What is the sharing economy?

Trying to define the ‘sharing economy’ is like trying to hit a moving target. As a concept, it is constantly evolving. But in its simplest form, the sharing economy refers to the exchange of any goods or service using technology. Here mutual parties share the value of an under-utilized skill or asset. The exchange happens through a shared marketplace, a collaborative platform or peer-to-peer application. While this concept of sharing isn’t necessarily new, the internet and mobile tech have radically improved accessibly. Making share-based transactions the easiest it’s ever been.

What are the sharing economy buzzwords?

Technology

This is a crucial aspect of the sharing economy. Using technology to share services is a common factor amongst all versions. Technology renders the process convenient, efficient and in many cases more affordable for SMEs.

Collaborative Economy/ Peer-to-Peer Economy

A collaborative economy is a marketplace where consumers rely on each other instead of large companies. This is done via giving, swapping, borrowing, trading, renting, and sharing products and services for a fee.

Freelancing/ Gig Economy

A freelancer is a self-employed person who offers services to clients. These services are often, though not necessarily, offered through sharing economy apps like OzLance and Freelancer.

Crowdfunding/ Crowdsourcing

Australian crowdfunding platforms like ASSOB  and ChipIn offer an online marketplace to source funding for small businesses. Here business owners pitch their business and multiple individuals pledge support in return for goods, equity or services.

Coworking/Cobranding

This refers to SMEs sharing premises to save costs. These hub spaces are advertised and sourced on online platforms such as Hub Australia. Perks of this platform include shared and short-term rental.

Fintech

This is when finance and technology join forces to bring funding to businesses in need. For example, Beyond Merchant Capital provides a quick online application and minimal paperwork. This beats the bank system because access is quick and reliable. with funding granted in as little as 48 hours.

What does the Australian entrepreneur think about a sharing economy?

Australian entrepreneurs are definitely jumping on the sharing bandwagon. They appreciate how it provides cheaper and convenient services. It can also work both ways by SMEs offering their goods or services to other companies to boost bottom lines. As well as the ability to call on other SMEs to plug holes and provide support to their operations. This may take the form of using Uber for transport or Udemy for training and upskilling. Calling on freelances, Dribble for design work and Expert 360 for consultancy. Some SMEs have even hired executive support like CFOs on these types of sharing platforms.

Is sharing always caring?

Not necessarily. In countries like Singapore, the collaborative movement has come under siege. The hype surrounding the sharing economy is quickly fading, as its original ideas have taken a back seat to the relentless corporate pursuit of profits, and public fallouts. Investors with deep pockets expect a return on investment and are often at odds with the spirit of sharing. Further to this, there is a need for checks and balances, so that sharing-economy firms operate in line with the acceptable behaviour of traditional companies.

How can SMEs make use of the sharing economy?

Staffing

Finding ways to save on expenses while increasing profits is necessary to stay afloat. With a nation of Millenials, companies are changing how they hire staff as well. Instead of having cubicles filled with ‘lifers’ they are opting for staff who may come and go as required. Companies are now hiring employees who are more caring and sharing, but have a lower level of commitment than their older peers in the business world. For smaller companies with less staff, this millennial mindset and the sharing economy, sometimes called ‘collaborative consumption’, can save on operating expenses and raise profits if done correctly.

Raising Capital

Crowdfunding is one way to leverage funding online. But it has many drawbacks. Consider, instead, fintech merchant financing like a merchant cash advance. The application process happens online and can result in cash in your account in as little as 24 hours.

Business trips

Whether it be a ride to the airport, or to a meeting from the hotel, small businesses can save on transport/ vehicle costs by using services like Uber and Lyft. When it comes to travel, SMEs can also save up to 50 per cent of lodging costs by using services like Airbnb.

Outsourcing Small Tasks

Small businesses can outsource a lot of small tasks to outside providers. Handyman services, painting, cleaning, and maintenance can be outsourced on Airtasker. You can also find the services of a logo designer, app developer, and writer from freelancers on sites like Fiverr.

Monetize Space

Do you have extra offices in your building that aren’t being used? Space for a cell tower? Unused parking spaces? You can turn all of these assets into money for your bottom line by utilizing the sharing economy to rent them out. In some cities, parking spaces are worth $50,000 a year.

When done properly, a small business can use the sharing economy to save money in both the short term and the long run. SMEs can also form relationships with individuals and other businesses that can be mutually beneficial to both parties. The approach here is the think about company resources as an ecosystem rather than a closed structure. This way of thinking is also helping Australian start-ups find their way, test the market and save while establishing their businesses.

Speak with a lending specialist today about funding the growth of your business.

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