In all-too-recent times, buying a house, owning a car and the concept of allocating possessions was the pinnacle of “making it” in life. But with sweeping changes in technology, a less-is-more, collaborative standpoint has gained ground and is leaving ownership behind.
Underutilized assets are abundantly available in a world with too many people that have too many things. As smart folks have begun to figure out, sharing lonesome assets kindles economic growth, turns stale resources into money and relieves cost burdens of ownership while chaperoning sustainability. Emancipation from owning is becoming an increasingly freeing notion, and sharing is fostering seeds of community -- sharing is caring, right?
The sharing economy is projected to grow from $15 billion in 2014 to $335 billion in 2025. Quicker than ever, we're shifting to the world of a shared economy.
What Is A Shared Economy?
A shared or sharing economy is an economic system in which assets or services are shared between peers or businesses for free or for a fee. The concept is to enhance the usability of assets, making their lifespan more worthwhile.
Sharing isn’t quite a new way of life. Rentable or shared goods have been around for ages, but technology and ease of connections through the digital world have boosted accessibility and convenience to users who now have a better ability to seek things out — often through apps — and obtain them easily.
Who’s Involved (And How You Can Join Them)
Need a cheap, fast way to get around town? Bird Scooter’s got your wheels. Ride-hail with Uber, or rent someone’s extra bedroom or temporarily available apartment space on Airbnb for cheaper than a hotel. Get professional cameras gear to shoot your next indie film from lensrental.com. Rent Apple computers for your newly hired team of designers to finish a month-long project -- no need to buy.
There are thousands of companies and individuals with assets waiting to be used. I believe entrepreneurs should start looking at alternative ways their clients could access and use the products they are currently selling. For example, if you sell high-priced luxury goods, maybe you want to consider a rental/subscription option.
Another tip would be to examine current assets where the usage rate is low. For instance, if you run a video production company but only use your camera gear five months out of the year, you could use services like sharegrid.com to rent out and make revenue with your underutilized cameras.
That's exactly how I got started renting high-performance computer systems. Creatives that wanted them couldn't afford to buy them, and the rental model really stood out to me as the ideal solution. Especially because in the entertainment industry, most projects scale up and down very fast; investing in specialized hardware for a short time doesn't make sense for a lot of companies.
Is there a similar need in your industry? If you're not convinced yet, here are several reasons your business should consider the potential of joining the shared economy:
Cost-Saving Incentives
Most cars sit idle 95% of the time. For some, owning a car that comes with interest, fees and insurance can become a more significant cost burden than utilizing ride-hailing networks, public transportation and the occasional rental fee. Travel prices may be reduced and often come with a better experience when you tap opportunities like Airbnb, home-swapping networks and ride-hailing methods. And, as I've learned from building our business, expensive equipment is usually not worth the price of ownership — but many companies make it readily available through a quick and cheap rental. Low-cost shared-economy options save consumers and companies money while contributing significantly to individuals on the other end.
Many of us have a lot of things that we don’t need -- according to one estimate, 80% of items in our home are used less than once a month, and yet self-storage rates are rising. Furthermore, things have a shelf life and become outdated quickly. When we share among ourselves for a small fee or rent from businesses or individuals, equipment or assets actually get used, more people can enjoy them, and there is money to be made.
Sharing May Be 'Greener,' Too
Sustainability has become a prime focus of the quickly emerging sharing economy. One hundred scooters that sit in a garage for a year aren’t getting a fraction of use (or monetary income) of a single scooter that companies like Bird are providing, and ride-hailing is removing thousands of cars from the street and curbing emissions to boot. It has upsides for businesses too: If you are purchasing computers for your company based on growth forecasts that don't pan out, you may be sitting with many idle computers. It makes much more sense to rent these computers as you scale up; this strategy will ensure your projects are profitable and you will also significantly reduce the amount of e-waste that will later end up in landfills.
Why Sharing? The Millennial Answer
Millennials, who are driving most of the growth in the sharing economy, have adopted new values. Efficiency is the utmost priority, material yearnings are starting to fade, and accessibility to experiences (like eating out at restaurants with friends, not spending money on possessions like expensive jewelry or new furniture) takes precedence over ownership.
With many millennials going to college or just exiting school during a severe recession, resourcefulness surfaced — it wasn’t necessary or even feasible for some to own a car anymore, and material possessions increasingly took on an air of unimportance. For this generation, ownership is more of a burden than a source of pride — not suffering under the weight of a car payment, sharing Netflix accounts, cooking food for each other or acting in different ways that chaperone more community is the foundation of the average millennial mentality. Right behind them is Generation Z, which already has the collective spending power of $44 billion and will soon surpass millennials.
With 75% of the workforce estimated to be comprised of millennials by 2025, there's going to be a major shift in purchasing decisions. As the newer generations take over the consumer and business world, their needs and values must be met; otherwise, your business may suffer the fate of companies like Blockbuster and Toys "R" Us. The sharing economy is taking flight, and consumers have made it clear that significant and small-scale sharing operations are here to stay.
