For years, innovation within the marketplace has consisted of entrepreneurs creating new processes, products and plans to satisfy the evolution of consumer needs. As we continue on in the Information Age, these new ideas have evolved to be less about new ideas and more about “new ways” to reach the end goal of customer satisfaction. With the rise of TaskRabbit, Airbnb, and Uber, the Gig Economy has revolutionized the way entrepreneurs view resources and how they exchange goods and services. In addition, online marketplaces such as Etsy have made it possible for entrepreneurs to delve into their businesses with less risk.
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The growth of this gig economy has changed the marketplace from what we once took to be a new ball game. Such small-scale entrepreneurship might make one wonder whether we are returning to an economy similar to that of the 18th century (as portrayed by the economist Adam Smith) when the genuine market of individuals engaging in commerce with one another was more prevalent. AirBnb users don’t rent from the company, just like Uber users don’t ride in Uber-owned cars… the products and services being sold are that of the individual contributors and the overarching corporation is just there to make this exchange possible.
So, what does this mean for entrepreneurship?
Better Ideas Beat More Money
The Gig Economy is set to be worth $63 billion globally by the year 2020 and it has changed how entrepreneurs approach business creation. Ideas such as Uber and Lyft drivers or individuals working on-demand to complete tasks for strangers may be new but the production is emerged from what is it already in use or sitting idle. Entrepreneurs roles are turning into less of a question about creating production and more about the coordination of productions across an entire process.Does the gig economy change the business “game” for Entrepreneurs? Read here: Click To Tweet
There is also less need for starting capital as many entrepreneurs look to the sharing concept. Finding investors is said to be one of the hardest parts of getting your business to market, but using other people’s resources greatly diminishes the capital needed to get started. It’s now not about who owns the resources in question but who makes the most out of them. The gig economy has tapped into the “work smarter, not harder” mentality.
Having “Workers” Does Not Necessarily Mean Having Employees
Beginning a business will likely bring the question of hiring employees to mind. However, within the gig economy, this is no longer as large of an ordeal as it used to be. Many entrepreneurs are contracting work to freelancers for a lower cost and less obligation. Entrepreneurs may have “workers”, but employees are not entirely necessary, and founders can build one-person companies to the top in a faster manner. An example would include Dan Mezheritsky, founder and President of Fitness on the Go, an in-home personal training company based in Canada. “I realized how much more contractors and entrepreneurs are willing to do a better job for you,” says Mezheritsky. ”They are trying to help your business–and grow theirs, as opposed to an employee who is just there for a paycheck.”
“The ‘Gig Economy’ is not a trend, it’s a new way of working. Startups are regularly tapping into specialized talent on demand, resulting in faster time to market and lower costs. We’re now seeing larger companies hiring teams of freelancers online, creating opportunities that wouldn’t have existed otherwise. By 2020, we believe 1 in 3 people will be hired online.” Rich Pearson, Chief Marketing Officer at Elance.com
Relationships as a Necessity in the Marketplace
As the Gig Economy becomes more concentrated the margins for sharing resources will begin to slim. Entrepreneurs need to focus on long-term relationships and the value of those relationships rather than one-off transactions. This includes building relationships that are of value to both parties. This instills trust through transactions between the buyer and seller. In addition to creating relationships within the marketplace, entrepreneurs must be able to create a relationship with their audience as through a personal brand. What’s the best way to make this happen? Be recognized as a thought leader in the industry by sharing knowledge and engaging in discussion and debate.
The way the gig economy affects the Talent Acquisition space is unique and interesting to watch. It tilts the power of pricing and booking back to the job seeker. In some cases, this works out quite well and in others, job seekers move en masse toward a marketplace forum that handles the back end for them… much like recruitment agencies. Only time will tell what will ultimately happen in recruitment and Talent Acquisition with the changes of the gig economy, but one thing is sure, we’re all watching.