The sharing economy is here to stay and with it comes many business opportunities. Some well-known businesses are AirBnB and Uber but that’s just a start. If you consider all the capital goods and real estate that people have accumulated and invested in but are not utilized much you can easily see the potential. We have everything from garages, storage rooms, spare office space, leisure boats, caravans, RVs, scooters, motorbikes, machines, gardening tools, machine tools, expensive sports equipment, bikes and, of course, cars. The challenge is how to make this pile of passive capital come to good use.
The challenge for consumers is that it’s sometimes hard to find the right equipment at a good price exactly when that equipment is needed.
The challenge for the owners of the capital goods is that they have invested money in equipment that is underutilized and thus present a source of capital income for them.
Connecting the consumers and the capital owners will solve both of their challenges.
The solution for the P-to-P capital goods sharing will be, as in many other cases, an online market place.
The toughest nut to crack here is how to make the rental costs low enough to generate demand, the rental income high enough to attract supply and the transaction cost so insufficient it doesn’t have a negative impact on the number of transactions while at the same time generate enough transactions so the very low fee per transaction will be multiplied into an income large enough to justify a business.
The transactions also have to be safe enough for buyers and sellers to disregard the risk of using the market place. Using an escrow service to keep the funds with the market place until a safe transaction is completed is an answer to the safety concerns.
The total investment needed is what it takes to develop the system and do the marketing needed to overcome the transaction hurdle defined as when transaction income surpass running maintenance and marketing costs.
Profit is generated from the percentage or fixed price charged for each transaction. The number of transactions must be high enough so that “the number of transactions * income per transaction > than system maintenance + running marketing costs” when the system is developed and supply and demand marketing has generated enough transactions to cover the continuous marketing and system development.
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