Business

Modern-Day Bartering

By Ruth Gifford-Diaz | bio | contact

Back in the day, a dairyman would take Bessie the cow down to the local market. The dairyman would meet a farmer there, and Bessie would set off for her new home, having been bartered for a winter’s worth of corn. In simpler terms, bartering is the exchange of goods or services for other goods or services where no money changes hands. Bartering is a terrific way for small businesses to get a hold of high-ticket goods and services they need but can’t really afford, especially during start-up.

The benefits of bartering, and whether it makes sense to barter, vary from business to business.Whether starting or growing a small business, bartering can be a profitable and useful tool as part of your company’s financial management plan. Swapping allows businesses to receive goods and services they need without tapping into cash flow. There are many advantages to bartering, but we’ve outlined four that may have a large benefit to your company.

Show Me the Money!

Bartering is a good way to increase your cash flow by unloading aged, outdated or excess inventory. However, don’t barter if it means turning away cash-paying customers or sacrificing time that should be spent on growing a business.

Support Your Local Economy

An unexpected, but welcome, benefit of bartering is the potential for new, strategic partnerships to be built between small businesses. Many business owners like the idea of supporting other businesses in their local community. A bartering relationship develops trust and support. The resulting relationship can turn out to be an even bigger asset than the cash savings from bartering.

Save Your Capital

It’s a sad truth but within the business life cycle there are times of slower cash flow or limited capital. Bartering can be a useful tool in acquiring needed services or products. If you have a business that has a seasonal flow, try bartering during your slow periods.

Buy Media and Marketing

We all need advertising to get our message out and let people know about our products. Maximize your company’s marketing by bartering for print, TV or other media services. Bartering for these services can provide a much-needed upper hand on your competitors who might be outselling your business.

With all the benefits of bartering, you should keep a few things in mind when swapping with other companies. Beware of companies in trouble or on their way to bankruptcy. If a company files for bankruptcy, you’ll never be able to get the financial return on your barter. Also, understand bartering is not a tax loophole to avoid paying taxes. You will have to report the income, based on fair market value, on your taxes. Whether you’re starting or growing, bartering can help in preserving cash and is a must-have success tactic for operating your small business.