You may have heard the term sharing economy thrown around a lot in recent years, but what does it actually mean? And what effect does it have for modern-day small business owners?

Here, we’ll be talking about the sharing economy. Specifically:

  • What is the sharing economy?
  • What are some examples of the sharing economy?
  • Where did it come from?
  • How does the sharing economy affect small business owners?

What is the sharing economy?

The sharing economy is a business model built around sharing, acquiring, or providing owned resources. 

When applying traditional business models, a company will hire employees to produce goods to sell to customers. The sharing economy model allows private individuals to cut out the middleman and sell directly to one another. It’s categorised as a peer-to-peer (P2P) based activity because the resources are usually owned by private individuals who have decided to share them through an intermediary, usually some kind of community-based online platform (like an app or website).

What are some examples of the sharing economy?

Nowadays, many companies operate through the sharing economy, so it can cover a lot of different sectors. However, these are the most common examples of a sharing economy in action:


Apps like Uber allow drivers to use their own cars and hire themselves out to customers. It’s a great option for customers who maybe can’t afford their own vehicles or don’t use them enough to warrant buying one.

Property sharing

Businesses like AirBnB allow property owners to list their spare rooms online available for others to rent out. A cheaper alternative for holiday goers who would traditionally have to fork out for a hotel room. 

Reselling and goods trading

Sites like Ebay allow users to buy and sell their own property directly to one another. An elegant solution for people with too much stuff and customers looking to pick up second-hand goods for a lower price.


Sites like Kickstarter offer a unique alternative to traditional banking loan models. With crowdfunding, entrepreneurs can seek out seed money by asking the public to donate to their business ventures. 


This ranges from freelance agencies, offering contract work, to more casual sites like Fiverr. Fiverr is a website where private individuals can request and offer their services to other private individuals registered on the site. 


Rather than renting out an entire office space themselves, small businesses, sole traders, and freelancers often rent a space together and use it at the same time. 

Where did it come from?

The rise of the sharing economy is often attributed to two main factors: 

Mobile technology

Advancements in mobile technology have produced a massive network of interconnected consumers and workers, allowing them to communicate with each other all over the world and trade goods and services. 

This is what’s often referred to as the gig economy, with a lot of people now able to work on a freelance basis, for multiple different agencies, or even just having a side hustle to supplement their regular income.

Increased property ownership

Without going into too much of a history lesson, we can trace the cause of the sharing economy back to the economic boom post World War II. The years after saw a considerable increase in property ownership, which only increased further as it was handed down to further generations. 

Fast forward to today, property is harder to attain, and newer generations found utility in sharing services on a short term basis. To put it simply, there are a bunch of people with property to spare, like houses and cars, and a bunch of people who need to use property, but aren’t necessarily in a position to buy it themselves. 

How does the sharing economy affect small business owners?

While there are a few concerns with the sharing economy, the general consensus for small businesses is that it’s had a positive impact. 

More flexible working hours and locations have made it easier for small businesses to compete in the corporate world while allowing small businesses to:

Rent assets

You can rent out any unused assets, like vehicles, equipment, or office space, to other workers. You can earn extra cash during periods when you’re not as busy or just taking time off. 

Conversely, you can also buy or rent any assets you might need for business operations at a cheaper rate.

Find and advertise talent

The amount of freelance agencies means it’s easier to find the right talent without the need to employ staff members on a long term basis. Small business owners can hire just about anybody they need for as long as they need them. 

It’s also just as easy to advertise your own services as a small business, or sole-trader, and work flexible hours from any location. 

Cheaper office space

Sharing office space is a common practice for small business owners and can lead to lower overheads. 

Alternatively, like many who operate through the sharing economy, you might not need office space at all. You can opt instead to work entirely virtually and have your customers find you online.