Parita Doshi, associate at OnPurpose, considers the bonuses of the "sharing economy" and why it has led to a boom in sharing online marketplaces
Last Wednesday was Global Sharing Day, and it brought to the forefront the sharing economy, also known as ‘collaborative consumption’ or the ‘peer-to-peer marketplace’. The combination of people looking to own less and use more, and entrepreneurs leveraging technology and social networks, has led to a boom in online marketplaces for sharing.
Flagship examples include Airbnb, a place to rent out your living space, or car-sharing services like Zipcar. Growth exploded in 2012 and is expected to soar still further. The People Who Share estimate the UK sharing economy to be worth £22bn, and traditional companies such as M&S and General Motors are also thinking of how to adapt their business models to participate and respond to its growth.
The great thing about this new version of the economy is that it creates value in terms of profit, people and planet. Financially, businesses do well since the business model works; it’s cheaper to rent rather than own. The economy is driving communities to collaborate, share and trust one another, and allows people to access things they couldn’t previously.
The sharing economy also has a massive positive environmental impact by reducing the amount of goods bought and made, thereby maximising resource use.
Moving from the financial services industry to the social enterprise space myself has shown me how critical it is to take a multi-faceted approach when valuing businesses.
Value of the UK sharing economy
There is already significant work in the social enterprise sector around impact measurement andvaluation, but it is young and more people need to engage with this dialogue.
The sharing economy represents the businesses of the future, and their explosive growth and uniqueness makes the conversation around how to account for the benefits of sharing even more critical. I see two key ways of making this happen – either social and environmental impact are important considerations alongside financial performance, or the value generated for people and planet are monetised and allowed to contribute to the financial valuation of the company.
Since there is already a lot of interchange around the former, I thought I would open ideas for the latter. How can we monetise the value of things like community interaction, the usage of items rather than their sale, or the environmental impacts mitigated by sharing exchanges?
Seemingly different, I ask, is it really so far removed from monetising reputation or brand value? Perhaps this value could be included in Goodwill? Or maybe it should always factor on the balance sheet and we need a new asset class which internalises externalities, both negative and positive?
By placing these non-financial considerations into frequently looked at mainstream business frameworks, we may push more companies into acting in a way that is socially and environmentally responsible. However, these changes will not happen without discussion, so in the name of sharing, I invite everyone – accountants, social enterprises, traditional businesses, investors and the public – to share your ideas of how we should value the businesses of our future.
Parita Doshi, associate at social enterprise On Purpose
During Global Entrepreneurship Week economia was guest-edited by Natalie Campbell, co-founder of A Very Good Company