Drop servicing 101: A complete guide

Drop servicing is a convenient and highly profitable business model that lets you outsource work from freelancers and contractors.

Not only does drop servicing allow businesses to deliver services to clients conveniently, but it also helps freelancers and gig workers earn a steady income off of doing what they do best.

This article tackles the basics of drop servicing, how it works, and how you can start a drop servicing business yourself.

What is drop servicing?

Drop servicing is a model in which businesses sell services to clients but outsource the work to freelance workers, agencies, or contractors instead of doing it themselves.

For example, let’s say you have a graphic design drop servicing business, and a client is asking you for some infographics for their new website. 

Instead of doing the work yourself, you will outsource the labor to freelancers at a low cost. They make the infographics, and you deliver the result to the client. 

Essentially, drop servicing allows you to act as the middleman between the client and the actual service provider.

How does drop servicing work?

Drop servicing is a relatively simple model that any business can follow. Rather than physical products, drop servicing is a service-oriented process.

• Your drop service business consists of yourself and a team of freelancers who specialize in a specific niche, which is the service you are selling. 
• From there, you can start looking for potential clients or customers and coordinate on rates and deadlines.
• You will then hand the work over to the freelancers, who will execute the client’s needs.
• Remember to double-check the output before delivery. 

If the client is satisfied, you will receive the payment and pay the freelancer their due.

Examples of drop servicing businesses

There are many different drop servicing business ideas to choose from. Here are some common ones to consider:

Graphic design

Because of its broad range, there is a huge pool of freelance graphic designers available for you to hire for your drop servicing business.

Whether it is making a new logo for a client, designing some infographics, or typography, you are guaranteed to find someone who can fulfill your client’s needs.

Web design and development

Almost every business nowadays has migrated to the online setting, meaning web design and development are more in demand than ever before. This may include simple user interface testing or more complicated tasks like coding.

Freelance writing

Writing is another commonly outsourced skill that can cover a wide range of tasks. Freelancers can take in tasks, such as blog writing, email marketing, transcription, or scriptwriting.

Video editing

Nowadays, businesses use videos to connect with their audience, and a good video editor is needed to produce good videos.

Freelance video editors can help create short-form videos, reels, or YouTube videos that help market your client.

Social media management

Social media plays a pivotal role in business, and anyone familiar with its ins and outs is a big asset. Freelance social media managers help boost social media engagement by creating posts and engaging with followers.

Benefits of drop servicing

Businesses everywhere have adopted drop servicing for its numerous benefits.

Low costs

One of the most appealing aspects of drop servicing is the ability to find cost effective talents. You can hire many freelancers from all over the world with exceptional skills at low prices.

To compare, the cost of hiring in-house employees is a lot higher. You have to take into account their monthly salaries, benefits, insurance, and several other overhead costs.

Meanwhile, drop servicing does away with all of those, and you only pay your workers for their work, either per output or per hour.

High profit margin

Drop service businesses have a high profit margin, meaning you can make a good income without having to do the labor yourself.

This is because drop servicing has limited expenses and does not require as many people. Not only do you make a lot of money through drop servicing, but you also save a lot.

It give you the opportunity to fund your business further. Some examples include hiring more freelancers and working towards building your business up more through marketing and improving your website.

No specific skills needed

You do not have to worry if you lack the specific skills required to be a graphic designer or web developer. After all, that is what your freelance team is for.

Running a drop service business does not require skills or experience in a certain field. What matters most is managing your freelance workers and making sure they deliver high-quality outputs for the client.

Flexibility

As a drop service business owner, you can work on your own schedule and from anywhere with an internet connection. It is not as demanding as a weekly 9-5 job, which gives you the flexibility to work on other things and achieve a work-life balance.

Furthermore, your freelancers do not have to worry about being idle, as they have the freedom to look for other gigs in the meantime.

Consistent client base

Digital services are constantly in demand, meaning you will likely never run out of clients. Once you have built your reputation, more and more clients will start to contact you, ultimately increasing your income.

Not to mention, the better your work, the more loyal clients will be, meaning you will not have to worry about finding new ones.

How to get started on drop servicing

Anyone can start a drop servicing business with the right planning and attitude. Here are some basic steps on how to get your started:

Find a niche

Start by figuring out what kind of service you want to sell. Drop servicing allows freelancers from any field to take part, whether it is graphic design or freelance writing. The decision is ultimately yours to make.

If you are having trouble finding the right niche, consider choosing one that you already have knowledge or experience in. For example, if you have experience in content creation, why not go for that?

Additionally, research on what kind of services are most in demand and build from there. Web development is always a popular choice, so it may be worth it to make that your main service.

Hire freelancers

Once you have figured out your main niche, it is time to start building your team. You can find many freelancers on websites like Upwork, Freelancer, and Fiverr.

Of course, you cannot just choose any available freelancer. You only want the best ones possible who will provide exceptional service. 

You can create a checklist of requirements to look for to guide you in finding candidates.

Find clients

You need to market yourself to find clients. You can start small by posting on social media or other freelance websites.

You can also resort to referral marketing to help spread the word about your business. The more people know about it, the more likely you are to find new clients.

Another way to find clients is by creating and promoting your own website that explains your services. You can detail everything from eligible services to rates and payments.

Build your brand

Once you have successfully landed your first client, use this time to improve further and build your brand. Your first client may be successful right away, or it may not. Either way, take it as a learning experience.

Ask for feedback from your clients, referrals, or even fellow drop service business owners, and see how you can make your business even better.

Things to consider before drop servicing

Creating a drop service business is no easy task, as there are several things to remember before launching.

Create a business plan

Like with any business, you need a clear business plan that highlights your mission and vision, goals, and other strategies that will help you succeed. 

Having a business plan ensures that your business is operational, optimized, and financially stable.

Business plans could always evolve because of the ever-changing drop service market, but what’s important is that you have one to guide you throughout your entire business journey.

Startup costs

Drop servicing may be more affordable than running a whole company, but there are still some startup costs to take into account.

This includes the payment of the freelancers, your domain and website name, marketing materials, and software subscriptions, if any.

It is crucial to set a budget for these startup costs to keep the business running and to prevent any payment disputes. 

Compliance

Drop servicing is legal. However, like all businesses, you must abide by standard laws and regulations. This includes having the necessary documents to run a business and following federal and state tax laws.

Some ways to ensure compliance include researching the various tax responsibilities and ensuring that you have proper insurance to protect you against personal indemnity.

Start a drop servicing business now

Creating a drop servicing business is no easy task, but it is full of rewards that could sustain you financially.

It is not necessarily a job that will make you a millionaire overnight, but with the right attitude, patience, and preparation, you can slowly work your way toward becoming one.

Learn from your mistakes, listen to and apply feedback, and find the right people for the job. These are the keys to a successful drop servicing business.