If you are a businessperson or an entrepreneur, then you must familiarize yourself with the sharing economy. There has been a shift lately in this type of economic practice. And this is in part due to because of the much advancement in technology, such as the adoption of smartphones and the widespread accessibility of connection to the internet. A sharing economy is roughly defined or likened to peer to peer or P2P sharing. In a shared economy, no one owns the means of production, the properties or the other kinds of capital. Instead, these types of assets are shared among with other people. So this means that no one truly owns any of these kinds of assets. For example, in a shared economy of lodging and rental homes, no one single person owns the rooms or rental homes. Think of an app like Airbnb Inc., where no one ones all of the singular rooms. Instead, individual people own and share their rooms with other people who need them. The shared economy is possible through the connection of people through the official app of Airbnb. The app itself allows people to connect with others and share their assets in order to make an economic transaction.
A sharing economy is basically a type of hybrid economy. Wherein practices such as trading, swapping, group sharing, mass purchasing, and so much more. Other terms that have been associated or applied to a shared economy are internet economics, pay as you use, collaborative, micro-entrepreneurship and more. A shared economy only works because of a few essential elements. Without these elements, a shared economy would not exist or would not even be able to function. A shared economy, thanks to these different elements is able to function fully.
The first element that a shared economy would need is people. Without people, there would be not a basis for transactions at all. People provide one of the most basic building blocks for the inner workings of a shared economy. People provide the means of production and even the value of those properties too. Without people, there would be no one to exchange anything with, and there would also be no one to ascribe the value of these things either. The basis for any kind of shared economy is that people have to be willing to participate in it.
Another essential element for a shared economy is the technology that is used to connect people together. Without the necessary technologies, there would be no way for people to communicate with each other, which means that there would be no exchange of goods or services at all. In most kinds of modern shared economies, the most recognizable form of technologies that connect people, are the smartphone and the app. These two kinds of technologies are the basis for many types of shared economies, which means that most kinds of shared economies rely on these types of technologies. Without the use or even presence of these types of technologies, most modern shared economies would not be able to function at all.
The value of goods and services is also another element that plays a key role in any kind of shared economy. People will have to agree upon and actively assign a value to different kinds of goods and services. For example, without having any kind of agreement on the value of two different kinds of products or services, then there can be no exchange made between them. So without some kind of agreement or regulation on the value of goods or services, there can be no shared economy at all.
Why adopt a shared economy model?
With the recent developments in technologies, shared economy communities in many types of businesses and industries are growing very quickly. There are sharing economy apps and industries for transportation, such as Uber, or even for lodging, such as Airbnb. Developments in technology and the rise of the use of these technologies have made it so that the adoption of a shared economic model are fast becoming more widespread. You will probably see many kinds of startups and other kinds of ventures, which are trying to dominate different kinds of industries. There are sharing economy ventures in home cleaning, food delivery, beauty, and even laundry services too. If you want to get into an industry that is hot, you should consider going into the fast-growing model of a shared economy. You will certainly be able to find a lot of opportunities here, because of the large potential for growth in such a community. You will be amazed at how awesome this type of economic model is because it gives more power to the average person. And there way more benefits to adopting a shared economic model too. Here are some of those benefits.
What are the benefits of adopting a shared economic model?
1. The sharing economy can naturally help a lot of small businesses. Many large corporations now have a monopoly on many industries. And it is hard for small businesses to compete with those large corporations. So in order for a small business to do that, they may want to participate in a sharing economy. By doing so, a small business will be able to gain access to a wider market. This alone could allow them to compete with their large corporation competitors competitively. So in essence, a sharing economy is a great thing for small businesses.
2. It is often better for the consumer in the end. Business and the exchange of services and goods, based on a sharing economy, will often allow the consumer to save more money. There can be a lot of monetary savings in a sharing economy, not just for the business or industry that adopts it, but for the average person who decides to engage in it too. And in a sharing economy, the consumer has got more power of their choices, because they do not have to rely on a large corporation or entity that has got a monopoly on the industry.
