What is a middleman business, and how do you start one?

A middleman business wins the client, gives the work to someone who specialises in it, and keeps the difference between what the client pays and what the work costs. You don't do the work. You own the relationship, the contract and the result.

It's one of the oldest models there is. It was old when your grandfather was young.

Where do you see it?

Everywhere, once you look.

• A main contractor who wins the build and brings in subbies for every trade.
• A recruitment agency that places a worker and charges the client a markup.
• A marketing agency that sells a result and uses freelancers to deliver it.
• A travel agent, a broker, a marketplace.

Nobody calls a main contractor a middleman to his face. But that's what the job is.

How does the money work?

A simple example with made-up numbers. A client pays £1,000 for a job. The specialist who does it charges £700. The £300 in between is the margin.

That £300 is not profit yet. It pays for finding the client, pricing the job, managing it, fixing it when it goes wrong, and waiting to be paid. What's left after that is yours.

People who think middlemen do nothing have never had to cover a subbie's invoice while a client takes sixty days to pay.

What is the client really paying you for?

Not the work. The work they could buy anywhere.

They pay for one phone number instead of six. For someone who answers. For someone who has already checked the specialist is any good. And for someone to blame when it goes wrong, which is worth more than people admit.

In maintenance, a property manager doesn't want a plumber. She wants the leak to stop being her problem. That's the product.

What makes a bad middleman?

One who adds a margin and nothing else. He passes messages back and forth, slows everything down and disappears when there's a problem.

Clients work that out fast and go round him. If the client and the specialist would be better off without you, you don't have a business. You have a delay.

What do you need to start one?

Three things, and money isn't the first.

1. 01A client type you understand. Pick one. Letting agents. Restaurants. Dentists. You need to know what annoys them.
2. 02Two or three specialists you trust, whose work you have seen.
3. 03The nerve to sell first. You win the job, then you deliver it. Not the other way round.

I started in construction because I'd been on the tools. I knew what good work looked like and I knew who did it. Start where you already know the difference between a good job and a bad one.

Is it legal?

Yes. Subcontracting is how most industries already run. What matters is that your contract with the client allows it, the people doing the work are qualified and insured, and you stay responsible for the outcome.

Some trades and some countries need a licence to hold the contract. Check yours before you sign anything.

Who should not do this?

If you hate selling, don't. If you can't stand being the one who gets the call when it goes wrong, don't. The margin is payment for exactly those two things.

And if you're starting with no trade, no contacts and no savings, start smaller than you want to. One client. One kind of job. Get it right ten times.

I told my own version of this in how I made my money. The long version is the book, MIDDLEMAN. And when you're ready to run it properly, the system I built for it is Plan@Job.