit it. Please leave a comment and tell me what you think.