Hot on the heels of the Library of Things Scaling ‘Bootcamp’, resident blogger Chris chats to co-director Emma Shaw – drilling down into the business model making borrowing possible in communities around the UK.
It’s obvious that, for you personally, there’s a strong need to prove LoT makes financial sense?
I’ve always been entrepreneurial – even at school I used to run little businesses.
Oh yeah? Like what?
I turned my school locker into a tuck shop. There was a vending machine ban, and suddenly our school’s only vending machine was filled with health bars. So off I went to bulk-buy sweets, chocolates and fizzy drinks and sell them to school kids.
My classmates would spend their whole lunch break walking to the nearest newsagents to buy this stuff, and it was more expensive than my mini tuck shop!
Library of Things sees itself as a community business – but, for those who aren’t sure what that means, could you please explain?
The community side is about being open and inclusive to everyone, letting local people have a say in the direction of Library of Things. Our members vote on what Things we should stock through our wishlist, for example. It’s about neighbours meeting for the first time in the space, or learning new skills, or feeling a part of something bigger.
The business side is making those activities financially self-sustaining. That’s what intrigued me about Library of Things from the start.
Are you a sucker for punishment because, especially at this stage of the process, making Library of Things work must be a constant uphill battle?
It is. For the past 3 years, we’ve been testing the idea on shoestring budgets. That has its advantages of course – it keeps us creative!
Because the company doesn’t have any shares, we looked at grants as a way to fund investment in new things like stock and events and marketing.
Applying for grants though involves competing against other groups you really like…and usually failing. The donors chose one or two organisations to support out of hundreds.
…and all three of you directors have had to make personal sacrifices in order to make your idea a reality?
Last year I moved out of my flat and stayed with a friend to save on rent. I was in a well-paid job, which I quit, having saved up enough money to throw myself into Library of Things for 6 months.
Now I’m cobbling together an existence from freelance work. If anyone asks me why, it’s because Library of Things challenges me. One day soon I hope to look a commercial investor squarely in the eyes and say, “The business of borrowing stacks up. We’ve nailed a model which is both community and business – it doesn’t have to be either-or.”
So how does the business of borrowing stack up?
Well, there are 3 key sources of income:
Borrowing fees: We’ve been amazed at the demand we’ve seen for borrowing this year. We’ve reached 500+ members in 10 months and have backlogs of reservations for popular Things like pressure washers and carpet cleaners. Most people would rather pay £5 for a gazebo for the day than buy one for £120, and pay to store it!
Events & sponsorship: B&Q West Norwood has offered to co-deliver DIY workshops with us this summer. We will run these on a tiered pricing basis – people on lower incomes can choose to pay a lower amount.
Tours and learning: We’ve run workshops about Library of Things for a Belgian business school, for groups of community activists, for Bosch UK Senior Leadership Team...
And then there are running costs that we’re constantly working to reduce:
Rent: It makes sense that all new Libraries of Things make use of underused spaces rent-free, at least at first. We’re generously hosted by our partners Community Shop. We don’t pay rent but bring other benefits like higher footfall
Staff: We’re investing in technology to make it easier for members to borrow and return items themselves – to reduce the amount of team time needed.
Stock: We’re building partnerships with equipment manufacturers to develop what we’ve called a ‘leasing model’. Imagine Carpet Cleaners Ltd gives us a carpet cleaner at no up-front cost to us. We lease out the carpet cleaner at £12 per day. Carpet Cleaners Ltd receives a percentage of every borrow fee – and in exchange provides ongoing maintenance and training.
Insurance: We’re working out a community insurance package to lower the risk and cost for everyone
What benefits are there to having more than one Library of Things?
The business model works even better! Having a network of Libraries of Things that work together means we can make use of economies of scale like shared insurance packages and even shared team members.
At Library of Things West Norwood, we’re now building the infrastructure (the technology platform and the stock partnerships) so that all future Libraries of Things have lower costs than us. That frees them up to focus on the good stuff: bringing people together to make their homes, gardens and neighbourhoods more joyful places to be.
Read more about what the team are building here.