3. In a sharing economy, other businesses are not competitors but are potential allies. Oftentimes in traditional economic models, it is encouraging that businesses act in a cut-throat manner. This is because the normal economic models dictate that only strong competition will be able to thrive. This is not true with a sharing economy. In such an economy, small businesses are encouraged to cooperate with one another. For example, in most types of settings, if you are trying to rent out an office space, there can be some difficulty in finding a rental agency that will cooperate with you. By participating in a sharing economy, small businesses are able to cut out such a middle man and find another small business or individual who is potentially interested in renting their office space.
4. There is a lot of potential for growth in a sharing economy. In the several years, there has been a huge explosion in the adoption of a sharing economy model. There are even larger corporations that have begun to tap into the sharing economy themselves. The sharing economy is estimated to be worth up to $110 billion dollars. And this is largely due in part to the many investments in start-ups and other kinds of sharing economy ventures. To cite one figure to prove this, there has been over $2 billion investment in sharing economy in the past quarter of last year alone. So if you want to get a slice of that very enticing pie, you should consider also adopting or consider going into a sharing economy.
5. A sharing economy is better for the environment. A sharing economy is much better for the environment because it encourages much less consumption, which means that less waste is produced. This also means that in addition to less waste being produced, the less monetary loss also happens because less consumption is encouraged overall in a sharing economy.
As you can see, there are actually many benefits to a sharing economy. In fact, these are only some of the benefits that you can expect to receive if you go into a sharing economy. There are way more, but these are only some of the most highlighted benefits of a sharing economy. And you may be wondering if there are any downsides to a sharing economy. There are actually a few downsides to a sharing economy, and despite being such a beneficial economic model, it does not work for every kind of industry.
What are the downsides to a sharing economy?
1. Since a sharing economy encourages less consumption, it will not work for certain types of economies or industries that rely on a high volume of economic movement. So it does not work well for some industries or businesses because it requires less consumption.
2. Sharing economies are also heavily regulated by many governments. There has been a lot of pushback in the last few years on sharing economy models. So in some countries, it may be hard to get into a sharing economy, because of the many regulations and red tape that a country’s government imposes on sharing economy.
3. Most small or developing economies and industries cannot sustain or support sharing economies. An economy or industry, itself, needs to be sufficiently advanced and developed, in order to support a sharing economy. This is in part due to the many requirements needed for a sharing economy. For example, there needs to be a robust technological system in place in order to support a sharing economy.
Now that you know the benefits and downsides of a sharing economy, hopefully, you will come to a more concrete decision on a sharing economy. This article should help you better understand a sharing economy, and also help you make better-informed decisions about it. However, there are also a few tips that you have to be aware of if you are going to go into a sharing economy model.
What are the common mistakes to avoid in a sharing economy?
1. Try to make your focus more specific. Oftentimes, a startup will fail because its focus is too broad. If a business does not know its direct aim, then its customers will be even more confused too.
2. There are often many bugs in a startup’s technological platform, and that is an unexpected problem, but it is not a fatal mistake. The fatal mistake that many startups make is that they do not address or even fix these problems or bugs.
3. A startup or business should also ensure that the customer experience is absolutely good. A startup can lose customers pretty fast if they do not provide an adequate or even pleasant experience. If customers continue to get bad or unpleasant experiences with you, they may start leaving en masse.
4. A sharing economy should also focus on expanding its scale in its early beginning. In order to sustain such a kind of economic model, there should be a lot of growth. And only through that growth will a sharing economy be able to reach any kind of sustainability. So try to focus on reaching a specific kind of scale in the beginning.
5. There should also be a focus on creating or maintaining a good brand name or reputation. In order to get customers and clients to trust your startup, you will first need to create a reliable and trustworthy image of your brand. This means quashing any kind of shady happenings in your own market or economic model. You should also focus on maintaining good public relations, especially if you do not want to lose any customers or clients to bad press.
These are just some of the mistakes that you have to remember to avoid. You will also be able to follow these tips to improve your own business model for a sharing economy. By keeping these tips in mind, you will hopefully be able to reduce your potential losses in a sharing economy. You will also be able to maximize your potential profits by remembering to avoid these common mistakes in a sharing economy.