What is your business’ value proposition? Why do your customers buy what you sell? What can your clients get from your business that they can get nowhere else?
These seemingly simple questions are devilishly hard to answer and, as your business grows, the answers may change over time. If you’re an entrepreneur, these questions are important because you must know where to deploy your limited resources. A small software company’s engineers may direct their efforts towards creating new business apps; that expertise is likely wasted when focused on marketing. A maker of organic soaps should be focused on creating appealing products, not managing the website that offers them.
Another reason that focus is important for the entrepreneur is because it is increasingly possible to outsource supporting business functions to third parties. While getting outside help for a business is nothing new, the options available to even the smallest businesses have proliferated exponentially.
The cause of this proliferation is the advent of the sharing economy—an economy in which customers share access to products and services coordinated through community-based online services. Some of the most visible examples of businesses that specialize in pooling and parceling out resources according to demand are AirBnB and VRBO, in which properties are offered for short-term rentals, and Zipcar, in which automobiles are rented on an as-needed basis. A less well-known example (at least in the United States) is Fon, a Wi-Fi provider founded in Madrid, which was created in 2006 by Martin Varsavsky who was inspired by the idea of encouraging people to share their home Internet connections. It is now one of the largest network providers in the world with almost 12 million hot spots in more than 100 countries.
More relevant to many small businesses, the sharing economy has allowed for the sharing of labor. Businesses like Toptal connect you with high-quality software engineers; Ruby Reception shares its pool of amazingly friendly receptionists amongst numerous small businesses; our company, Equivity, offers small businesses administrative and marketing support from virtual assistants.
Here are some of the ways in which a sharing economy will change the way we do business.
- Labor Outsourcing: Businesses will focus on what they do best and outsource the rest. Since many business functions can be outsourced in the sharing economy, it is a waste of resources to try to develop those functions in-house. Successful businesses will find the best suppliers of the services that they need and concentrate on what makes them great.
- Increased Accessibility. Services previously available only to larger organizations will be available to small businesses. The stereotype of the entrepreneur is of somebody that wears numerous hats and does every job from executive strategy to changing the printer cartridge. But entrepreneurs no longer need to do administrative work or fumble around trying to figure out pay-per-click advertising. The sharing economy brings this expertise to small business, allowing them to compete more effectively with larger businesses.
- Legislation and Government Involvement. The status of contract workers will increasingly become a matter of concern for businesses and the government. Companies that offer flexible work arrangements often rely on large numbers of independent contractors, rather than full-time employees. This classification is increasingly under pressure in the courts, both from independent contractors themselves, who are seeking increased compensation from these companies, and aggrieved customers, who seek to qualify these contractors as employees in order to hold the companies for which they work liable.The issue of whether these workers should be classified as independent contractors or employees will continue to be raised in the court and in legislatures at the state and federal level.
- Green Business Practices: As the sharing economy makes resource usage more efficient, pressures will increase for businesses to be more eco-friendly. The sharing economy permits asset owners to more efficiently use and reuse resources. For example, coworking environments allow businesses to share spaces, rent conference rooms, participate in seminars, and facilitate interaction amongst entrepreneurs.As it becomes possible for businesses to be more efficient through collaborative work spaces and virtualizing offices, businesses can reduce their environmental impact. Expect to see more businesses certified as green and increased government incentives to promote conservation.
The sharing economy is changing the way that small businesses operate.With an increasing number of business services at an entrepreneur’s fingertips, many businesses will need to adopt new ways of doing business to remain competitive.