High density urban communities have unique urban opportunities but to unlock requires intrinsic understanding of urban dynamics. With new economic paradigms such as the sharing economy and shared ledgers like the blockchain, the urban youth generation can leverage these economic models to create new paradigms of hood-based businesses. 

One such new urban economy model we will present is an urban shoe club model using the sharing economy and the blockchain to allow teen sneakerheads in a hood create a collective economic solution.  In this article, we are going to discuss with you how to run a shoe sharing operation and hopefully our urban youth will realize the opportunities and value these young brothas and young sistas can extract and share among themselves within their own community. 

Revenue Model

The ADOS Digerati code requires revenue models are discussed before anything else when it comes to the hustle. Too many people talk about the business model but don’t know how to get the money up. Once a person knows how to get the money, they can start any damn business they want to. 

In order for a business to be profitable, the gross revenue generated minus operation costs must be able to deliver a positive net revenue. 

Gross Revenue. Gross revenue is generated from rental fees and fines from the shoe club members. It is possible to sell off shoes after use or donate the shoes for a tax deduction after return on investment exceed 150% - 200%. 

Operation Costs. These costs include acquiring and maintaining the shoes and printing and shipping costs. There should be a reserve for the purchase of shoes that are rare.  

Net Revenue. The revenue after operation costs should be enough to re-invest in new kicks and pay off each shoe club members proper dividends as well as pay the CEO their money.  

Business Model

The shoe sharing club business model leverage sharing economy principles where shoes are acquired and rented out by the club members. The business goal is the club members rent the shoes among themselves where each shoe is paid off after a number of rentals and generate profit after the shoes ar paid off to distribute among the members. 

The business operation involves the acquisition of shoes to be made available for rental. The club members will reserve which shoe they want to rent. The shoes are conditioned and shipped to the club member from a centralized location. The club member returns the shoes at the end of the rental term back to the central location to be re-conditioned and shipped out for another rental. 

The business structure is a mutual company. In a mutual company, all paying customers are considered stakeholders and owners. This means all shoe club owners are entitled to the company profit which is set by the CEO as a dividend payout. Mutual companies have been around since the beginning but rarely brought up in the African-American communities because uppity black folks like Black Enterprise magazine wanted to focus on one or two black people being rich instead of practicing group economics. 

Business Structure

The business structure for a teenager-ran urban shoe club should be a CEO/Custodian. The CEO job is to set the rental pricing and be the final approver of what sneaks will be available as a buyer. The custodian job is to secure the physical shoes, condition the shoes and prepare of shipping and receiving. A CEO/Custodian role would be appropriate for one teenager or two teenagers living in the same house. 

The blockchain controls the actual accounting ledger where everybody can view the distributed ledger and view the rental activities and see if the mutual company is making money or losing money or what shoes everybody is renting. In terms of revenue, the CEO/Custodian will be paid for their works and is part of the operating cost of doing business. 

Business Strategy

To create a successful shoe sharing operation, there must be a balance between the number of members, the price and frequency of the rentals and the lowest cost of operation as possible to achieve profitability to sustain money good enough for all of the members to continue participating.  Here are some concepts to be considered in the business strategy. 

Deposit. Recommend a refundable deposit of $35 which is an affordable cost to the teens serious enough to be part of the shoe club. The deposit provides a level of coverage against loss and damage. 

Shoe Size. A shoe club that only focus on one shoe size will be more profitable than a shoe club that carry multiple sizes for multiple people. Focus on one shoe size or look at a halfway size like 9.5 for size 9 and size 10. 

Rental Rate. We recommend the price of the rental should be focused against a payoff period of 6-8 weeks period. Meaning if the shoe cost $50, the sharing rate should be approximately 6.99/week where the shoe is recover the cost of investment off after 8 weeks of rentals. After 8 weeks the $50 shoe will bring in $6.99 of gross revenue.

Profit Sharing. The CEO/Custodian should receive a percentage of the total profits first. After their cut, and the set aside for reinvestment into new shoes, the remaining profits are distributed to the members via a dividend check. 

Operations

Recruit Members. While it is possible to recruit members from around the world, it is best to recruit local members that are one shipping day away from sending and receiving packages for a faster turnaround of rentals. A shoe that is in shipping for 3-5 days has lost 3-5 days in rental revenue which adds up over time in lost revenue. 

Acquire Shoes. The best approach depending on the teen group is to go to places like TJ Maxx and Nordstrom Rack and look for shoes in the $45-$65 range. The best shoes to capture are the ones that are unique and rare where they will stand out as unique. Also $45-$65 is a good range to deliver a return on profits faster which is why auto rental firms focus more on compact and mid-size sedan rentals over luxury and exotic vehicles. 

Rent Shoes. Shoes can be rented by contacting the CEO or the Custodian for availability. Shoe availability do not need a web site – the blockchain will show who has custody of the shoe and if the custodian has custody of the shoe, the shoe is available. This is one of the ways blockchain is so disruptive and powerful and scares the status quo because it decentralizes the business operation among the club members to perform tasks such as look up availability of product and efficiency of the business operation. 

Send Shoes. Shoes should be kept in a shrink wrap with an anti-humidity pack inside to keep the shoe fresh. They can be shipped with the original box or use a small duffle bag. The shipping can be a poly bag and will be strong enough to ship out for a day. The shoe should have a label sticker applied to the shrink wrap for the member to scan the QR code to write to the blockchain they receive the package. 

Receive Shoes. Upon return of the shoes, the shoes should be inspected for any damage and if so, the member will have to pay for the shoes. If they do not pay for the damages, the deposit is claimed and they are no longer a member and the blockchain will have the removal as a permanent immutable record. If the shoes just require conditioning, the shoes should be washed, the shoestrings replaced or washed separately and UV shoe dryers that are $15 from Amazon to dry the shoe and kill germs. In some cases, the soles can be replaced but will require a higher rental fee – it may be best each shoe club member have their own soles to insert when they receive the shoes. 

Analyze the Blockchain

The blockchain ledger line should have at least the following columns

Entry Address. This is a unique address id (ABC123) for each row generated. 

Entry Date. This is the date of the QR scan and the record insert into the database. 

Asset Address. This is the unique address assigned to the shoes being rented. 

Sender Address. This is the custodian when the shoes are shipped; this is the member when the shoes are being returned. 

Receiver Address. This is the member when the shoes are being delivered; this is the custodian when the shoes are being returned. 

Total Cost. This is the cost of the rental period and is the revenue generated. 

Expected Date. This is the date the product was expected to be received by the club member when shipped out or expected to be returned to the custodian. 

Shipping Tracking Number. This is the UPS or Post Office tracking number everyone can verify if the product was received. This number is encrypted by the CEO public key and will be revealed if there is a conflict of when shoes were received and returned. 

The blockchain hash can be validated by each shoe club member to know the status of a shoe, how often a shoe is rented and the cost to know how much money is made, what is the popular shoe and what is the shoe that is not doing well. 

Start Making Moves

As we discussed in this article, urban teenagers can leverage the sharing economy and blockchain to form a mutual company to develop a group economic solution among themselves. The urban teenagers can share a prized resource and make money from an asset they consume between themselves. Garbage Boule uppity crap like Black Enterprise magazine did not want to see our hood brothas and hood sistas do for self so they never stressed mutual companies or group economics to empower the people. 

This shoe sharing operation is a great business model for teenagers to make friends and focus on collective economics among each other and learn how to create ADOS Digerati businesses to uplift themselves, their communities and their future.