Article #82, June, 2009
Bartering: Blessing or Burden?
Bartering for needed business and personal services can be a lifesaver! On the other hand, you cannot pay the rent with massage therapy, new logos and make-up.
When you do any kind of networking, even casually through everyday contacts, you will eventually be asked to do a trade. I recommend you create a company policy - even if your company consists of just you - that you do not trade or barter. When you are approached by someone with whom you have no interest in doing a trade, you just tell them it is against your company policy to barter.
You do not need to explain why.
I have this policy, but since it is my company, I can do whatever I want! Every time I am approached, I evaluate the opportunity. If I would spend money on that product or service anyway, it might be worth it. If I would really like to spend my budget on that product or service, I will seriously consider it and I might say yes. The vast majority of the time, I say no. If you decide to do it, here are some tips I suggest:
- Be sure to trade value-for-value, not hour-for-hour. I have spent many, many hours in school, work and training to become the expert I am - I will not be trading hour-for-hour in exchange for babysitting (which I started doing when I was 11).
- Attach a deadline by which both products and services must be delivered, if possible.
- Put the agreement in writing and sign it. One reason I have a policy against bartering is that the other party often flakes, and I don't. I don't like ending up at the short end of the stick. Outline exactly what is included.
- Remember that receiving bartered business services is considered taxable income, so consult your tax preparer.
- Treat the client the same as all your other clients, and expect the same from them. If you find this difficult, don't barter. You will resent the client, and that's not fair to either of you.
One example of a good barter situation is when you are starting your business, and you offer a business service, like virtual assistant work or website development. Most businesses will need your services at some point, so you have a good shot at getting a quality person to say yes. If you are starting your business on a shoestring and have no cash to purchase the products and services you need, bartering could be your savior.
When you approach someone, be realistic and business-like. Make sure the graphic designer you approach is the one you would pay your hard-earned money to. Set up a coffee meeting to discuss your offer, and be clear on what you want and what you can offer in exchange. If they say no, just say thank-you and don't take it personally. They are in business to make a profit, after all.
Getting fellow business owners to barter with you could have a very positive side-effect. Once they have experienced your brilliance, they will tell others how great you are and give you referrals.