We are living in an era where it’s possible to create a middleman business and earn 7 to 9-figure revenues. The success of an organization using a middleman business model requires the following:
- Strong vendor relationships. (this is your moat)
- End-to-end customer service. (owning the customer journey)
- Software & Tech. (Ready-to-buy platforms are available without having to build custom)
- Online marketing & sales to acquire customers. (Proficiency is key here)
Transaction Facilitations as a Middleman Business
Here’s what you need to focus on to succeed in a middleman business where you facilitate transactions:
Owning Customers:
Obsessing over customer service is key. The first company to do this was Zappos.
Building Partnerships:
Treat your suppliers and vendors like partners because they are your key to success in this type of business. For example, Amazon serves its suppliers because it relies on them to serve customers.
Become Proficient Online for your Middleman Business:
You are responsible for getting customers through SEO, social media writing, or paid ads. A middleman business requires you to manage the transactions between buyers and sellers.
Get friendly with Software and Tech:
Most marketplaces are run on software platforms that remove friction for customers. The good news is that you no longer have to build from scratch as many existing platforms are available to buy.
Marketplace Models for Middleman Business
Let’s talk about using marketplace models. These platforms are more than middlemen and they completely change how buying and selling happens.
They connect people who need things with those who have them without needing to store any products themselves.
Pros:
Low overhead costs = lower risk.
Nimble business models innovate.
Scalability without the need for capital.
Cons:
→ Lower margins.
→ Need high volume.
→ Serve both buyers and suppliers.
Skills needed in this new era:
- Leveraging software and digital tools.
- Mastering online marketing, content, and sales.
- Customer service – own the customer experience.
 5 Questions to Ask to Plan a Middleman Business
Ask these five questions when planning your business:
- What can I sell without holding inventory?
- Where is there friction I can remove?
- Where are unorganized data sets?
- Where’s the fragmentation of supply?
- Opportunities for consolidation?
Popular businesses facilitating transactions between parties:
- Recruiting
- Amazon
- Fiverr
- Zillow
Bonus tip:
To run a middleman business and get success, go for opportunities with recurring revenue streams.
Examples:
- To make your first sale, sell a home as a broker – get a one-time fee
- Match a candidate – get monthly fees
- Sell subscription products that need replacement
 5 Considerations Before Starting a Middleman Business
Here are some crucial questions to think about when starting up: Before diving in, think about how you can smartly use resources you don’t own for:
- Inventory: Can someone else hold your stock to cut costs?
- Content: Is there existing content that needs a platform?
- Service: Are there service providers to connect to customers?
- Data: What disorganized data sets can I consolidate?
- Suppliers: Is there a fragmentation of supply to aggregate?
Wrap Up
Nowadays, billion-dollar companies operate with fewer employees and it is becoming possible due to middleman business models. What we need is to reflect on how these businesses are evolving. With all these changes, ask yourself: Are you ready to adapt and lead in this new way of doing business?
