The rise of the sharing economy: 5 things to consider

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Unless you’ve been living under a rock these past few years, you’re probably familiar with Uber, Lyft, Airbnb, and other similar businesses.

These online platforms are part of the so-called “collaborative economy” (also known as sharing economy, peer-to-peer economy, or gig economy), which has grown in popularity over the last decade—the Mesh Labs Global Sharing Economy Index shows that there are approximately 5,000 sharing companies, organizations and programs now.

Basically, companies using this business model allow users to convert otherwise idle assets (vehicles, spare rooms, and even skills or talent) to cash by renting or “sharing” them with others. At the same time, consumers get to use specific goods and services for only as long as necessary, enabling them to save time and money.

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Moreover, the collaborative economy helps create networks of formerly dispersed workers via centralized online portals, allowing users to advertise their goods or services and connect with more clients quickly and easily.

While this new business model has its own pitfalls, it‘s clear that the rise of the collaborative economy has opened up a whole new world of opportunities for a lot of entrepreneurs, professionals, and skilled workers looking to earn money without being tied down to a traditional 9-5 office job.

In fact, a recent study by the Bank of America Merril Lynch forecasts the global growth of the sharing economy to jump from $250 billion to $1930 billion ($785 billion in the US, $645 billion in Europe, and $500 billion in China), while a separate survey conducted by JP Morgan shows that on average, Americans who made money from labor-sharing platforms like Uber and TaskRabbit earned an additional $533 (£373) monthly, while users who rented out their assets on sites like Airbnb earned an average of $314 every month.

Sounds good, doesn’t it? Want to take your share of the pie, but not sure where to begin?

Never fear, we’ve listed 5 quick and easy ways to earn money via the sharing economy—but before you sign up, keep the following things in mind:

1. Choose the right platform

Not all businesses and platforms in the sharing economy are created equal, so make sure to do your research to ensure that your selected platform reflects your lifestyle, needs, and preferences.

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To help make the selection process easier, take a look at three different business models commonly found in the sharing economy:

Centralized:

  • The company owns the asset and controls prices
  • Greater control over quality, availability, and standardization, with higher transaction value
  • Needs significant amount of onhand capital and high utilization to earn

Decentralized:

  • Owners set the terms and conditions, and offer items and services directly to another user. The company facilitates the match and takes a cut of overall fee.
  • Lower upfront capital costs.
  • Needs to have sufficient number of users and providers to be sustainable

Hybrid:

  • Owners offer goods and services according to price and standards set by the company
  • Lower upfront capital costs
  • Most recruit users and providers to ensure sufficient supply

2. Trust your fellow users but remember to verify

Apart from secure and efficient payments, trust is the top currency in the sharing economy. Make sure that your chosen platform has background checks and identity verification systems in place to protect yourself and your assets from possible scams or dodgy customers.

At the same time, check if the platform has a reliable user review system, which helps build user/platform credibility and encourages more high-quality transactions.

3. Have a solid insurance policy in place

Despite best efforts from businesses and individual members of the collaborative economy, accidents can happen. Protect yourself by double-checking if your chosen platform has insurance policies that cover common issues.

4. File your taxes and keep tabs on regulatory developments

Consult a tax professional to see if you need to report additional income generated via collaborative platforms, so as to prevent legal problems in the future.

Monitor all international and local developments and regulatory changes that may affect your chosen platform.

5. Consider your financial needs

Whether you plan to become a fulltime freelancer, or just want a part-time side hustle, it’s important to know the pros and cons of both options.

Apart from offering flexible and efficient work arrangements, earning money via the sharing economy can be ideal for folks with volatile income from traditional jobs, or workers whose salary schedules are at odds with their billing cycles.

Ready to jumpstart a lucrative career in the sharing economy?

Here’s a quick rundown of platforms on industries transformed and disrupted by the collaborative economy that you can also check out:

  • Shared rides (transportation and delivery):  Uber, Lyft, Getaround, Splinster, and Roadie.
  • Shared houses (hospitality and accommodation): Airbnb, Home Away, LoveHomeSwap, and SharedEarth
  • Shared labor (manual labor): Airtasker, Task Rabbit, and Fiverr
  • Shared knowledge (skills and knowledge): Upwork, Indeed, 99designs, Verbling, Trustify and Craigslist
  • Shared expertise (professional advice and education): Udemy, University Tutor, UpCounsel, HelloTech, The Expert Institute, and Instavest.

These are just a few examples of peer-to-peer service sites and apps that are making waves in the sharing economy today.

As it is, the continued growth of this new business model shows that that collaborative consumption is set to disrupt and affect almost all industries, including those in the B2B arena.

What about you? Do you think the sharing model is sustainable, or is it just a passing fad? Have you used any of these sites before? How was your experience? Can you recommend similar sites or perhaps local versions that we missed?

Tell us in the comments; we’d love to hear your thoughts!

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About Jason Acidre

Jason Acidre is the Founder of Grit, and the inbound marketing strategist at SaleHoo. You can follow him on Twitter @jasonacidre.

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