The FINANCIAL -- Georgian companies are being given the opportunity to switch to the sharing economy system. The new business model is a fresh way of making money. Kim Tjoa, Co-Founder of the Luxembourg based FLOOW2 | World’s Reset Button, presented his vision to its Georgian partner, Alliance Group Holding, last week.
Q. How has the sharing economy system developed globally?
A. This is a new business model for every company all over the world. We are Dutch entrepreneurs and we are the first company to provide businesses worldwide with the opportunity to share their assets. It gives them a new way of making money. Whether in the US, Europe or Georgia, it is all the same. It is an economy which we have to build. Every company is more or less at the same stage. The only difference is that perhaps in the West people’s mentality and business perception is different. In the West it is less traditional and more innovative in comparison with less developed markets. It is a matter of people’s mentality.
We believe that in the end every company in the world will use this tool in their daily business practice. It is an extra source of money, to rent out idle or under-utilized capacity.
Q. Why should companies switch to the sharing economy system?
A. If we look at the business perspective, the most important value is the financial one. Companies have two ways of making money. The first is by providing the goods or services for the core business. If you look at the nature of the companies the second source is a hidden one. This means turnover from renting out idle capacity to third parties. Idle capacities include cars, office spaces, storage spaces, in addition to knowledge and personal skills. All companies have hidden sources, meanwhile Internet technologies can enable them to turn it into financial value. So, the financial value is the biggest advantage for companies. Its second advantage is its sustainability. We make better use of what we have instead of buying things new. This then has an environmentally green impact. When people start to communicate with each other and find or share trading capacities within the local community it enhances the sense of common community. So, if you are looking for extra money, for a new business it is more difficult to innovate in terms of your core business, to find new markets, to improve or find different products, while the low hanging fruit is actually that which you already have within your company. Thus, if you can make the asset that you have already invested in tradable, then simply put it on our website.
Q. What is the potential for developing a sharing economy on the Georgian market?
A. Our Georgian partners, the Alliance Group Holding, will develop the market. At the first stage we are working on informing Georgian businesses about the benefits of a sharing economy. Simultaneously, the clients of AGH are being offered the possibility to start sharing their assets among themselves, in a secure environment. After seeing the advantage of this model AGH decided to offer it to its customers.
Until our establishment, there was no B2B asset sharing company on the market. For the last two years we have been busy communicating to others our business model, as well as the benefits. We are currently already observing how companies involved in this system benefit from it. And we are commercially gaining some ground. By the end of 2015 B2B asset sharing will be more developed at least in the Netherlands. As for Georgia, we have to wait to see how it is going to be in the country.
Q. Your motto is ‘just do it’. What about the risks?
A. It is a fact that not every single piece of equipment or not all the capacity that a company has is always being 100% utilized. That is just a fact. There is always some equipment sitting unused and waiting to be needed. It is a professional job for people to be active with this new tool to make extra money. Therefore, there has to be someone within the company who can identify the equipment which can be rented out for a period of time, be it a day, a week or a month. Within the companies employees have to comprehend the notion that there is a new way to make money. Thus, everyone within a company has to contribute to the idea that when there is some unused capacity then he or she can be detached to work for a couple of weeks, say, at another company. Both the renter and the one renting out has to understand that they can lower their cost, by renting pieces of equipment or services from and to another company, instead of going to an employment agency. We are only enabling this tool, but it is the companies and each individual as portions of the country’s whole economic growth, who are the ones that need to carry this movement forward.
It is a new tool. Doing it in a professional way is very important. The board of directors have to define the policy, whether they are going to use it, how they are going to use it and who within the company is going to be responsible for it. After deciding to rent something out, it is then business as usual. It does not matter if you are sealing a contract with a supplier or just another business. We have service providers in place that can help each individual company, from an insurance point of view. All the deals are confirmed by contracts similar to any other business.
Q. Which business segment can benefit the most from the B2B system?
A. This whole tool is especially beneficial for SMEs. This whole shared economy is aimed at the support of local communities. It is great when people in a town or in a street share their household appliances and other things with each other, instead of buying them new. It is also great when they have solar panels on their roof for example, and it is also good for local businesses, meaning they are less dependent on old structures. From a linear economy towards this circular economy we are going back to more or less old-fashioned values. They are going to collaborate and communicate again. We are going to do it like our grandparents did it, with more personal relationships and social responsibility. What will make sense and what people are prone to realize especially in western countries is that they will not use equipment that is useful only once. People are used to lending something useful from time to time to their neighbours. It is the same in business.
Q. What was the main message that you delivered to Georgian companies during your meeting?
A. ‘You have to do it’ - this is the main message that I want to give to the Georgian companies. Companies simply have to start communicating with the market, putting all of their efforts into its development.