There's no question that the sharing economy – where users can rent out what they have, be it a room or a car, through the internet – has disrupted the traditional economy in the Western world.
So why should businesses embrace the sharing economy rather than fight it?
The sharing economy's long history
Remember going to the neighbor's house and asking for a cup of sugar when your mom ran out? Or attending swap meets to exchange things you no longer need for things someone else no longer needs? These are examples of the sharing economy. Call it cost-sharing, bartering or anything else you like; it's important to realize that the sharing economy isn't new. The internet's ability to let us communicate quickly and efficiently with a wider audience, however, is.
"The sharing economy thrives in a community-based online platform where people interact to do business, share utilization of assets, and facilitate collaboration among private individuals," said Jake Smith, owner and managing director at Absolute Reg LTD. "The online channel has become the primary medium of economic activities since the virus outbreak. Thus, the scope of the sharing economy flourishes as more people embrace the concept of doing virtual transactions in almost everything they do."
How sharing rather than purchasing can help small businesses survive
Most small businesses, especially in the early years, operate on the kind of funding that makes a shoestring budget look generous. Business experts cite cash flow problems as one of the reasons that small businesses fail.
Anything you can do to control your cash flow as a business makes your survival more likely. This includes both turning your unused assets into cash flow and making sure that you're reducing expenses whenever possible.
Ways to use the sharing economy to help your business
Let's look at some tips on making the sharing economy work for your business.
1. Share what you have.
Does your office suite have two spare cubicles that you could trick out and rent as a daily workspace to freelancers? Does your building have a row of parking spaces that never get used? Could your building fit a cell tower on its property, or a community garden and solar panel on its roof?
The sharing economy is built around the ideas that most of us have things we don't need to use all the time and that these things can be monetized. As a small business, look for items or services that you can offer that can boost your bottom line.
2. Hire freelancers for individual projects.
When a company is still small, it doesn't need a full-time marketing department. It probably doesn't need a full-time IT person, a dedicated accountant or a company chef. Conveniently, these jobs can all be done by freelancers.
Employ someone to build your webpage or to create the text of your brochure. Get a professional to do your corporate taxes or help you manage your funds so that you can pave your way to success.
Track how much you're spending to hire out these jobs, and watch for the moment when it becomes more cost-effective to bring that person into the company. It'll probably take longer than you think.
3. Utilize ride- and house-sharing for cheaper business travel.
Business travel is expensive. Flights, car rentals and hotels are all costly. Airbnb, Uber and similar sharing platforms can reduce the cost of business travel and make your trip feel a bit more personal.
While there was a pause in services with both Airbnb and Uber during the height of the pandemic, travel is picking up again. Prices might not be as low now as they were pre-pandemic, but it's still worth checking them against those of hotels and car rentals.
4. Rent out equipment you need only occasionally.
Just like those services that your business needs only every few months, you may find that you need particular pieces of equipment only periodically. Rather than purchasing them, look at renting them for the necessary amount of time, or consider working with another business to purchase something you both need together.
If you do decide to buy, consider how you can offer the use of the equipment to other businesses that may need it.
The sharing economy is here to stay, and it makes sense to make sure that your business gets its fair share. Many major economic players have tried to resist the sharing economy and have found their businesses seriously disrupted, and in some cases destroyed, as customers realized that they could get what they needed at much more reasonable prices than the original companies offered.
How industries thrived during the pandemic
Since the start of the pandemic, some businesses and industries fared better than others.
"The sharing economy has gained traction during the pandemic," said Craig Miller, co-founder of Academia Labs LLC. "Humanity has driven this, because there were a lot of people in need, and there were also a lot of people who had things to give."
Industries like entertainment, transportation, freelancing and hospitality took a major hit during the pandemic but are starting to make a comeback thanks to the sharing economy.
"Businesses have benefited more from the sharing economy, as they can now connect with users around the world in increasingly innovative ways with the help of sharing economy apps and digital platforms now that most people aren't working from the office," said Stephen Curry, CEO of e-signature tool CocoSign. "These sharing economy services offer international businesses, companies and hospitality services new freedom in various industries."
Curry noted that some services have dropped, but rent-by-the-hour services have boomed. "The rent-by-the-hour services such as [the] Globe app, which offers short-term apartment and home rentals by the hour, have bloomed by helping people escape their home and parents get a break from their children."
Another sharing industry adapting to the pandemic is the food industry, according to Smith. While food delivery services like Grubhub are not always worth it for restaurants in ideal circumstances, they did allow a lot of restaurants to keep serving their customers during the pandemic.
"The food industry establishes modern innovations that are adaptive to the current situation to ensure that it can cater to the needs of its consumers," Smith said. "Food delivery services rose to popularity during the pandemic because restaurants [were] no longer accepting dine-in customers."
Margarita Hakobyan contributed to the writing and research in this article.