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Why it’s Smarter to Barter

It’s a system as old as mankind, a discourse that goes something like, “I can offer you this, in exchange for what you’ve got over there.”  Bartering is for all intents and purposes a system of trading a good or service for another good or service, outside of the realm of monetary value.  These days it’s a bit absurd to attempt to barter without a cash value of items or services traded in mind, but the advantage is still the same – there is no cash involved!

Many think bartering is a strange concept, completely out of the sphere of contemporary business.  That’s not the case though.  Bartering is still a great way to build a business from the ground up, creatively expand, and run a successful company with an impressive profit margin.

It may be hard to believe, but there are all types of businesses more than willing to trade services rather than write a big check.  Consider requesting bartering exchange with the types of services that every business requires – things like:

  • Accounting services
  • Web design and maintenance
  • Repair or cleaning services
  • Professional marketing services
  • Occasional piece or side work

How is bartering done? It’s as easy as 1-2-3:

  1. Determine what type of services you need. For example: cleaning services, technological support, web design, marketing help, the list is virtually endless.
  2. Next you need to decide what your company is willing and able to offer in exchange for the necessary service.  To what extent are you willing to offer this service? For how long and under what terms?
  3. Join a bartering network to connect with a bartering partner (no worries, there is further information on this below).

How is bartering beneficial?

  • A business is allowed the luxury of expanding more quickly, as you’ll be able to move a necessary expense from the cash liability list to the much more beloved ‘taken-care-of’ list.
  • Without the need for cash to initiate or back this transaction, any business, especially newer startups, is able to spend the tight funds they do have on other aspects of the company. Bartering frees up cash that can be used in other areas, such as expanding or hiring employees, as well as spending that cash on non-bartered items such as utilities, taxes, and rent.
  • There is virtually an endless number of items and services individuals and businesses are willing to exchange for yours.
  • Bartering can help clear extra inventory by offering it for trade for a service or item more beneficial to the company.
  • This may open the lines of communication between other businesses, which may in turn lead to actual cash transactions, referrals, or sales in the future. Building a relationship essentially for free can be priceless.
  • For accounting or tax purposes, these types of bartered transactions are considered exactly the same as cash transactions and can still benefit a company’s balance sheet as tax write-offs.

Join a barter network

It’s always a possibility to contact individuals or businesses with which you already have an established relationship, to feel out the possibility of a barter-trade deal. But depending upon the specifics of your business, it may be difficult to find an appropriate pairing for the service that is required. Luckily, there are bartering networks designed exactly to address this issue. One such network is known as Itex.  This is a publicly traded and well-respected barter network that has worked out a majority of the possible kinks in this trade system.  Value Card Alliance is also another example of a Trade Exchange that is growing at a rapid pace with over 54,000 businesses already in their network. These types of networks also help ease the barter-trading process by offering a multiple trade system. Here’s an example:

Say you own an accounting firm and are in desperate need of a new, high-tech website. If you don’t have someone in-house who can perform the work, you’d simply search a bartering network.  You may come across the perfect web design company willing to barter services, but what if they aren’t in need of any accounting services? Every time a bartered deal is worked out and completed, allotted credits are applied to your account.  In this case, the web design company would be willing to complete the job in exchange for a certain amount of credits, of which your company would be indebted a matching amount of credits.  These credits can be continually traded within multiple transactions and businesses.  Yes, this is similar to a conventional monetary system but there is still zero money changing hands!

One word of caution is in order: Don’t forget to double check with state and federal laws regarding transactions between businesses.  Bartered trades are considered and treated the same as cash transactions in most cases, so various laws and taxation rules do apply.  Learning and testing the bartering waters could be a way to revolutionize an entire business.  You’ll likely find this system fairly intuitive, and as you become more familiar with these cashless transactions, it will become easier, and the benefits of a trade-barter system more apparent.

Have you used barter in your business? Share your thoughts and experiences in the comments and on our Facebook page!

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