There’s no doubt that the sharing economy has shaken up the entrepreneurial world. Startup companies like Uber and Airbnb have redefined the roles between production and consumption by releasing and granting access to private resources that otherwise would be left unused.
Uber does this by making private cars available for public transportation, while Airbnb makes private homes or rooms in a home available for short-term housing. These kinds of business models have boosted the use of existing resources and in many ways changed the way entrepreneurs look at business creation. Here are three examples of the effects that the sharing economy has had on entrepreneurial opportunities:
1. Shift in distribution of production.
Traditionally, business are caught between deciding to manage all aspects of the business in-house and therefore increase control, or outsource everything and reduce in-house costs.
Sharing economy companies like Uber and Airbnb choose to outsource and base their business model on other people’s existing resources. This way they are not only reducing production costs but their role shifts from producing goods or services to managing goods or services that are readily available and useful.
2. Better entryway for young companies.
Finding investors and capital to help jump start a company is one of the biggest challenges for entrepreneurs. However now, with the sharing economy model companies that have access to previously private resources can lower their overhead and reduce the amount of needed capital to fund the company.
A good example of this is Uber’s competitor – Lyft. Its founder Logan Green saw a market need to relief the transportation situation in Los Angeles, but he knew he would need a lot of starting capital in order to produce a taxi service with his own cars. Instead, he developed an ride-sharing app, which provides a similar taxi service all while using existing resources. As a result, there is now a market shift where competition is not necessarily dictated by who has the most startup money or who owns more resources.
Competitive companies like Lyft are proving that now it’s all about making the most out of the resources you already have.
3. No more passive ownership.
The sharing economy leaves passive ownership behind and is now is all about active maintenance. The owners of the unused resources, whether it’s a car or a home must bear the upfront cost, but the sharing economy model gives them the opportunity to generate an income out of these resources, instead of letting them go to waste.
Owner seem to like this economic model since the sharing economy is projected to rise from $15 billion in 2014 to $335 billion in 2025.
Is the sharing economy affecting your business or industry? Leave your responses in the comments section.