How to Succeed in the Sharing Economy
The sharing economy could hold the key to your success as a freelancer, entrepreneur or small business owner. So what is this sharing economy that some claim is changing the way businesses work?
The phrase ‘sharing economy’ describes the ability of people to access resources, instead of having to actually own them. It’s that simple. It relies on the power of the crowd and the technology that makes it easy for people with spare things, like bedrooms or bicycles, to hook up with those who need those things.
Making it work
How can you make the sharing economy work for you as a freelancer or entrepreneur? Here are three effective approaches to really make it work for you:
Approach 1: sharing stuff
The part of the sharing economy that most people are familiar with is all about sharing ‘things,’ which allows you to save money as well as earn money.
You can save money by sharing, bartering or trading, rather than owning. Instead of investing capital in buying a car for your occasional business needs, you can save by joining Zipcar or Carpooling.com, for instance—and paying for the car, only when you need the car.
If you travel for business, you can use Airbnb or Couchsurfing to find someone willing to share a spare room, rather than putting out more money for a hotel.
You can even rent out spare assets to bring in new income. If you have spare space you could look to rent it or trade it to those travelling in your area or looking for temp office space. In one extreme example, a woman rented out her spare bedroom for a year and made enough extra money to fund a start-up business.
Reducing costs and increasing revenues by bartering or trading assets are great ways to take advantage of the sharing economy to positively impact your business. But the sharing economy is not just about stuff.
Approach 2: sharing intangibles
People aren’t just interested in sharing items, like parking spaces and spare power boats. The sharing economy can dramatically alter your business by allowing you to share intangibles, like jobs or capital.
The skills exchange
Like an old-time stock exchange, a skills exchange matches buyers and sellers who want to trade resources. But in this case the resources are not physical assets.
If you are a freelancer or entrepreneur—a designer, consultant, accountant, it doesn’t matter—sites like oDesk and Elance allow you to find new jobs. In fact, another phrase that people use to describe the sharing economy is “The Gig Economy”—that’s gig as in job, not gigabyte. If you have unused time, you can join one of these sharing communities and hire out your skills to the crowd—that huge group of diverse people online looking for help.
On the flip side, if you have business opportunities that you don’t have the skills or manpower to pull off, sites in the ‘Gig Economy” could help you staff up on a temporary basis to complete the job and bring in new revenue.
Crowd-based funding sites like Kickstarter and Indiegogo allow entrepreneurs to pitch their great start-up or campaign ideas. Anybody who likes the idea can pledge a small amount of money to fund it. Combined, the small pledges that members of the crowd make can add up to amounts sizable enough to fund the project.
Approach 3: become a network entrepreneur
All of the different elements of the sharing economy have two things in common—the things that are most important to a freelancer’s success in this new world—trust and its close cousin reputation. Nobody would rent a spare room, loan a car, or hire a freelancer for a new gig if they didn’t trust the other person. So your reputation—built up of people’s direct experience of you, what you say about yourself, and what others say about you—is vital. Reputation is like a messenger sent out in front of you that says, “You can trust me.”
How can an entrepreneur build trust and reputation, in order to prosper in the sharing economy? I spoke with Howard Rheingold, author of Net Smart: How to Thrive Online, to get his take on the opportunity. One of the first concepts Howard introduced me to was the “Network Entrepreneur.”
In Net Smart Rheingold talks about the importance of people or businesses that link different networks together. The linchpins. They are the network entrepreneurs who can connect IT developers with writers, or marketers with doctors, for instance—the ones who, through their social capital and varied connections, can add value by putting together people or businesses that would not normally interact.
“Be a bridge,” Rheingold says. Bridges span networks. Network entrepreneurs transmit wisdom and trust. The businesses that learn to do it the best, whether they are freelance companies of one or giant corporations, will be the supernodes of the new economy. They will be the most connected, the most trusted. The most valued.
Becoming an effective network entrepreneur may require new skills. Three of them stand out.
1. Build your reputation
One of the central issues of the sharing economy is “how can I share with people I’ve never met and don’t know if I can trust?” Trust has become the universal currency of the new world. Capital, in the form of money, has become less important than social capital—your reputation and the trust others put in you.
Entrepreneurs can build their social capital by being active in the networks that interest them and where they have expertise. In Net Smart, Rheingold says entrepreneurs should comment, blog, tag, bookmark, email—just share. When an entrepreneur demonstrates their expertise and generosity, their trust-ranking will soar.
When an entrepreneur shares social capital with others they will foster goodwill and increase the likelihood of cooperative partnerships. Potential clients will be more likely to seek them out, and more likely to say yes to working with them.
As Rheingold says, “Trust is transitive,” it is to be shared and exchanged. “Unlike financial capital trust increases when you use it and becomes depleted if not used.”
2. Stop ‘networking’
Rheingold asserts that, “People need to understand the difference between cultivating and nurturing a network, and what is also known as networking. Networking used to mean meeting a lot of people and giving them your card. It’s just self-promotional—as opposed to finding people who interest you, and, not only paying attention to them, but giving them things they will find useful.”
3. Build a world-class PLN
Rheingold advises that a great way to become a better network entrepreneur and a more central part of the sharing economy is to build what he calls a Personal Learning Network, or PLN. A PLN is a web of experts and cooperators. According to Rheingold the most effective way to grow such a web is to harness what he calls Participation Power. As he says in Net Smart, “Knowledge, power, advantage, companionship, and influence lie with those who know how to participate, rather than those who just passively consume.”
Successful entrepreneurs participate and grow effective PLNs by:
- exploring multiple media
- following experts in their PLN
- engaging the people they follow
- tuning their network by dropping those who don’t regularly provide value
- feeding the people they follow by sharing with them
- engaging the people they follow with comments and questions
- responding to inquiries made to them
Rheingold suggests it is not necessarily difficult. “It’s not just getting known by a lot of people, it’s helping people out. You’re priming the pump for them to cooperate with you by cooperating with them in advance.” (For more information on Howard Rheingold visit his website www.rheingold.com)
The last word on the sharing economy
The social networks that underpin the sharing economy are engines of trust. It’s in these networks that entrepreneurs will build their reputations, and through these networks that they will collaborate with like-minded partners and customers to drive their business.
Entrepreneurs who recognize and learn to harness the true power of the sharing economy will thrive in the increasingly connected and always-on, networked world.
About the author: Andy Haynes is a writer for FreshBooks. He is the co-author of two best-selling business books, a successful entrepreneur and business consultant.