The on demand economy goes by more names than Prince the singer. It’s also known as The Gig Economy, The Shared Economy, The Sharing Economy among a few names. So if any of those terms are used, we are really talking about the same thing. This refers to business where the resources are of a crowd – sourced nature and the actual platform owner does not own any assets or productive resources. I say platform but not all gig economy businesses are platform based. A lot of them have risen in the past decade and it would be good to talk about how difficult it is financially to start one of these.
The most popular real world examples of gig economy businesses are Uber (owns no vehicles but offers the most comprehensive transport service) and AirBnB (competes against the largest hotel brands in the world and yet owns no property). Of course there are others: GoJek from Indonesia, Fiverr and UpWork to name a few. These companies have created business but joining asset owners and those in need in perfect ecosystems that are great for all involved. Also, all of them solve a problem so maybe lets shelve that shared sharpener idea you have for class. No wait. That’s a great idea, let me write it down.
I remember Harare in the late 90s; our family generally went through a lot of maids, very quickly. I wasn’t a problem child so I don’t know who the issue was. What I do remember is that my mother would contact the employment agency and brief them on she wanted (age – group, languages, education level) and we would start getting maids come for interviews. Sometimes my mom would go there. This was early Zimbabwean gig-economy businesses that somehow died when the rest of the world was catching up on the concept. There are also tons of stories of american teenagers becoming millionaires by pooling together landscapers and taking over one neighbourhood at a time.
When is It Cheap to start a Gig Economy Business
Some would like to say always. It is always cheap to start such a business. This is not true. It is cheap if it is not a platform based business. For example if you decided to create an Uber replica for your city you would need to either develop an application that works very well or you would need to purchase a white-labled app. Of course now thanks to anti-competitive intellectuals this apps are available for purchase for as low as $1,000 USD from different sites and you get it customised (somewhat) to your desires.
If you start a gig economy business that doesn’t need you to develop anything then it’s very cheap. Imagine running a runner – type business similar to TaskRabbit through Facebook. You could start with a group of friends and just post on Facebook that you are willing to do tasks around the city for a fee. Here in Zimbabwe Lytie seemed to be coming with that concept but have gone quiet; they even offered to queue for your fuel on your behalf. Talk about solving real problems for real people. The same could work for if you are good tutoring and you band together with some friends and unknowns and start offering tutoring services through Facebook or whatsapp.
The key in terms of costs comes down to how big a target you want to target and how fast you want to grow. If you are willing to take your time proving the concept to a small group and growing that group you can actually grow at a rate that doesn’t balloon your costs ahead of your revenues quickly while chasing Unicorn status
When is it Costly?
When it is large scale from the onset and requires a platform it becomes very costly. Hiring Developers, Development costs associated with servers and third party licenses can easily come to the tens of thousands if not even hundreds of thousands of US dollars. This is because once there is a platform involved there are a lot of concerns around security (can it be hacked), payments (can customers pay easily and are their payment details safe) as well as general uptime (no crashes, how many users can it handle at the same time.
On Demand services can also be costly if they involve a significant amount of legal costs or require regulatory approval. This can be seen with uber and their attempts to register or maintain ride-hailing services in certain countries; case in point Nigeria and London.
Should You start Your Own
Just remember that it’s always better to start with a proof of concept when it comes to the gig economy. Investors have got their eyes on new mushrooming gig economy services and you could be the next one to receive major funding.
Find your niche. Look for a problem around you that can be easily solved by sharing information or resources and you could be well on your way to starting something. Remember to always Continuously Improve Yourself #KaizenYOU
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