What do music, word processors, and taxis all have in common? They are all moving toward business models based on access, rather than ownership—the fundamental principle behind the sharing economy. Rather than having a small group of people owning taxis and driving people around, apps like Uber and Grab enable everyone driving a car to pick up a passenger during their normal commutes. But this idea won’t work in every field, everywhere; certain foundations need to be in place first.
Frequency and Density of Demand
Uber launched in San Francisco, where most new residents don’t drive. There are lots of people who need rides! This is what “frequency” means in regards to the sharing economy—frequency of demand. Uber has evolved somewhat beyond a ride-sharing platform now, with many drivers working full-time, but this evolution happened after a successful launch in an area where people were crying out for more and better ways to get to work. Think carefully about frequency of use in relation to your own business idea. Is there enough demand? Is there higher demand elsewhere?
Frequency and Density of Supply
In the sharing economy, it’s a mistake to focus solely on the demand side of the equation. To continue with the Uber example, ride-sharing worked initially because San Francisco, like most cities, has large business and industrial parks separated from large suburban areas. Although new residences tend to be car free, 30 percent of households still own cars, and everyone drives to and from the same places. The capacity was there, it just wasn’t being used. Uber solved that problem.
Supplying a peer-to-peer service is not without certain downsides and risk. Some people prefer to be alone in their car, or they might not want strangers in their house or to rent out their possessions for fear of them becoming damaged. It’s a good idea to screen and train your suppliers to ensure the safety of your customers. Surplus capacity multiplied by willing suppliers equals your potential supply. Is it enough?
The sharing economy is ultimately about increasing human connections, and this is as true for your suppliers as it is for your customers. Try to build a sense of community throughout your service. Encourage and reward power users who contribute often to online forums or who use the service regularly. Word of mouth is key, so it’s essential to keep vocal spokespeople on your side. Also, leverage technology to build trust; most services do this through ratings systems, for both suppliers and customers. Aim for people to be more trusting of your service than they are of traditional businesses in your sphere.
The best ideas are worth nothing if not implemented effectively, so set up your physical environment and your daily routine in a way that enhances productivity. If you’re working from home, set up an office area that’s free of distractions. If you have some money to spend, it’s worth investing in a comfortable office chair, an ergonomic desk, and a monitor arm so your screen is at head height.
You also need to keep your output high, but remember that productivity is not just about doing things quickly; it’s about doing the right things and doing them well. Focus your days by setting daily goals. Every evening, write down three key tasks that you’ll do the next day, and the order in which you’ll do them. When you sit down at your desk, get right onto task #1 without delay.
Businesses within the sharing economy do not become successful by accident. They become successful by satisfying an unfulfilled need using surplus capacity, by building a community of engaged suppliers. If you can identify these same foundational requirements in any industry, and you’re able to keep your daily productivity high, then maybe in a few years people will be talking about your business in the same breath as titans like Uber, Lyft, and Airbnb.
Mr. Burgess started Excitepreneur to explore entrepreneurship in depth, and to share the stories and lessons he learns.