Who needs your help?
Fiverr.com is a marketplace where you can buy and sell services. Looking at some of the stats on this website can help answer the question of who needs help and what kind of help do they need.
Go to fiverr and search for ‘analytics’ in the seller area. You will get a list of the top sellers and see what kinds of analytics services they offer. For example, you might see that most of the top vendors are offering Google Analytics set-up, suggesting that there is a lot of demand for this service.
A Twitter search can also show up what people are looking for on certain subjects. Also, as we saw in the last lesson, Udemy is a good place to see how popular certain topics are.
What help do they need?
Let’s say you are looking to offer SEO services and you have identified your potential customers as follows: Any website owner who wants to learn from past successes/failures and use data to improve results or increase sales.
With this in mind, you can start to identify some needs. For example, a company looking for SEO services may have the following needs:
- Confidence in the data they collect
- Clear perspective that they can act on the data
- Training on how to make sense of the data
- Staff augmentation
- Ongoing service level and specialized expertise without hiring a new team member
- Frequent reporting and analysis of what is happening
How do you solve these needs?
Once you have identified the needs, you can start to think about what services you can offer to address them and make money.
Looking at the SEO needs listed above, you could offer the following solutions:
How do you make money from solving these needs?
To work out how much money you can make from these different services, look at the price per hour or per job offered by marketplace sites like Fiverr or Upwork.
Doing some simple calculations, you can compare what you might earn in a salaried position to what you could earn on one of these marketplaces.
For example, if a logo designer makes $50,000 per year in a salaried position and you find logo design services going for $100 on the marketplace, you can quickly work out how many jobs you’d need to complete to match this salary. Are there other people on the marketplace completing this many jobs?
A better scenario is where you sell your services as a contractor and charge out at a higher rate.
For example, as a logo designer, you might offer your services at $3,000. This means you earn 30x more per job than on the marketplace and require much fewer clients in order to match your annual salary benchmark.
In addition, you have the potential to make some real money because you earn more as you gain more clients. A salaried position pays the same no matter how much business the company does, and in the marketplace you will always have an upper limit on how much you can earn because of the competition forcing prices down.
Are there enough opportunities to sustain you?
To get an idea of how much you can potentially make on a marketplace:
- Find a vendor who indicates how many jobs they have completed
- Use the number of ratings they have to calculate on average how many jobs it takes to get one rating
- Use this review rate as a guideline to see how many jobs these other vendors have completed based on their number of ratings
- Then, see how many clients you would need to make the same as you could make in a salaried position
Estimate how long each job might take and multiply that by the number of jobs to see how many hours you would need to work to make that salary.
As a rule of thumb, when you are running your own business, you should only be spending 20-40% of your time on the actual “doing” of your business.
So, as a service provider, you should be looking at spending 1 or 2 days a week working on client projects. The rest of your time will be dedicated to sales and marketing to grow the business, or back office tasks like accounting.
Following these calculations will give you a good idea of whether you can sustain a business without killing yourself doing it.
Which model should you use?
Selling your services on marketplaces like Fiverr, Upwork or Udemy is a good way to get some experience and build some cash reserves so that you can invest in sales and marketing to advertise your services to clients directly. You will be able to charge more when you are not surrounded by competitors and can differentiate yourself a little more.
Another downside of using a marketplace is that you are dependent on that platform for work. If they change their conditions or disappear, you may suddenly lose all your clients. Your aim should be to have a business model which is sustainable and has room to grow.
Although these external platforms make it seem easy because they do all the sales and marketing for you, remember that they don’t do this for free and take a percentage from every sale you make.
To create a sustainable business that can grow you should think about contracting your services or setting up an agency.
Hiring someone to work for you may seem like a big outlay in terms of salary to begin with, but it will allow your business to grow and you will start to see the benefits already by the second year as you expand your capacity to take on new clients.
Key Takeaways
- You can use online marketplaces to research current demand for your services and estimate what other service providers are making
- Build a prototype to see if your service offering is sustainable
- Selling your services on a marketplace is a good way to gain experience but is not a sustainable business model
- Offering your services as a consultant allows you to charge more and gives you more time to dedicate to growing your business
- Building an agency is a way of future-proofing your business