The sharing economy connects individuals who need a particular product or service with other individuals who have, or who can obtain that particular product or service from another source. Examples include Uber, the ridesharing app; Airbnb, which helps you rent your spare room or empty house to people vacationing in your city; and TaskRabbit, which connects you with people in your neighborhood who are willing to do your errands and chores for a nominal fee.
A plethora of startups have stemmed from the sharing economy, 17 of which are worth over a billion dollars each. Experts predict that the sharing economy will only continue to grow going forward, offering fantastic opportunities for entrepreneurs. Here are some of the benefits.
1. Build easily on to existing businesses.
In a sharing economy, everyone benefits. The customer gets what they’re looking for quickly, locally, and cheaply, while the provider makes money. A story in US News & World Report tells how retirees are supplementing their income by becoming Uber drivers, renting out rooms, and more. To see just how you can piggyback onto the “on-demand” economy, check out the list of potential business opportunities at Collaborative Consumer.
2. Peer-to-peer financing opportunities.
Eager to get into the financial sector of the sharing economy? Companies like Lending Club are demonstrating how you can circumvent traditional banking to benefit both investors and clients in this innovative new business environment. There are still regulations, of course, but all-in-all, the process is much less complicated than setting up a bank, credit union, or traditional loan company to cater to people’s financial needs.
3. Minimal startup costs.
In his new book, The Business of Sharing, author Alex Stephany explains that the sharing economy has produced literally millions of micro-entrepreneurs. These entrepreneurs often start out with a few hundred dollars or less in capital. They’re then able to build on the fact that there is little or no government oversight—not to mention taxes—on many of the sharing economy’s business traffic opportunities.
Many of the most successful sharing economy startups began with very little traditional financial backing. For instance, take a company like Justpark. They’ve created tens of thousands of inner city parking spaces in the last year without so much as turning a spade of dirt or razing a single building. Their revenue stream is predicted to avalanche this year.
4. The sharing economy is building on the barter economy.
Parts of the sharing economy work without actual money at all. For example, time-exchange platforms. Say a person with a specific expertise offers one hour of online instruction in that area, via Skype. Then, rather than traditional monetary payment, the person receiving the instruction offers in return an hour of instruction in another area, in which they have expertise. This can be done with any number of services, and has led to the creation of an entire system of time banks, which keep track of hours paid and owed as if they were real money.
5. Millions of people are buying into the sharing economy.
As of 2015 millennials represent the largest workforce in the U.S. And they’re the ones forging the sharing economy movement. As James O’Connell, CEO of JDP, explains, “Millennials believe in making a difference with their spending habits… Companies like Uber and Airbnb are doing so well because their business plan taps into that mindset so completely.”
And according to a recent Consumer Expenditure Survey, baby boomers also love the sharing economy, as it often saves money over traditional methods. With both of these significant demographics embracing the ideology, it makes sense for a startup to tap into that revenue stream.
It’s clear that the sharing economy is the way of the future. Whether it’s a ride, a bed, or a meal, people are finding it cheaper and more convenient to get it from a local individual. If you can find a need, and individuals willing to help fill it, then your startup could be the next billion dollar idea in the sharing economy.