Entrepreneurs of all stripes eventually face this question: where do I find the best opportunities for my business?
It applies whether you’re aspiring to start a company or you’re looking toward the next step for an existing venture. In my experience – from launching businesses to taking them public – I’ve observed that people’s ambitions fail to gain traction when they don’t resonate with the needs of a market. Timing isn’t everything, but it’s definitely something, and paying close attention to macro trends is an ideal way to identify breakthrough opportunities.
As we head into 2014, one trend will tower above them all: the movement of business and consumer activity toward the “collaborative economy.” This shift in market behaviour will present tremendous opportunities for entrepreneurs who are paying attention. The collaborative economy focuses on eliminating excess and waste in today’s overbuilt and over-owned world.
Consider these striking facts:
- Every household in the developed world has, on average, $3,000 of unused items.
- Private cars sit unused 95 per cent of the time.
- Vacation rental properties are only occupied 32 per cent of the time.
For most people, these facts simply reflect the reality of choosing ownership over sharing. For astute entrepreneurs, this tremendous unused capacity is a rich business opportunity.
Investors are paying attention, too. In a study of more than 200 “collaborative economy” startups, Altimeter Group found more than one third have received funding at an average investment of $29-million, collectively raising $2-billion.
If you’re an entrepreneur looking for the next big opportunity, here are four tips for navigating the collaborative economy:
Keep it broad
Some companies focus on solving one small problem for a discrete audience, such as letting consumers rent a high-end dress for a special night out. However, you’ll get more mileage from creating models that adapt to a variety of scenarios. Take Uber, for example.
Most people see the company as an on-demand car service to replace taxis. But Uber is building a robust transportation network capable of providing logistical services to a variety of markets in the cities it serves. The company has piloted programs that deliver everything from kittens to Texas BBQ. More than PR stunts, these are tests of a business model for supporting people who would rather share items than own them.
Think access, not ownership
We have all been tricked into believing the best way to start a business is to find a product worth selling. That belief is predicated on the idea that ownership bestows high status. But the recent recession brought about a new consumer attitude that access can be more desirable than ownership. As you look for new business opportunities, start with ideas for achieving more yield from items that already exist instead of defaulting to the idea that you have to create something new.
Appeal to both ends of the market
Most entrepreneurs design businesses to serve either consumers or other businesses. Why not find opportunities to reach both? For example, the huge online travel industry is dominated by business-to-consumer models that focus on monetizing data – selling ads, more or less. In the collaborative economy, it’s more powerful to bring buyers and sellers together in multi-sided marketplaces. This unlocks more value and represents a bigger opportunity for your business. To quote Steve Jobs, “think different.”
Don’t ignore the value of end-to-end service
You need more than technology to create loyal, engaged customers. Service is a key element in building strong relationships. So look for industries in which personal service has diminished – or even been replaced – by technology. Consider Amazon’s outstanding “Mayday” feature on the new Kindle Fire, which lets customers chat with a real person when they need help. This end-to-end service distinguishes the product and strengthens the ties between Amazon and its customers.
Peter Schwartz is chairman, CEO and founder of Demeure, a Waterloo, Ont.-based online travel infrastructure provider that operates its own travel marketplace and licenses its proprietary Marketplace Management System (MMS Connect). He has more than 20 years of experience as a successful entrepreneur.