How Much Can I Sell My Service Business For – When you do it right, drop servicing can be a very profitable—and very rewarding—business model. It allows you to manage the behind-the-scenes team to deliver services to your customers, without getting your hands dirty on the execution details.
Whether you realize it or not, we are surrounded by drop servicing on a large and small scale. Here are some common examples:
How Much Can I Sell My Service Business For
Drop servicing, also called service arbitrage or white labeling, is a highly profitable business model in which a company sells services to customers, then hires less expensive freelancers or agencies to complete the work.
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In essence, a drop servicing company acts as a liaison, the primary point of contact for its clients while its freelancer or agency partners work behind the scenes.
For example, say you own a graphic design company. You sell branding packages for $3,000. Instead of doing the work yourself, you hire a freelancer who charges you $2,000 for a branding package. This means you will pocket $1,000 from the transaction.
Some drop servicers prefer to keep this a secret, while some will explain to customers that they manage a team.
There is a lot of overlap between dropshipping and drop servicing. While both strategies involve partnering with another person or company to fulfill client orders, there are fundamental differences between the two.
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Dropshipping is a popular and affordable business model that allows you to sell physical products without managing your own inventory. The suppliers you work with store, pack and ship the items directly to your customers.
Drop servicing, on the other hand, involves selling services like copywriting, graphic design and social media management. However, you will not provide these services yourself, but hire freelancers to do the work. It is then sent to your customers.
So the main difference between dropshipping and drop servicing is that one involves the sale of goods, while the other deals with the provision of services.
Another difference relates to the amount of competition on the market. Since drop servicing is a relatively new business model, the market is not that saturated. That said, you’ll still face challenges like finding high-quality freelancers at a price that fits your budget.
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Just as you can dropship a wide range of physical products, you can dropship a wide variety of services.
In general, it is best to provide a service that you are experienced. Because if you leave the service with something you don’t fully understand, you may have difficulty managing it and suffer losses.
I’m not saying you need to be an expert in the service – but you should at least have an idea of how it works.
First things first: What service will your business be built on? As we discussed earlier, there are many options. In many cases, your creativity is your limit.
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There are many paths you can take when choosing a niche. Consider what means the most to you and use that as a foundation.
This may seem like an easy step, but it’s important to choose your team carefully. After all, they will be the lifeblood of your drop servicing business.
You can try searching on freelance marketplace websites like Fiverr, 99designs, Upwork, Guru, FlexJobs, and FreeUp.
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Once you have a game plan and a solid team, it’s time to build your company! If you plan to get customers online, the most important order of business is your online presence.
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There are plenty of website builders to choose from, including Shopify , Wix , WordPress , and Squarespace . Many offer free trials so you can start building your website before you make a financial commitment.
Marketing is a crucial aspect of any business. There’s no point in having an incredible brand and website if no one is looking at it, right?
You have many options when it comes to building your company’s reputation, bringing in new clients, and keeping old clients. Here are a few:
Some say there’s no feeling like your first sale. It can come easily, or it can be very difficult. No matter how it works out, the name of the game is to stay dedicated and don’t quit.
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As you have more interactions and conversations with potential clients, you will learn things that you should and should not do.
Pay attention to what these leads and customers are saying. Is your price too high? Are you missing a key detail that everyone expects? Does your competitor have a strong reputation to keep up with you?
Drop servicing is a completely legal business activity. However, it is a good idea to check what services you can actually provide in the state where you are starting your business. There may be some restrictions on how the Services are provided or what kind of certificates you may need.
It is also a good idea to research your tax obligations before starting a drop servicing business. You may find that you will need to file certain tax return documents each year to stay above board in the eyes of the government.
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Drop servicing can be very profitable if you provide the right services – such as those required frequently. For instance, blogging is a service that many website owners demand monthly. That said, your actual profit depends on the pricing tactics you use for your services.
Ideally, you should charge two to four times more than you pay your freelancer. This means that if you pay the contractor $5 for the project, you charge the end user $10 to $20. This way, you also have room to cover any marketing costs incurred to attract new customers.
You can research other companies offering the same services as yours to determine a general price range. As your reputation increases, you will be able to charge more for your services.
The cost of starting a drop servicing business will vary depending on how you approach it. However, due to the nature of the business it is usually very affordable to start. Typical costs include:
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You might hear gurus say that drop servicing will make you millions overnight. While this isn’t true, there is some truth to it—if you work hard, plan strategically, and have the desire to grow with your business, you can have great profit opportunities.
Make sure you always listen to the people and companies around you. They will have valuable insights to apply to your business and you will continue to learn every day.
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The site uses cookies to provide essential functionality and improve your experience. By using our website, you agree to our privacy policy. A company’s income statement includes all general and administrative expenses (G&A) as well as direct and indirect selling expenses under the category of selling, general and administrative expenses (SG&A). Business. This line item includes almost all business expenses that are not directly responsible for making the product or performing the service. SG&A includes the costs of operating a company and the costs of delivering its products or services.
SG&A plays a key role in calculating a company’s profitability and its break-even point. SG&A is also one of the first places managers look when cutting redundancies after a merger or acquisition. It makes it an easy target for the management team to increase profits quickly.
Selling expenses can be divided into direct and indirect expenses. Direct selling expenses are incurred only when the product is sold. Indirect selling costs are incurred throughout the production process and after production is finished.
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G&A expenses are the company’s overhead. They are incurred in the day-to-day operations of the business and may not be directly linked to a specific function or department within the company. They are usually fixed costs that are incurred regardless of the amount of sales or production made during a particular period.
Many SG&A expenses are unavoidable. For example, companies often need to maintain insurance and find it impossible to operate without incurring the expense of maintaining their headquarters.
Selling expenses are often related to the costs required for a company to directly interface with customers. These types of expenses include:
Normal expenses are often necessary to run a business. These costs will likely need to be incurred regardless of the type of product or industry the company operates within. These types of expenses include:
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Administrative costs are mostly related to personnel costs. These people may be internal staff or external parties providing services for a fee. These people often do not directly interface with the production or sale of goods. These types of expenses include:
General and administrative expenses are rarely reported separately; It is quite common to see these two expenses listed together.
Calculating SG&A expenses is easy once the expenses are categorized into different categories. Some things to keep in mind when calculating SG&A expenses include:
SG&A has a very specific place on a company’s income statement.
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