We all think about the best ways to make money, and at the moment, it seems like the sharing economy is the way to go. In the last few years, the rise of the sharing economy seems to have given small businesses a second wind. People are learning about how to make money from home and find new forms of passive income. Even those who work full time are using their skill sets to explore ways to make money online. And, we’ve seen a resurgence in small businesses who are giving the big guys a run for their money.
At Spacer, we’re not only part of the sharing economy, but we’re hopeful of the positive impacts that the sharing economy can have on the small business sector. In this article, we’re going to break down how the sharing economy works and why it’s given small businesses a leg up towards profitability and success.
How we moved away from the old ways to make money
Take yourself back to 2005. We know, a lot has happened in the last decade and 15 years feels like an eternity, so we’ll give you a mental image.
You’re at a local clothing store, looking for the perfect outfit for an upcoming business dinner. It has to be formal enough to make a good impression, but you’ll probably only wear the outfit a few times, so you’d rather not spend too much money.
This is the third store that you’ve visited, and for some reason, everything seems to be overpriced, cheaply made, and generic. Why is that? Well, on the one hand, brand recognition means that some clothing stores can count on continued business even if they’re not providing the best quality clothing. And conglomeration in the fashion world has meant that many brands are sourced from the same mass-production line. You might even show up to the dinner in the exact same outfit as someone else.
Frustrated, you wish there was a way for you to find unique, high-quality clothing at an affordable price. It would be even better if you could just borrow an outfit from someone else since you’re not going to be wearing it more than a handful of times.
This is where the sharing economy came in. Someone frustrated with the system decided, “Why not create an app for sharing clothes?” They didn’t need a brick-and-mortar store. They didn’t need to produce the clothes themselves. All they really needed was a good platform and a plan for moving around the materials, and they had a potentially successful business! These fashionista entrepreneurs may not have been able to take on the biggest brands in the market head-on, but they could make a business that solved a problem for consumers.
This is just one example of how the sharing economy has allowed small businesses to enjoy big success.
So what exactly is the sharing economy and how does it offer new ways to make money?
With the sharing economy, you’re able to rent or lease someone’s asset through a cloud-based platform. You’ll know if you’re using the sharing economy if, instead of buying or renting a product directly from a large corporation, you’re accessing a product that is owned by someone else, often in your own community.
The gig economy is often lumped in with the sharing economy, but the two are slightly different. The gig economy is focused on providing services like freelance web design and other contracted work. This new sector has proved to be beneficial for anyone looking to learn how to make money from home, and many gig economy freelancers enjoy the flexibility of the field. You can learn more about the differences between the two in our article, What’s the Difference Between the Gig Economy and the Sharing Economy?
Both the gig economy and the sharing economy rely heavily on recent technological advances like cloud-based platforms to connect people online. Usually, with a business or start-up working in the sharing economy, you’ll be able to enjoy a user-friendly app with online, secure payment options and plenty of verification measures. After all, the sharing economy only works if everyone can easily use and rely on the platform that links them with the host, seller, or renter on the other end of the line. Take Spacer, for example. With our easy-to-use site, you can clearly see the parking or storage spaces in your specific neighbourhood, no matter if you’re in a crowded area like Sydney CBD or farther out in Willoughby or Petersham.
Why else do consumers love using the sharing economy? It gives you more ways to make money and save money. As a user with Spacer, you can save about $122 per month by storing your items in someone’s home rather than paying for a traditional storage unit. And according to Business Insider, 1 in 10 Australians active in the sharing economy reportedly make around $1,100 a month.
Impact of the sharing economy on how big corporations do business
There’s no doubt that the sharing economy has completely rocked the way that big businesses function. But how exactly are big businesses affected and how have they changed the way they run their operations?
When big businesses were running the show, the power difference between themselves and the consumer seemed to be getting bigger all the time. Individual consumers had little say in where and how their products were made, and prices were fixed.
Then, the sharing economy put power back into the hands of the consumer. With companies like Airbnb, for instance, travelers had more autonomy over their temporary living situations. For families who would prefer to stay in a more communal living situation and cook for themselves, they would no longer have to rely on the standard hotel layout or the hotel restaurant for their needs. They could simply rent a room in someone’s home or rent out an entire apartment. People who wanted to rent a car for a short period of time without being locked into a string car rental contract could rely on peer-to-peer car sharing or ride sharing apps.
These sharing services were so popular, that big businesses were forced to take a second look at their business models. They realised that customers wanted more flexibility and customisability.
Are there downsides to the sharing industry and the rise of the small business?
In the beginning, selling anyone on the idea of the sharing economy was quite difficult. If you were to travel back in time and tell the previous generation that one day you would be able to pay a stranger to borrow their car for a couple of hours, they might think you were crazy.
Indeed, safety and trust is big in the sharing economy. In order for it to work, companies have to make sure that the sharing part of things is safe and reliable. That’s why most sharing economy platforms have rigorous safety measures, background checks, and review systems to make the process as secure as possible.
There are other safety measures too, from online payments to avoid cash transactions and on-the-line customer service if ever there’s a bump in the road.
Not all small business are part of the sharing economy, but that may change soon
As it stands today, not all small businesses are functioning as part of the sharing economy. And the sharing economy won’t work for all small businesses. But there are things that the two can learn from each other, and we predict that the two will start to overlap more and more in the coming years.
To start, both small businesses and the sharing economy find success through community cohesiveness, openness and trust, and a strong online presence. Even for the small businesses not directly working in the sharing economy, they can still rely on the sharing economy to help them move their products, and the gig economy to help them with all of their freelancing needs.
The end result will be a user experience that will benefit the consumer and make our communities even stronger. It will help us shift towards a more local perspective and give us more options for environmentally-friendly lifestyles. And, for those who are looking for new ways to earn, the sharing economy opens many new ways to make money at home or in the neighbourhood.