Do you like to share? Are you comfortable lending a neighbor your hedge clippers, a friend your pickup truck to move furniture or a coworker your spare room for his visiting cousin?
If that’s you, you’re going to love the new sharing economy. Some people believe that it will do to consumer behavior what the iPad did to the world’s computing habits. But there's something even better to be gained from this new sharing economy: money!
Birth of a Concept
One person may say that the sharing economy has its roots in the early 2000s, when the world began noticing how much “stuff” was consumed and discarded. By sharing resources, we produce less and that’s great for the environment.
Others would point to early peer-to-peer file-sharing networks such as Napster that provided a platform for people to share music. Although Napster, in its early days, was illegal, it was one of the first technology-powered sharing platforms that gained mainstream appeal.
Let’s give eBay credit too. In 1995, eBay developed an online auction system that allowed people to sell what would have otherwise been thrown away.
If you want to sound smart at parties, throw around the term, “collaborative consumption.” Collaborative consumption is an arrangement where a group of people share a product or service instead of owning it outright.
Instead of owning a boat, a group of people could join a club where they pay a monthly fee to use a boat on certain days.
Instead of one person hiring a babysitter for his or her child, a group of people could hire somebody to care for all of their children.
From DIY to Big Time
Though it started on a small scale, collaborative consumption is real and it’s growing fast. According to Rachel Botsman, author of “What's Mine is Yours: How Collaborative Consumption Is Changing The Way We Live,” the sharing economy is now worth about $26 billion.
Take Airbnb for example. You can use it to get a room in any of 34,000 cities in 192 countries, but Airbnb isn’t just another hotel booking site.These rooms are in peoples’ homes or even less traditional locations. How about a romantic night in a decked-out Airstream for about $100?
Airbnb connects individuals with a spare room to people who are traveling or looking for a place to live. Since its launch in 2008, 4 million people have used the site. On a given day in 2013, 40,000 people rented rooms on the company’s site.
Sharing is growing so rapidly that large corporations are taking a closer look. Hoteliers are watching nervously, while Avis and General Motors are exploring how they can become part of the sharing generation. So how can you get in on the action?
Seven Ways to Make Money
By now, it's possible to share just about anything. You almost certainly own something that’s shareable.
Your “stuff.” Maybe you remodeled your kitchen and purchased a killer wet saw to cut tile, but now it sits in the garage unused. You could make $10 or more per day sharing it with somebody else. Apps such as Sharehammer can connect you with somebody in your area who needs your tool for a few days.
Your room. People who list rooms on Airbnb can make $100 per night or more, depending on the type of room and where it’s located.
Your car. Some people need a car while traveling. Others may want to impress a first date. If you have a car that isn’t in non-stop use, you could make some money. Apps such as Getaround can help connect you with somebody who needs a car. According to Getaround, users are raking in hundreds of dollars per month or as much as $10,000 per year, but that depends on how much you charge, as well as other factors.
Worried about your prized automobile? Every transaction through Getaround is covered under the company’s insurance policy, and every driver is background checked through the state DMV.
Give somebody a ride. There’s only one word you need to remember: “Uber.” Become an Uber driver and you’ll receive alerts from people who need a ride. Pick them up, collect your money and move on to the next job. Some drivers are making more than $300 per night in major cities such as Boston.
A wise person in your life likely told you not to pick up hitchhikers. That’s certainly true in most cases, but Uber adds a $1 safe-ride fee to each booking. The company uses the fee to run background checks, DMV checks on vehicles and provide training.
Your parking spot. Do you live in a city or another place where parking spots cost as much per month as some apartments? How about renting your unused parking spot to somebody else? Apps such as ParkatmyHouse allow you to share your parking spot with somebody else for a fee. You could make up to USD 40 per event if you live near a stadium or concert venue or up to $240 per month if you live near an airport.
The parking spot doesn’t even have to be yours. The app MonkeyParking lets a driver grab your current parking spot before somebody else can take it. You could make $5 to wait for that white Honda Accord to show up to take the spot you’re vacating.
How much can you make? According to Lending Club, investors see returns of around 5% on their safest investment options, but ratcheting up the risk could yield higher returns.
Investments come with the risk of loss of capital, but that’s true of any investment. With any investment of this type, the money should not be retirement funds or money earmarked for something such as a child’s college education.
Yourself. Somebody needs a handyman (or woman), someone to clean or a babysitter. Why not share your skill or talent with somebody else? Take TaskRabbit, for example. People post a need and others place bids. If you like grocery shopping, you could make USD 35 by answering somebody’s request for a personal shopper. If you do house-cleaning or you’re a handyman, that could land you an average of $60 or $85 respectively.
But be careful. Depending on the job, you may need insurance, licenses and other certifications, even if the arrangement is informal. Check the laws in your state and locality.
How Do These Companies Make Money?
By taking a portion of your loot, of course. Before signing up to share, read those long, boring terms and conditions to see just how much you’re giving to the platform. Some pocket as much as 40%, so factor that in when you set your rates.
Sharing Comes With Risks
The sharing economy is largely technology-driven. People share by using a website that connects the two parties. In a world where everybody is low on trust and high on skepticism, there’s an obvious elephant in the room: personal safety and the safety of your possessions.
First, only use sites that have verifications in place. If you’re sharing a room, the site should run a background check on the person. Look for a review system that allows users to post experiences with both buyers and sellers; when possible, do some online checking of the person on your own.
Use the buddy system. If you’re driving somebody you don’t know, have someone else in the car with you.
Be sure any valuable possessions you rent are insured and expect that sometimes things won’t be returned in the same condition in which they were lent. Also, check your insurance to see whether you're covered if someone else is driving your car, for example, or if a temporary renter damages your apartment.
Most importantly, use your instincts. If something doesn’t seem right, move on. Nothing is more important than your personal safety.
The Bottom Line
Wonder why it’s called, “sharing” when it looks a lot like renting? Whatever you call it, people are finding that it’s cheaper to share resources than to purchase them outright. If you take the right precautions, you could profit.