How to Be a Middleman

Last Updated: December 28, 2021 References Approved

Many people successfully work for themselves by serving as middlemen between suppliers and consumers. Making a career out of this type of work can be difficult, though, so you need to know how to confront and minimize the risks involved.

Part 1

Part 1 of 2:

Establish Your Business

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Set up your own business. When you go to work as an independent middleman, you'll be establishing your own business. Start-up costs are fairly low for this type of work and you can get started quickly, but you still need to treat your work as a business both professionally and legally.^{[1]
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- On a basic level, dedicate the basic space and supplies needed to do business. You should have a separate business phone line, a fax machine, and a business e-mail address. If possible, dedicate a separate computer and corner of the house for business purposes alone.
- On a more advanced level, familiarize yourself with the legal side of establishing a business. Set yourself up as a business entity. Research any restrictions involved on how the product/service you want to provide can be traded. Make sure that you know how to file your taxes and do so accurately when the time comes.
2
Identify a need. Observe the marketplace and look for a niche you can slip into. The biggest need will be in an area where the supply and demand structure is sluggish or does not otherwise satisfy the consumers and suppliers.
- Services or specialty products are usually easier industries to break into as a new middleman. Generic products that are readily available are often purchased direct from manufacturers, and convincing a retailer to change can be nearly impossible if the system it currently uses works well.
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3
Research potential buyers. Determine who the consumers of your chosen product or service are. Depending on the nature of your intended business, these consumers might include both local and non-local buyers.^{[2]
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- When you're dealing with a product, this usually means researching retailers who would be interested in selling that product. Research local retailers by looking in the phone book or searching online. Research non-local retailers by looking through online databases of retailers. Focus your search on small and medium businesses instead of major brands.
- When you're dealing with a service, you may need to rely on more traditional advertising to find individual consumers and business entities in need of that service. Start with the parties you first observed the need through—oftentimes, this will be someone you know personally or a local business. Work through that source to find other potential buyers who face similar issues.
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Get in touch. After making a list of potential buyers, give them a phone call. Find out what they need and what you can do to encourage them to buy through you.^{[3]
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- You can send an e-mail to touch base with your potential buyers, but contacting consumers by phone can often leave a more professional impression, especially when you're dealing with businesses instead of individuals.
- When you contact retailers, try to speak directly with the purchasing manager. Ask that individual if he or she would be interested in seeing a wholesale price list. If the answer is "yes," promise to get that list to the retailer within a few business days.
5
Research potential suppliers. Find as many potential suppliers for your chosen product or service as possible. Do your research on each one and narrow down the possibilities to the top ten.^{[4]
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- When dealing with products, you need to search for manufacturers. Unless your focus is strictly on a local product, this may mean searching for international manufacturers.
- When dealing with services, the suppliers will usually be local.
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Ask for quotes. Contact your potential suppliers and ask them to provide price quotes on a certain quantity of product or quality of service. After gathering these quotes, compare them and determine which suppliers offer the best value.^{[5]
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- Take into consideration the entire value of the quote. The supplier with the lowest quote may not be the best one if the product it supplies is dramatically inferior to the product another supplier offers. The same can be said for suppliers of services.
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Add your cut to the cost. You will earn money being a middleman by earning a certain commission from each sale you make. While the exact amount can vary, commissions of 10 to 15 percent are common for many industries.
- Note that suppliers who already work with other middlemen may have a set commission fee they allow middlemen to charge. Determine if this is an issue before you try setting your own commission.
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Pass the information onto the buyers. Make contact with your list of potential buyers again. Deliver the final cost of the product or service with you cut included in it.
- Factor other fees you'll need to worry about, like taxes and shipping costs, when providing the final cost to your potential consumers.

Part 2

Part 2 of 2:

Survive as a Middleman

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Understand the risk. While middlemen can thrive in some industries, most industries are working to cut them out of the picture completely. If you cannot make your value apparent to both consumers and suppliers, your business may not last long.^{[6]
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Diversify within your specialty. Avoid stretching yourself too thin by specializing in one type of product or service. Prevent yourself from being made obsolete by diversifying the sources and specifics of the overall product or service you specialize in.^{[7]
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- Regardless of the product or service you work with, it is generally safer to work with multiple suppliers instead of a single source. If you only work with one supplier, your business goes under as soon as your supplier's business struggles or your supplier decides to stop working with you.
- Consumers may also recognize that your business is at risk if your supplier suddenly cuts you off, which may discourage them from trusting or relying on your business.
3
Encourage customer loyalty. To prevent your suppliers from also becoming your rivals, you need to make sure that your customers are loyal to you and not to the brand they receive from the supplier.^{[8]
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- Working with multiple suppliers is one way to accomplish this. With no one supplier to become attached to, the customer is more likely to become attached to you.
- Another way to encourage customer loyalty is to focus on the entire sales experience, including both the pre-sales and post-sales portions. Regardless of the product or service you provide, you should also provide excellent customer service.
4
Focus on quality. The quality of the product or service you provide to consumers must be top-notch, and the quality of the overall experience you offer to both suppliers and consumers must be of a high grade, too.
- You can maximize success by becoming the person your buyers and suppliers turn to for a better experience.
- For suppliers, this means expanding their customer base and taking care of a portion of their marketing.
- For consumers, this means delivering the best product or service for the cost they are able and willing to pay. Sift through the junk and evaluate all the different options before offering the best one.
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Create an active digital presence. Nowadays, a new business without an active digital presence will struggle. Make the process as convenient as possible to your suppliers and consumers by making it easy to access your business through both computers and mobile devices.^{[9]
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- Create a website and establish social media accounts to interact with suppliers and consumers.
- Through your website, consumers should be able to learn about the process, contact you, search for products/services easily, create accounts, and place orders. Billing and order fulfillment information should also be readily available.^{[10]
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- Moreover, your digital presence must also extend into the mobile world. Make sure that your website can be easily navigated on smart phones and other mobile devices. When applicable, consider using mobile apps to streamline the process even further.
6
Speed up exchanges. Nowadays, people have become accustomed to a sense of instant satisfaction. Middlemen are negatively associated with slowing down the process of trade. Avoid slowing the process down and, if possible, look for ways to make it faster for both consumers and suppliers.
- When appropriate, consider placing time restrictions on the delivery of payment and the delivery of the product or service. Make sure that all sides know your restrictions and agree to work within them.^{[11]
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Remain responsive. Your consumers and suppliers should have no trouble getting in touch with you and receiving timely responses to their comments, questions, and concerns.^{[12]
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- Make it easy for the parties you work with to contact you by phone, e-mail, and fax.
- If someone on either side of the process has a problem, address it immediately and keep the party informed during each step of the solution. Avoid leaving suppliers and consumers in the dark.
- Treat both suppliers and customers well during your exchanges.
8
Stay flexible. The idea you have in your head may not be the best course of action. Be receptive to feedback from both consumers and suppliers. Prepare yourself to adjust your business accordingly to better suit the needs of those you're in trade with.
- Watch both sides of your business carefully to determine how well your current process works and where you might need to improve. Consider asking the parties you work with to rate the experience or answer a few survey questions about it.
9
Make your business practices transparent. People like to know that they can trust the businesses they work through. Make it clear to your suppliers and buyers how you run your business and how the money flows.
- When asked, let your consumers know the source of your supply. Many buyers express an interest in this information so that they can determine whether or not they wish to support a supplier's business practices.
- Break down the cost for your buyers so that they understand exactly where the money is going. This can prevent them from feeling betrayed later on if they learn the information from another source.