The Sharing Economy can help Small Business
The Sharing Economy means different things to different people. For many, it involves everyday people monetizing their stuff or their time. It’s also usually accompanied by state of the art online technologies that connect people in need with people in business. Technology companies like AirBNB and Uber are facilitating the sharing economy and making regular consumers like you and me into Trump Towers’ largest competitors.
For a small business, the sharing economy can mean something a little different. It could mean offering up your excess resources like warehousing space, barber’s chair or office boardroom to other individuals or companies. These partnerships are normally borne out of either a temporary need or a requirement for a smaller space. Either way by sharing resources, companies can reduce their costs and become more profitable. There are opportunities on the other side of the ledger as well. For example, those in need of the excess resources can turn to the sharing economy to expand their business while avoiding barriers to entry such as acquiring permanent facilities to manage their short term business surge.
Networking groups are another innovation of the sharing economy. These groups are used by businesses to spread around their efforts to gain positive word of mouth. This business building exercise is improved upon when a group of companies get together and share contacts. If one promoter can generate a lot of positive sentiment for a company then surely a dozen will be even better.
With all these positives, participation in this section of the economy will undoubtedly pick up steam as we progress through the decade. Although the sharing economy is practiced throughout many industries there is reason to believe it will become more prevalent in the near future. According to a 2016 study by the Business Development Bank of Canada titled “Canadian SMEs and the Sharing Economy” almost half (48%) of the over 800 companies surveyed have never heard of the sharing economy. Despite this, 89% of respondents felt that it was an opportunity for their business. However of these, 22% feel it is a threat as well as an opportunity. When asked about their openness to collaborate with other companies to reduce costs or improve customer value 87% responded positively. Likewise openness to sharing assets, retail space or expanding offers to benefit from this economy respondents scored positively 75%, 65% and 81% respectively.
Despite a large swath of companies unaware of this collaboration, the underlying sentiments are ripe for a significant increase in use. The question then becomes, “is your company ready to take advantage of the sharing economy?” If the answer is no, then perhaps it is time to reassess your business model. During this reassessment, you should consider your costs. Questions to ask include: Are costs too high? Are we getting full value for our costs? Are we experiencing excess waste? A perfect example would be a company paying a premium for office space featuring a large boardroom that gets used 4 times a year. Perhaps a company in this situation would be better off renting a smaller permanent space and renting out a boardroom when needed.
During this reassessment, revenues should also be considered. Questions to ask include: Can our capacity support our sales? Are we generating enough sales leads? Do enough people know about us? If the answer to any of these questions is no, then perhaps the sharing economy should be a bigger part of your business model. Joining a networking group could be your first step.
Only you know if you have opportunities in the sharing economy or not. But, if after reassessing your business model you find underutilized resources that would be a pretty good clue that your opportunities are larger than you might think.Follow or contact us