Collaborative consumption is the concept of using the internet to reinvent market behaviors like sharing. It also includes lending, renting, and bartering. The difference is that now we can perform these behaviors on a scale not previously possible.
Previously, many people and businesses built fences around their investments. Now, collaborative consumption is about having access to assets rather than hoarding ownership of them. These assets include equipment, real estate, and even funding.
This efficient use of assets, through sharing and renting from peer to peer, has changed the way small businesses operate. Platforms have emerged to help apply collaborative consumption principles to the B2B space. Businesses have found that there are major benefits to accessing otherwise underused assets without having to buy them.
Here are ways small business owners should explore collaborative consumption platforms to improve or grow their business operations.
Renting shared office space
Let’s be honest: When you’re first starting up, a nice, big office is more about ego than necessity. Of course, it’s important to attract talent with an inviting workspace. Renting out your own floor of an office building, however, is a huge overhead cost that is no longer necessary.
Now you can still have a comfortable, well-equipped office, thanks to companies like LiquidSpace and ShareDesk. These platforms connect businesses with unused space to companies that need flexible, on-demand offices. Businesses can rent by the day, week, or month.
Companies no longer need to be locked into long-term leases that don’t reflect the volatile nature of business. This is also more in line with the trend of businesses shifting into more flexible, remote teams.
Accessing expensive fixed assets
Many businesses know the pain of having to invest in assets that can help them scale. Investing sometimes sacrifices the cash businesses need to pay for everyday expenses. Whether it’s heavy equipment or office tools, businesses often take out expensive loans to pay for the assets they need to compete.
Instead, platforms like ShareRing allow businesses to rent assets from other ventures that are now sitting idle. Dozr — an online heavy equipment rental marketplace — facilitates the sharing of construction equipment and reduces some of the risk that comes with purchasing.
The borrowing business taps into otherwise inaccessible assets and gains business cash flow flexibility. Lenders with unused items that are just taking up space can bring in a little extra dough by helping fellow entrepreneurs.
Finding better funding options
One way to avoid too much business debt is, as mentioned above, renting over buying. Another way is to use some of the emerging lending, financing, and fundraising platforms to fund your business.
There’s peer-to-peer small business lending from Lending Club. There’s crowd fundraising by Kickstarter. There are business loans from online lenders that offer much quicker turnarounds than banks. All of these platforms remove a costly middleman and brings lenders and borrowers closer together. Then they achieve their respective goals of making money on investing and getting affordable financing.
Redistributing unused supplies and inventory
Another facet of collaborative consumption is redistribution markets,or extending the life of a product. These markets allow businesses to buy and resell second-hand products, rather than wasting time and resources creating new ones. Examples of this include thrift shops and “recommerce” platforms like Yerdle.
You can also find deals on things like office supplies, electronics, tools, and even heavy equipment on sites like eBay and Craigslist. These sites might provide a better deal than you would get from the original sellers.
Sharing rides on demand
If you need to travel for work, collaborative consumption can reduce the headaches of owning a car for business. This applies whether you’re driving across town to meet with a client or visiting suppliers across the country.
Rather than use your own car around town, or wait at the airport to grab a rental, companies like Zipcar let you reserve an available local car and go. Or use ridesharing apps like Uber to call a cab on demand. You can still track all of your travel and deduct the costs of using these platforms on your business taxes.
When you own a car that sits idle except on those rare business trips, you’re watching your investment lose money. These product service systems allow people to pay for the benefits of using vehicles without the hefty upfront cost of a car.
Collaborative consumption is still growing and gaining traction. Every day, new platforms and tools emerge that can alter the way a small business operates. As a small business owner, it’s your job to explore this marketplace and turn inefficiency into opportunity.
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- How Collaborative Consumption Can Help Small Business Owners - December 7, 2018
MileIQ’s blog does not constitute professional tax advice. You should contact your own tax professional to discuss your situation.