Why the sharing economy is a win-win for contractors
Work, rest and ‘pay.’ No, it’s not a commonly-used phrase misspelt; it’s actually three major things in your life as a person who works for themselves that can now be achieved via a single platform -- the sharing economy, writes Andrew Chamberlain, deputy director of policy at IPSE, the Association of Independent Professionals and the Self Employed.
Before exploring how this trio can enrich you (and not just personally but potentially in financial terms too), some background to begin. We’re interacting with each other in new ways. Technological advancements have made transactions much quicker and easier, and consequently, just about anything can be made available for hire within seconds. That’s true of you and your services too!
In fact, in the same way that peer-to-peer retail sites like eBay allow any user to buy or sell their items, a plethora of new, user-led sites allow people to connect with others and share their assets instantly.
Save Money, Make Money
What’s upon us is a rapidly emerging culture based on ‘collaborative consumption.’ Put another way, what we’re seeing occurs where assets and services are shared when their owner isn’t using them, so they’re used to their maximum capacity. Secondly, but at the same time, new technology is allowing people requiring a service to connect instantly with those who can offer it. Smartphone apps are at the fore of this development.
Notable examples of success stories of these two dynamics include Uber (car sharing), Airbnb (accommodation) and Upwork (freelance jobs marketplace). According to PwC, the sharing economy is set to soar in value from £500 million today to £9 billion by 2025.
That sort of number might make contractors rub their hands together. Because while the sharing economy’s growth is clearly a win for the consumer, it’s a ‘win-win for resource-conscious, digitally-savvy contractors; in this economy they are some of the best-placed individuals to be both the consumers and the producers. Their circumstances, often envied because they have flexibility and autonomy, are optimised for them to both save money and to make money. And those in conventional employment know it. Indeed, an increasing number of people with 9-to-5s are now creating additional income through the sharing economy – sometimes taking on several jobs at once – as and when they can. Companies and consumers alike now expect services to be available for particular tasks at short notice, and the sharing economy ensures it’s available.
How one-person businesses are using the sharing economy
We’re seeing fewer freelance professionals use recruitment agencies to find and compete for contracts. Instead, online platforms are connecting such workers with potential clients. In this way, the client gets to choose between large numbers of available freelancers; the freelancer gets to browse all the available contracts and bid for those which suit them. Upwork , with over 10million freelancers registered globally, is a case in point. Clients can interview, hire and work with freelancers through the platform, which is also used to manage payments, meaning it can provide a ‘one-stop-shop’ for those wanting talent and those offering it. There’s longevity too, as such platforms often bring together freelancers and clients for longer-term contracts which can result in the same freelancer being rehired.
Workhubs are flexible workspaces allowing users to rent by the hour, by the day or by the week. They work particularly well for businesses which don’t require expensive permanent offices and are used by freelancers as a collaborative space to network, create and learn from each other. It’s common for workhubs to take advantage of otherwise unused industrial spaces, such as former factories, and they’re becoming increasingly commonplace as more people make the choice to work for themselves. In addition to business essentials such as wifi and power sockets, some workhubs offer extra services such as IT/business support and training programmes.
Making work pay
Aside from using the sharing economy for ‘work’ (as we’ve seen, you can now find a contract and a space to execute that contract), more and more freelancers are making their work – or someone else’s work – ‘pay.’
In particular, new forms of credit such as crowdfunding and peer-to-peer lending are rapidly increasing in usage and allow small businesses to access capital in ways which weren’t previously available.
Crowdfunding brings together a large number of financial backers who each pledge a certain amount of money towards a project, usually in return for a stake in the business or other form of payment after the business begins to turn a profit. As there’s rarely a limit on the amount that can be pledged to a campaign, ventures with serious potential can far surpass their target funding and make a very strong entrance to the market.
Meanwhile, the peer-to-peer lending industry has rocketed in popularity and is forecast by some to hit £40bn -- this year. It allows anyone to put forward extra capital to lend to others, also via an online platform, and make a healthy return on their investment over the longer term. P2P lending decisions are made by the lender themselves, meaning they can assess individual loan requests based on their aversion to risk and the potential of the venture(s). Lenders are encouraged to mitigate any chances of loss by lending to many businesses at once. The first service of this kind was Funding Circle; other small business-focussed examples include Funding Tree and Zopa.
Realise the value of that resting spot
One of the best-known sharing economy services is Airbnb -- an online platform allowing users to advertise accommodation and places to rest, which is often just unused space in a home, for a fee. Available lodgings to rest and recuperate in range from a sofa and an airbed in someone’s lounge (hence the name “Airbnb”) to entire mansions, castles and private islands. It requires a fair degree of trust on the part of both the guest and the host, more so than between a hotel and its guests. But it works; tens of millions of people have chosen to “live like a local” with Airbnb, eschewing the option of an expensive hotel. The host, meanwhile, can earn anything from a few pounds to a few hundred pounds per week without committing too much time. Something for you to consider, perhaps, if you’re looking at losses from the incoming dividend tax. And for a longer-term injection of cash, why not consider making use of spareroom.co.uk? It’s a site which, as it ‘says on the tin,’ allows users to advertise their spare rooms and meet new tenants.
The explosion of sharing economy businesses has changed the commercial landscape for good. Companies in many long-established sectors such as hotels and hospitality, transport and logistics and banking and financial services need to catch up, fast, or risk being left behind. For contractors and the self-employed though, it will remain quick and easy for them to find and undertake work through the sharing economy; making money or saving money as they go.
We think it’s likely that even more new business models will emerge in 2016 and beyond, partly as the sharing economy’s already active agents expand (Uber may branch out to deliveries, for example). Furthermore, experts predict the renewable energy and consumer healthcare industries are next in line for a peer-to-peer infusion. Not many people predicted the sharing economy boom. Who knows what could happen next?