Posted: June 27, 2013
The benefits of sharing
A big value proposition for business and consumersBy Chris Schwalbach
We are moving increasingly and swiftly toward a more “shared economy", which is evolving as a new business model that matches under-utilized assets with potential users in a manner that promotes value, efficiency and connection. From my own perspective, I have seen and fulfilled the need and for a shared services model, but more and more it’s becoming a trend with substantial benefits that spans both business and social culture.
A recent article on this topic says that, moving forward, assets will be shared and used like never before. “Currencies such as paper money and hard metals will gain competition from traditionally more intangible ones such as caring and trust; and finding ways to use what’s already in the marketplace to reduce monetary expenditure and production will become ever more important.”
Our business model is a prime example. We provide high growth companies, startups and those in the small to mid-sized range senior-level finance professionals or fractional CFOs to manage their current requirements. Most of these companies can’t afford or don’t need to bring on a full time CFO or experienced finance and accounting talent.
We’ve seen the same hold true for CEOs, sales and marketing, IT and HR consultants. We’re also seeing the model used for other goods and services, including shared meals, rides, office space and places to stay a la companies such as Feastly, PivotDesk and Airbnb Inc. ZipCar’s acquisition by Avis for $500 million in March marked a massive endorsement of the valuation of businesses within the shared economy business models, in addition to the validation from Google Ventures; Sequoia Capital; and Greylock Partners' Reid Hoffman, the cofounder and executive chairman of LinkedIn who have all backed "sharing" ventures in the past year.
The Wall Street Journal says, “Dinners with strangers are just one front in what Internet companies and investors are dubbing the share economy: niche marketplaces for things that get cheaper when people use them together. Lately Internet startups have, in all earnestness, set up businesses to "share" pet care, wedding gowns, child rearing and more.”
A recent Economist article refers to the trend as “collaborative consumption”. The technology trajectory that we are on is certainly a big factor in this movement, but other influences include the health of the economy, as well as lifestyle and culture in the workplace. It is not a coincidence that we saw an increase in this model after 2008 with a global financial crisis. Tough times force us to make more efficient use of our resources and we are arguably more practical when forced to do so.
“By the nature of how the economy is moving, we are starting to see people and companies providing services that are much more consumable and the shared services model supports this new business model,” says David Mandell, CEO, PivotDesk, a TechStars alumnus company based in Boulder.
“PivotDesk tackles the office space dilemma directly in a shared manner. We offer temporary/flexible office space for businesses and match companies who need space with companies who have extra space to fill and we give them the tools to manage their relationship and make sure the relationship continues to work for both parties.”
From a business perspective, the benefits of a shared services model are strong – reduced costs, flexible terms, less waste, more efficiency and often less risk. Shared services’ agreements provide predictability while yielding consistency and the ability to accommodate growth without an equivalent increase in cost. The approach makes sense for many companies who may only need fractional support, space or other resources in certain areas or work as ebbs and flows or funding becomes available.
In many cases, shared services partners or consultants become an extension of the team without the overhead required for a full-time employee or specialist. This can be a big value proposition for many companies trying to keep payroll and expenses to a minimum as they expand, seek financing or restructure while balancing current needs and future opportunities.
From a time management perspective, the shared model allows a company to outsource a specific need to a dedicated professional or company with a specific skill set or area of expertise freeing-up the CEO or management team to focus on its core competencies. It offers significant cost saving, in many cases, plus the flexibility for growth and the ability to sustain a turbulent economy -- and at the same time creates a broader sense of connection and community.
“For the first nine months of existence, we shared office space in the TechStars space,” Mandell says. “I just took a lease on an office for our 10 employees and will share the space with two to three other companies. With our current plan no one is at risk of a huge financial liability.”
So I challenge you to take a hard look at how you can utilize your company’s resources more effectively through collaborative consumption within the shared economy.
Chris Schwalbach is co-founder of AVL Growth Partners, a professional services firm that delivers fractional finance and accounting advisory expertise to small- and medium-sized high-growth businesses. AVL directs the day-to-day financial operations of numerous businesses on a fractional basis with a team of accounting and finance professionals in Colorado and Minnesota. You can reach Chris at firstname.lastname@example.org or 303.335.0355.