Business

Businesses turn to the sharing economy to save money or grow income

Income ideas panel

BY DENNISE WILLIAMS
Contributor

Wednesday, February 07, 2018

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Are you profiting from the sharing economy? This covers a wide range of opportunities to either make money or save money. Now the sharing economy isn't limited to the world of the internet, although the online premise is the same, as it involves building relationships. The sharing economy is about how businesses can save or profit from sharing goods and services rather than taking on the entire expense themselves.

UWI researcher Dr Carolyn Hayle explains: “Many people believe that the sharing economyis only AirBNB and Uber. It is not. It really means consumer to consumer providing opportunities to utilise unused space and things. So there is a new phenomenon called the gig economy which will fit nicely with both business tourism and entrepreneurship -- gig meaning contract worker…completing job by job. This can be done anywhere in the world where your skill is needed and an opportunity arises. Also, with big data, long-term tourists can come here, sit on the beach and run their businesses. Sharing space can be rented or leased to both locals and visitors alike. This opens up a whole new world of opportunities. I particularly like the sharing economy because it focuses on the multiplier [effect]…greater circulation of money in the hands of more people! However, new policies need to be written to accommodate it.”

Below our income ideas panel go through some examples of the sharing approach that can be utilised both offline and online.

One example is sharing office space. That one is something that more businesses are considering as a way to save [money].

Dino Hinds, director of MicroFinancing Solutions observes, “What technology has done is make it possible for most businesses to operate with less physical space. As a result, a lot of companies will have employees who work from home and only need a virtual office. Added to that, they might need space to keep meetings both with staff and customers. With the need for less physical space, companies can reduce costs by sharing.”

In the United States, the idea of sharing legal costs through prepayment is a tricky area that only large businesses in Jamaica have taken on. By sharing legal costs, the idea is to prepay a fixed sum for a fixed number of services.

Attorney-at-law Robert Taylor explains: “Prepaid legal plans have proliferated in the US market for some time and have become an accepted concept. Prepaid legal plans involve people making monthly or annual payments of fixed amounts, anywhere from US$20.00 to US$50.00 monthly to providers who direct legal services to a network of attorneys. It's like having your own attorney on retainer, and allows you to call on a particular specialist attorney for a bundle or range of services. Under a prepaid legal plan all attorney fees are covered and may include advice and consultations on a limited number of personal or business legal matters. In the US, [these] services most commonly cover prenuptial plans, home purchase or sale, and traffic ticket defences. The viability of the business model relies on the service provider offering a number of plans to a wide range of potential users, with the probability that not all people will call on the service. So there is an actuarial component that works similar to the coverage of insurance risks.”

The idea here is that more people have to come on board so that the risk of the lawyer actually having to litigate is reduced. Same as when the insurance company goes after a large pool of clients to reduce the impact of having to pay out when claims arise.

Taylor continues, “This consumer business model is not marketed in Jamaica, perhaps because the market is not as litigious, and transaction risks and exposure are not as significant as in the US. Notwithstanding, there are local companies that will pay law firms a monthly retainer fee for the assurance of the firm being available on call to perform or provide a limited bundle of legal services. In relation to the consumer model, the question will always be whether the consumer is in fact saving by signing up to a monthly retainer. This service would not be attractive to the person who seldom has use for legal services, and may not have relevance in this market. Also, prepaid legal services in the US have come under scrutiny for consumer abuse and for being marketed by persons not qualified to practise as attorneys.”

Another area of the sharing economy that our income ideas panel touched on is education, especially free online education.

Dr Hayle explained, “It is called Mass Open Online Course (MOOC). Several of the top universities have expanded their course offerings to people in locations far away from the universities' home site. These courses can now be accredited. Internationally acceptable procedures and measures are in place to ensure that the courses can be quality assured and accredited. You can find these courses on sites like Coursera.com.

“You can stay in your house and take courses from the top university. You asked about free university education…that you will have, but NOT certification for free. You can take the course for free… this is called auditing, but if you want a certificate you must enrol and pay. Nothing in life is free!”

In fact, Taylor noted that the online programme of the University of London is, in his opinion, more rigorous than the legal programme that many people attend in person. And so he is very confident that when a job applicant presents a University of London certificate, he (Taylor) will be hiring an attorney that has truly read for their degree. As a businessman with diverse interests in finance and manufacturing, Hinds notes that online education “has enabled individuals to improve their qualification in a more cost-effective manner”.

And our income ideas panel believes that the company set to benefit the most from the sharing economy is tTech, which is listed on the Jamaica Stock Exchange. Hinds explains: “tTech is a company on the JSE that best positions people to benefit from the sharing economy. It allows companies to outsource their IT needs instead of setting up an information technology department. The company is trading at around $5.95 but has a 52-week high of $10, so there is some upside possibility. And so I would want to investigate this stock more as another way to profit from the sharing economy.”

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