In the past year, small businesses had had to adapt quickly, accelerating the need to adopt new technologies, and a different way of working.
The digital transformation that many companies have undergone due to the pandemic has resulted in the democratization of professional services. With technology acting as the enabler, this is a huge win for the self-employed and SMBs, who have access to digital tools that allow them to compete with larger corporations. The world has been opened up to those seeking professional services, as it no longer matters where in the world someone is based. Finding people whose skills are best suited to the task is now more important than location, providing access to a much larger talent pool.
The gig economy has seen huge growth in the past five years. On the professional services side of things, some small businesses started life as a side hustle on freelancing platforms before developing into a full-time job, and it has no doubt benefited many people who would have otherwise been unable to find employment, especially in these difficult times.
But there are downsides. One off and short-term contracts can generate income, but many experts are being underpaid for their skills due to the very nature of the free market environment the gig economy has created. When cost is a major factor in deciding who gets the gig, it’s tempting to drop prices in order to secure the job despite the quality of work delivered remaining extremely high. Additionally, competition on online freelance marketplaces is fierce, making it more difficult to stand out or build ongoing relationships with clients.
The rise of the passion economy
Most entrepreneurs are passionate about what they do, and take a great deal of pride in their business. The passion economy, unlike the gig economy, puts the power back into the hands of experts, ensuring that they are paid what they are worth. New technology platforms are emerging that provide the opportunity to showcase skills in a way that demonstrates expertise beyond a job ad, allowing those with experience and knowledge within a specific field of professional services to thrive.
Rather than relying on one-off payments, with fewer opportunities for repeat business, it’s now possible to generate ongoing revenue by building audiences and developing relationships.
The passion economy is allowing SMBs to begin monetizing their content in much the same way that creators have done via Patreon and Ko-fi. These platforms mostly work on a tip based revenue model, and fans who regularly support creators get rewarded with perks in exchange for their loyalty.
These platforms are great for generating small, frequent payments, but it’s difficult to make significant income without having a huge following. However, for SMBs, a better way of generating income is via platforms which pay a percentage based on how engaged an audience is with its content. These platforms are perfect for coaches, consultants, marketers, copywriters, and teachers who are able to offer their content at a premium via downloadable guides, ebooks, videos, and podcasts, or provide remote support via phone, email, or web conferencing.
The best of these platforms share one thing in common – the ability to build an engaged community. Many SMBs focus their efforts exclusively on building a social media following, but these platforms are rarely fit for purpose due to the noise, distraction, and ads. This makes the audience less suitable for monetization as they are less engaged, and therefore less likely to invest the time in building meaningful business relationships.
There are plenty of alternatives to social media platforms that are more focussed on connecting with experts, peers, and prospects, allowing relationships to be nurtured. By sharing insights, advice and guidance for free in a friendly, yet professional environment, it is then possible to generate ongoing revenue via a subscription model, or charge a premium for a project after building trust and reassurance with an audience over time.
It’s worth noting that developing a business strategy with the passion economy at its core takes time. Building an audience isn’t easy, but the more you put in, the more you’ll get out.
Even though face-to-face meetings are no longer commonplace, being able to build a rapport still matters. But it’s no longer about who you rub shoulders with on the golf course, how many years of experience you have on paper, or how much money you spend on entertaining prospects – the passion economy presents a real opportunity to level the playing field – it’s not about who you know, but what you know. It’s about being able to demonstrate your skills and ideas and by leveraging technology, SMBs can do just that.