Is the rise of the Sharing Economy an opportunity for SMEs?

Sharing economy ideasFrom renting a city-centre bicycle, a place to stay overnight to a taxi ride, there are plenty of examples of the sharing economy, also called the “access economy” or the “demand economy”.

The big, established names in the sector include Airbnb, Uber and Etsy and what they all have in common is that they have been made possible by developments in IT and its widespread use, coupled with the idea that consumers may want access to goods or services for only a short time rather than buying them long-term.

But there is no reason why this type of business should only be the preserve of big businesses.  It is less about economies of scale because the overheads are relatively small, and more about being able to provide something that customers want.

One example is an Essex-based business, Borrowaboat.com, that allows boat owners to rent out their vessels. Within 18 months of launching they had 17,000 boats registered on their platform as available for hire all over the world, from Thailand to Suffolk’s River Orwell.

Arguably, therefore, there is no reason why SMEs cannot be successful in this sector. Suppose someone wants to an hour of a handyman’s time for help with a small household job, or for help with assembling a flat pack. Both are examples of potential services that could be small, shared economy businesses.

While there is clearly potential for consumer-oriented services that does not mean there are no opportunities in Business to Business, such as having people do research or handle business calls for short periods such as when you are on holiday.

What do SMEs need to do to build a successful Sharing Economy business?

The first and most obvious is to thoroughly research the mechanics of a Sharing Economy business model. There is plenty of information both online and in book form about the concept.

There are several online platforms like Kajabi, QE Bot, Simplero, Kartra that make it easy to set up and go.

Knowing your target customers and identifying their needs is crucial to launching a successful Sharing Economy business as is finding the resources to satisfy them.

What possessions or skills do people have that they are most likely to want to share and need to advertise, and are they things for which there is likely to be a demand from sufficient customers?

It doesn’t matter from which end you approach the market since you are finding suppliers looking for customers and customers for them, so essentially you are making it easier for both parties.

Marketing is key and often relies on paid-for promotion and Social Media to create awareness of the service.

One of the benefits of the Sharing Economy is the opportunity to differentiate your proposition for example by emphasising a commitment to minimising waste, to sustainable growth or to corporate social responsibility. It is surely more ethical to share goods or services than it is to own them but use them only rarely. Equally, demonstrating an awareness of the financial constraints many people experience and offering a solution through sharing can be a sign of a responsible, civic-minded business.

Creating a successful Sharing Economy business is about identifying a need and offering a solution that works well both for the business and for the individuals using its services.

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