You are a startup company and boy, are you shocked over the hidden costs that keep creeping up as you are getting your business going. What’s a company to do if you simply don’t have the cash yet? Barter !
Barter has been around for thousands of years. In simple terms, barter is the direct and mutual exchange of goods and/or services between two parties. The Latin term quid pro quo, “something for something,” is the original definition of barter. Think of the old family doctor in movies who accepted a chicken and a sack of potatoes for delivering a baby.
The beauty of these trading systems, of course, is that traders can find new buyers of their products and services from the targeted trading within a particular exchange. Instead of having to trade one-on-one, a barter exchange enables members to “shop” anywhere in the system, using trade currency, with a large number of willing buyers and sellers. A member, for instance, can sell office furniture to an advertising agency but use his credits to hire a law firm, have a website built, or pay an accountant.
Startup businesses can conserve precious operating cash by making purchases with their products rather than their profits, thus freeing up cash and bringing in new sources of business through the drawing power of the exchanges. When business owners “buy” products or services first by using trade dollars, they are essentially able to make purchases with interest-free credit lines.
Another key benefit is the ability to purchase such services as advertising on a barter basis and attract cash-paying customers. Additionally, joining a barter exchange-either offline or online-has the immediate and important effect of creating a new sales channel for a member business: once a business becomes part of a private “economy” using a proprietary barter currency, other businesses who may never have bought and sold from one another now are incentivized to do business with fellow exchange members, thus creating new sales channels.
Small business should look for barter opportunities and I you aren’t sure how to go about it, just call me. For example, with too much inventory and too little cash, barter can be part of a survival strategy in a bad economy. Slow-turning goods become the equivalent of cash to pay for something that in a better economy would have been covered by the cash flow and profits from customer sales. Businesses can use this as a survival tactic to tide over in off season and keep their businesses afloat with what services and supplies they have for trade. It’s worked since the original markets and it will continue to work now.
Liz Bowler
Itex Barter Treasure Coast