What You Need to Know to Start a Drop Servicing Business in 2023

by / ⠀Entrepreneurship Startup Advice / January 17, 2023
Drop Servicing

Having a drop-service business is a great service to have, not to mention profitable too. A drop service business gives you the opportunity to lead a team and to please clients with your services.

You may not realize it, but drop-service businesses are all over the place. They exist in different mediums so you probably don’t notice them.

Below is everything you need to know about the drop-service business and how it works. So, let’s get started!

What Is Drop Servicing?

Drop servicing, also called service arbitrage or white labeling, is the business model where a business sells their services to clients, but hire freelancers to do the actual work.

A drop service company is like a middleman because it is the main contact for the clients, but the company’s partners actually complete the work.

Here are some examples of a drop service company:

  • A social marketing business that hires a freelancer to manage your day-to-day operations.
  • A landscaping company sends some of their partners to do the work at your home.

Another example would be if you had a software company that sells software for $500. Rather than you doing the work, you recruit a freelancer that charges you $400 for the software, and then you pocket the $100 from the payment.

When it comes to drop services, not all of them have to mention that they are a drop service company. However, there are times when a company will tell their clients that they are a drop service business.

Drop Servicing and Dropshipping

Perhaps you have heard of dropshipping. It is similar to drop servicing there are differences between both.

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With dropshipping, it is the process of selling products despite having no actual inventory. Instead, it is the suppliers who take care of the work including storage of the product and sending the product to the customer.

Drop servicing is different from drop shipping because it is the selling of services that are not actually physical like video work or writing. But, as mentioned earlier in the article, you don’t do any of the work and instead, outsource to someone else.

Drop servicing is still a new business so the market is still pretty open. However, there are still issues that you have to figure out like freelancer fees.

What is Considered Drop Service?

There are a wide array of services that are considered drop services. Here are some of them below:

  • Ad copywriting
  • Beta Testing
  • Graphic Design
  • Resume Writing
  • SEO
  • Video Editing

How to Start a Drop Service Business

If this sounds interesting to you, here are the steps to get started.

Step 1

The first thing you need to do is figure out what service you want the business to be. There are many options out there, but a good start would be something that interests you. If that doesn’t seem feasible consider questions like:

  • What idea is the most simple to create a business from?
  • What ideas offer the best amount of profit possible?
  • Which ideas are floating around in the market?

Step 2

After you have your business idea, you now need a team. This will be a long process because of all the factors you need to consider. For instance, you have to think about pay, how much training they need, how much experience they have, where do they live, and many more factors.

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Consider freelance market sites like Fiverr, FreeUp, and FlexJobs.

Step 3

Building your brand is the next step. This is going to be a business that is more focused online. Therefore, you need a website. Luckily, there are many website builders that have templates for you to use. Consider using WordPress or Wix.

Step 4

The next step is to focus on marketing. There are many options that you can do with marketing so don’t hold back!

Consider using referral marketing by starting a referral program that encourages your customers to refer more people to your business. There is content marketing like videos, blogs, and emails. Finally, there is social media marketing where you use various social media platforms to interact with your customers.

Step 5

The final step should be making your first sale. After that, keep going! Now you need to keep your business afloat by ensuring that customers are flocking to you.

Final Questions

Are Drop Services Legal?

Yes, they are. However, like any other job, you need to make sure what the qualifications are in your state. Each state has different rules regarding businesses.

Are They Profitable?

They can be for the right service! But, profits depend on how you go about pricing. The rule of thumb is that you should be charging about double to quadruple times more than what you pay the freelancer. This helps with marketing fees.

Conclusion

While drop servicing is hard work, it can be a rewarding job. That is if you know where to look and how to start one. Make sure when you have this service that you respect all rules and boundaries and that you listen to both customer and employee.

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About The Author

Tristan Anderson

Hello! My name is Tristan Anderson and I live in Manhattan, Kansas. I enjoy being in nature and animals. I am also a huge geek who loves Star Wars and has a growing collection.

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