Anatomy of a Barter Trade
In the course of conducting business I am often met with the question, “what if the business I am trading with does not have what I am looking for in return”. Must people seem to think that bartering is a “one-on-one” trade, where it is necessary to find someone with an item you want or need in return. While this scenario does describe a barter transaction, it is in fact not the way organized bartering works. When participating in organized bartering or as a member of a barter exchange, members actually trade their excess labor, capacity, or inventory for barter credits that can be spent just like cash. By utilizing this cash alternative businesses can maximize the value of their product or service while preserving their cash. This means that if your service business has unbilled hours, or if your retail business is left with unsold merchandise, each of these commodities can be traded at full value.
Another advantage of becoming an active participant in an organized barter exchange is the introduction of your product or service to what for many businesses is a new market. Selling to other businesses can not only increase your business-to-business sales, but will help you to attract new cash paying customers through referrals. In many instances the increase in referral business has resulted in both increased cash sales and expansion of a business’s existing customer base. Although you may think that organized bartering is not for your small business, statistics show that most businesses operate at less than 100% capacity. There is no reason why you would not consider converting those unused commodities into a valued asset.
Organized bartering does not replace your current cash business. It is instead used to augment your cash business by creating value from your unused assets. You do not have to find another business that has what you want or need to trade. Your barter exchange should work with you to determine how you can best apply your dormant assets and create new value for your business. The exchange should also act as a marketing partner to promote your product or service to other members of the exchange. Before you conclude that barter will not work for your business, you should take a closer look at organized barter trade.