5 Tips for Using the Gig Economy to Grow Your Small Business
The gig economy isn’t a new concept. That said, it has radically transformed the modern labor force in much of the world.
Despite its accessibility, the gig economy poses an interesting problem for small businesses- specialized expertise that's readily available.
After all, finding a remote job isn’t that difficult. That means more competition and higher chances of getting undercut on service rates. If you haven’t heard of the gig economy, it’s basically a shift in the labor force. The average worker is shifting from traditional, long-term 9–5 jobs to project-based or specific task jobs (gigs) that are usually one-time in nature.
A great example of the gig economy is Uber- a company that provides one specific gig at a time. Another great example is Fiverr, a marketplace for people to advertise their gigs, inviting website visitors to buy a specific service for the cost of just one project, like creating a business logo.
All is well in how the gig economy functions, but it places strain on traditional businesses. Most small businesses rely on long-term employment and customer lead development for making ongoing sales.
Chances are the world is going to continue shifting into a gig-economy model. Businesses will need to find new ways to bring value to customers or risk going under.
For the small business owner or startup team, the rise of the gig economy should not be ignored, because although it might seem an uncertain path to take, there are a lot of growth opportunities that can be taken advantage of.
Let’s have a look at a few ways that your small business can utilize the gig economy to your benefit.
1. The gig economy offers the opportunity for short-term, project-based labor
Traditionally, companies will spend enormous amounts of time and money on hiring and training their staff. According to this article from NPR, Amazon is forecasted to spend $700,000,000 on training staff over the next six years.
That might not seem like a lot, given the companies astronomical margins, but for a startup or small business, hiring new staff can take away valuable time and money. These resources could likely be put to better use in other aspects of the business (like advertising).
The gig economy offers short-term, project-based labor for businesses of any size. Why spend the time training and developing employees to do a certain job, when you can find someone with 10x the experience online for a fraction of the cost? As a record label owner, it would be silly for me to hire a full-time visual design team when each of our projects and releases are one-of-a-kind and creatively different.
Instead, I would consider hiring one person to oversee the assets, then utilize the gig economy to hire one-time contractors for individual releases.
Another benefit of the gig economy is that if a business partnership or contractor doesn’t perform at the level you need, you don’t have to bring them back. Companies spend copious amounts of time and energy on resolving internal disputes. With one-time workers, you can pick and choose as appropriate. Sometimes, going separate ways is the right thing to do.
2. The gig economy allows for more personalized customer service
It used to be that all companies were attempting to adopt the one-stop-shop business model. While this is still the case in the marketplace industry (like Amazon, for example), other industries are finding that customers are willing to shop for a specific service or product and choose the best option available, instead of finding a business that tries to do everything.
In the world of small business, every customer pain point feels important, but the gig economy model says that solving every issue is not the right approach.
By becoming a specialized service that solves a particular customer need, small businesses can provide much more value. It’s better to start with several raging fans, as opposed to a lot of impartial shoppers. Plus, this way, your business has more opportunity to grow into new segments down the road
- it's good to plan your business from the start.
3. The gig economy allows your company to become the middle-man
The concept of the middle-man might have a negative connotation at first, but think about how relevant (and useful) it is today.
Customers know that there are hundreds, if not thousands, of ways to purchase a particular product or service online. Because of the copious offers out there, customers now have to spend their time browsing and finding the best available option (best deal, fastest shipping, best quality, etc).
Even within the Amazon marketplace, there are many sellers trying to sell the same item. It can be annoying to have to dig through the reviews (which are often fake) and find the best product.
That’s exactly the kind of problem that a middle-man business can solve in the gig economy. A great example of this is the Bangyourbuck website, which compiles all of the products on Amazon and allows customers to find the very best deals, on a cost-per-unit basis. Now, customers can evaluate which bag of kitty litter has the most value per-pound or whichever measurement is most relevant. Now that’s value.
For small businesses, becoming the middle-man could mean becoming a well-connected entity in your niche.
If your company is focused on selling hiking boots, perhaps you could also become a distributor of season passes to mountain resorts in your area? People who are searching for hiking boots and know that your company is the very best at making them would find value in knowing which mountain resorts you recommend.
The gig economy also allows for businesses to enter the affiliate program world (which is different than affiliate networks) and help customers solve their problems by finding the best solutions for them. Kind of like a solutions agent!
4. The gig economy allows for small business to expand globally, faster
Building off of our first point about having access to one-time project labor, the gig economy also opens the door to labor from all around the world. This could be especially advantageous to businesses that are looking to set up operations in new locations.
For example, a pizza company may decide it wants to start putting its billboards in a neighboring city, due to an increase in commuter traffic from that area. People travel downtown for work, and it makes sense to advertise in their home areas so that they drive to work thinking about pizza. However, the pizza company may not necessarily know the best billboard to place their signage. They might not be aware of regional dialects or other elements that are relevant to advertising in that area.
By hiring a local gig-worker to help, they can gain valuable insight into the community’s preference for virtually anything, provided the gig-worker is in the know. Think about this on a global scale- you can gain insight by hiring project workers from another country, anywhere you are planning to expand business operations.
For the small business (especially if it operates primarily online) this means gaining valuable insight into which types of ads a particular region responds best to, or perhaps understanding slang that can make their marketing more accessible and relatable.
Time is critical in business. The gig economy can help expedite many aspects of deliverable services, resulting in faster growth.
5. The gig economy allows for quick learning about industry trends and standards
Because the gig economy encourages collaboration and partnership, it opens the door for you to brush up on emerging ideas, tools and strategies that you’ve never heard of before.
I personally believe that this type of networking and exposure is paramount to accelerating a small business. Your biz dev person might know how to use Linkedin, but a one-time project manager you hired might expose you to The Pond App, a social app for connecting like-minded team people on business ventures. Finding these tools and resources can increase productivity and competitive advantage of your small business.
This is exactly what happened to me when I was trying to track all of my clients with a Google spreadsheet. Although it was working fine, I spent hundreds of hours in admin mode, which took away from time I could actually be making sales.
Then, during a conference call with a potential client (who I also got via the gig economy, for a one-off project), I heard about the Tapdesk software, which automates and streamlines the lead acquisition and development process. Because of this adoption, I was able to decrease my admin time and increase my sales.
Overall, the gig economy poses a tremendous amount of opportunity for all kinds of projects. Take some time to evaluate how your business can gain value from the gig economy, and start putting some feelers out for client interest. It just might take your growing business to the next level.
Originally published at https://founderu.selz.com on February 11, 2020.