2018-04-26 10:55:00 Staying Competitive English Learn about the sharing economy. Find out what it is and how it could affect your business model. Find out how your specific business can... https://d1bkf7psx818ah.cloudfront.net/wp-content/uploads/2018/04/05080030/Rideshare-Driver-Participating-Sharing-Economy.jpg The Sharing Economy and Your Small Business

The Sharing Economy and Your Small Business

4 min read

With the rise of the sharing economy comes plenty of opportunities to branch out from your traditional business model. With more and more consumers moving from making one-time purchases to renting and borrowing, brick-and-mortar, retail, and service-oriented businesses could stand to see the biggest changes. Luckily, it’s pretty simple to incorporate elements of sharing into almost any business model — and doing so can help keep you relevant for years to come.

What Is the Sharing Economy?

The sharing economy is actually a fairly self-explanatory name. In this type of economy, consumers tend to "borrow" items, spaces, and services that they need, only when they need them. Many sharing-oriented products and services are already recognizable — think of ride-sharing and home-sharing businesses such as Uber and AirBnB. These businesses can also be said to follow a "peer-to-peer" model: rather than purchasing an item from a manufacturer, you borrow an item or request a service from your peer. It’s like borrowing your friend’s car or staying at your friend’s house.

Products with a high idling capacity — that is, a high probability of going through long periods of disuse — are ripe for sharing. For an example of this, take the lowly snow shovel. Most people in Canada own a snow shovel — but there are areas of Canada that only get snow once every few years. That’s a lot of shovels sitting in storage for years at a time without being touched. With a sharing model, someone in the warmer climate of Vancouver could offer someone in Ottawa the use of their snow shovel for a fraction of the cost of buying a new one. That’s fewer shovels sitting and collecting cobwebs, less waste, and lowered costs.

How Can the Sharing Economy Benefit Your Business?

There’s plenty of opportunities to profit from sharing. For example, sharing can make for a bigger return on your equipment purchases. Say you run a business creating handmade pottery and you own the kiln in your studio. Sure, you make money from your sales, but with the sharing economy, you can also make money from your equipment and your space.

In a sharing model, you could host pottery-making classes at your studio. Each person pays for a ticket that covers not only the cost of clay and glaze but also the cost of a portion of the equipment and tools. Your customers get a memorable experience, and you get to monetize your space. Not only that, but you build connections with those customers and get word-of-mouth marketing for your own products.

Sharing With Technology

With apps and smartphone technology, connecting with customers and generating brand recognition can be as easy as using an existing platform.

Take AirBnB — before the creation of the platform, it probably didn’t cross people’s minds to rent out their apartments while they are out of town. Now that the platform exists, however, it’s easy to rent out a space, and many people prefer AirBnB to hotels because it’s cheaper. Similar apps let you advertise your spaces and equipment for rent, so you can continue to profit from them even when you’re not around.

Another great use of smartphones is crowd-funding. Maybe you have a great prototype but don’t yet have the capital to get it on the retail market. Rather than going through the daunting process of applying for grants or investments, the sharing economy lets you tap directly into your prospective customer base to get the ball rolling. Each individual can contribute an amount that’s a little more than what they might pay for the item in a store, but they get to be a part of the creation process, and you can also offer additional perks.

Renting Your Space or Equipment

Even business-to-business models can share. Take, for example, co-working spaces. Need to get office work done but don’t have a fixed office? Just borrow one. Maybe your business rents an office but you have a meeting room that you rarely use. Why not rent that meeting room out on an hourly or daily basis so companies that are more mobile — independent film productions, for example — can hold meetings in a professional space without having to rent one full-time? These are examples of business-to-business sharing.

The same goes for commercial spaces. A restaurant, for example, can get into the sharing economy by renting out its dining space once a month or once a week. Rental halls for events like weddings and family reunions can be expensive — partly because these halls exist solely to be rented out for events. As a restaurant owner, you’re using that space anyway, so sharing it is a side profit stream. This means you can charge renters less.

Fostering Community and Building Your Customer Base

The sharing economy opens up a range of new opportunities for connecting with members of your community and creating a more personal face for your business model. A sharing model can not only attract customers, but it can also make the difference between a one-time customer and a regular.

Imagine you own a cafe and you want to attract more customers in the evening, when your business tends to dip. Why not put that fancy espresso machine to work and offer latte art classes? You can sell tickets to the classes through a platform such as Eventbrite, then offer coupons and loyalty cards to attendees. You make money off your space and equipment, while your customers get to see a more personalized side of your business.

The sharing economy is proving to be a lasting shift in the way consumers interact with products and businesses. Adopting sharing methods for your business can help ensure that you get noticed by a new generation of consumers and that your business makes a great impression.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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