Last Updated: Aug 15, 2014
Bartering can help you get the services or goods your business needs by trading them for the services or goods your business provides. But bartering isn’t always a bargain. These guidelines can help you make sure you’re not losing money when you barter.
There might come a time in your business’s life when you want to barter your services. In fact, you may find it prudent from time to time to trade your services for the services that another business offers. It helps to have a plan in place for this and to have some safeguards against overextending your services beyond what you can support. After all, if you barter all of your services all of the time, then you’ll never earn an income.
So the big question is: When is it okay to barter your services, and when should you pass on any trade offers?
When Bartering Doesn’t Makes Sense
Many businesses decide it’s time to barter when they don’t have the income or can’t afford the services they really want to purchase, or need to purchase, from another business. This is a really bad idea. Bartering should never be done solely on the basis of your budget or on an emergency ad hoc basis.
It makes better business sense to barter for essential business services rather than to barter for services that are luxuries or that are primarily personal expenses.
For instance, let’s say your pipes burst at your home and you find yourself in need of a plumber. It’s an emergency situation and if you don’t hire a plumber fast, you’ll be displaced and will have to move your family out of the house and into a temporary living situation. That certainly would be a bad thing. But should you barter your dog grooming services right now? Do you really want to trust your plumbing to the only person in town who’ll do the job if you shampoo their poodle?
When Bartering Actually Does Make Sense
Bartering services is best reserved for when you were going to make a purchase anyway. So instead of bartering your dog grooming services for an emergency plumber, you could establish an agreement with your shampoo supplier. You know you’re going to need shampoo to run your business. So offer to perform a pet pedicure in exchange for an equal value of shampoo each month.
Or, if you have a plumber whose business you value and your business location has an ongoing need for plumbing services, you could agree to trade your dog grooming services for plumbing services on an as-needed or an ongoing basis. Whatever works for you and your trade partner.
Before you enter into any bartering agreements, however, you must first set a value for the services you are trading. Trade only on the retail value of your services, not their costs.
What To Consider Before You Make A Trade
Other considerations you should weigh when determining whether or not to barter your services include:
Consider all trade agreements just as you would any other business agreement and make sure you annotate all exchanges. You and your employees will spend time performing services for your trade partners, so there are still expenses to be accounted for, and you want to make sure you get a return on that investment. If the services you receive in return do not result in a net positive for your business, then it likely isn’t a good trade arrangement.
As mentioned earlier, stay away from trade agreements that mix your personal finances with your business finances.
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