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I recently read an article in the Sunday Times about the increasing number of small business owners using bartering to their advantage. Basically two people (businesses) come together and realise ‘I’ve got something you want, and you’ve got something I want – I know, let’s trade! Swapsies!’. One woman swapped a stand at her show for swimming lessons and another woman swapped her PR services for a load of luxury chocolate and also for shoes (yum and yay!).
Obviously it only works if both parties value what one another have to offer as no-one wants to get caught short and you also need to be choosy. You also don’t want to be known as one of those really annoying people that’s always trying to bargain people into a corner instead of coughing up!
However, I know from personal experience and from people who barter that it can be really rewarding. From getting your hands on that item you really want, to building a really good relationship with someone where there’s a two way flow, to technically getting it cheaper than you would have done out on the open market, this is a really good opportunity for a win:win.
A close friend of mine has been looking to get some PR and marketing done but hasn’t been able to afford it, but can now, because she’s found someone willing to trade and they’re getting along brilliantly. I know others who’ve done it and the great thing is that in an ongoing situation, where one is, for instance, providing a service, having someone believe in you enough to do this means that when things take off, they benefit too, and you can even help build one another’s businesses. That same friend has recommended her Swapsie partner, so she’s picked up a few paying clients that she may not have otherwise – result!
Our 4 quick tips are:
1) Make sure you are both clear about what is on offer on the table, and manage expectations. Obviously if it’s a nice straight swap – here’s your stand, thanks for the swimming lessons – that’s easy peasy. If you’re providing a service, you need to ensure, as you would if they were a ‘paying’ customer, that they understand what it entails. If you’re leaving out something, make sure this is clear. You don’t want to get caught out with a duff deal where you’re giving them a diamond whilst they hand you back a piece of coal…
2) Get a feel for one another before you ‘hammer out’ your deal. It’s one thing if it’s a one-off, straight swap, but if you have to deal with each other on an ongoing basis, it’s probably best that you actually ‘get on’.
3) Be clear about whether this is a confidential arrangement. You don’t necessarily want every Tom, Dick, and Harry to know about your arrangements as they may no longer attribute the same value to your offering, or may feel entitled to get you to trade instead of coughing up.
4) Consider possible tax implications. On the couple of occasions I have done ‘contra deals’, I’ve still done the paperwork. As the Sunday Times article points out, these arrangements don’t show up on your profit and loss (unless done formally) so it could be perceived as tax avoidance.
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I totally agree with all the points you raise and just add one more: Treat your ‘barter clients’ just as you would any other paying client.
My very first projects were done on a trade basis in exchange for valuable things for my business. Infact one of those clients is still a client of mine 7 years later.
Even now, having been in business nearly 8 years we still trade our services where appropriate. Its a fantastic way to do business.