Small businesses can benefit by joining forces, sharing resources, and doing other outreach to boost their bottom line. The following article has been adapted from previous postings of mine and is intended to spark thinking about how you can start working with others to spend what is absolutely necessary to get what your business requires.
Background on the sharing economy
Consumers have been enjoying cost-cutting options in the sharing economy. According to a recent survey entitled The Sharing Economy from PricewaterhouseCoopers, 44% of consumers in the U.S. are familiar with the sharing economy, 19% have already done a sharing transaction, and 72% expect to do so within the next two years.
Technology has enabled people to share homes (Airbnb), rides (e.g., Lyft, Sidecar), cars (e.g., RelayRides, Getaround), bicycles (e.g., Liquid), home wifi networks (e.g., Fon), dog daycare (e.g., DogVacay), chores (e.g., TaskRabbit and Zaarly), and more, easily and inexpensively. Technology has also enabled people to share their money to support worthy causes through crowdfunded loans (e.g., LendingClub).
Now businesses are getting into collaborative consumption. The purpose: Only pay for what you need. In effect, you obtain what you need without the costs associated with ownership. Sharing may mean lending, subscribing, reselling, swapping, or donating property or services.
Businesses can use well-outfitted commercial space when they need it at a modest cost. For example, WeWork offers flexible workspace for one person or small companies starting at $350 a month. Members also enjoy events and other opportunities to benefit from being part of a community of small businesses. The number of co-working space in the U.S. increased in the past year by 83%.
Businesses may need certain equipment regularly but prefer to use it on an as-needed basis. The Shared-Use Farm Equipment (SUFE) Pool and Maine Farmland Trust lends out large farm equipment. TechShop has nearly a dozen locations nationwide and provides manufacturing space and equipment for a monthly fee. This type of arrangement provides access to tools and equipment without the expense of full-time ownership, storage, and maintenance.
Sharing professional assistance
You can gain top notch professional services at a fraction of their price if you pool resources with other businesses to utilize economies of scale. For example, if you need a particular software application, you can share software development costs with another company (e.g., a competitor in a different market). Pooling resources with just one other company cuts your development costs in half.
Attend trade shows, conventions, and national conferences to find like-minded businesses in your industry interested in joining forces for cost savings. To state the obvious, before you are able to work together, it likely will take time to develop relationships with other business owners and establish trust.
Not all cities and towns are embracing the sharing economy when it intrudes on their ability to impose permits and collect taxes.
Cases in point:
- Airbnb has been struggling for a couple of years with NYC over tenancy laws.
- FlightCar is a service that provides members with free parking (and a $1 million insurance liability policy) at certain airports in exchange for allowing the company to rent the vehicle to other members while the owner is traveling. (If your car is rented, you receive payment in addition to the free parking.) San Francisco Airport is suing because they're missing out on fees paid by traditional rental car companies. And Millbrae, California, where FlightCar was based, revoked a conditional permit issued to the company, citing compliance issues.
- Workers at Lyft and Uber have challenged their worker classification, contending that their companies should treat them as employees (providing tax withholding, fringe benefits, and legal protections) rather than as independent contractors.
Clearly the outcome of such challenges could impact the cost you'll pay for these types of arrangements and how you engage workers if you begin offering services through the sharing economy.
It's clear that the sharing economy is here to stay, although to date, many opportunities are limited to certain urban areas. The only question for business owners is whether it makes sense to become a part of the new paradigm and how to do so successfully as a user or provider. For example, the PWC report suggests that there are opportunities in the sharing economy that you should consider, such as sharing your asset base. There's a lot to think about!