Bartering, trading one good for another, is becoming increasingly popular as the value of the dollar continues to plummet. There are several bartering systems available online (some better than others) and activity on these web sites has increased as the economy has gotten more and more troubled. However, when you move into cashless economies, it’s easy to get sucked in. Here are a few things you need to know to make it work for you.
1. Use an established bartering system.
Bartering on your own is often fraught with difficulties. Establishing “what’s fair” is rarely easy, especially if you’re the guy who charges $100/hour and you’re negotiating with someone who charges substantially less. One hour isn’t always equal to one hour, and that’s not always an easy concept to explain.
Instead, use established systems that operate with their own version of “dollars” and have structures in place to ensure that everyone follows through on their end of the bargain. The way these systems work is that you join the system and let people know what you have to offer. People use dollars they already have in the system pay you for your products or services. Then you use your system dollars to pay for products and services that you need.
2. Use bartering systems as a marketing tool.
Bartering systems can act as a solid marketing tool for your business, when used the right way. People already in bartering systems have dollars that have to be spent in the system. So you’re entering a marketplace of willing investors.
Plus, people tend to look at these dollars slightly differently from “real dollars” and are more willing to spend them. Bring the right product or service into the system, and you could introduce your product or service to a large group of willing buyers very quickly.
3. Avoid getting too heavily invested.
One thing you want to avoid is getting too heavily invested in any bartering community. If there’s something in the system that you really need and would have invested in anyway, this can be a good way to obtain it. However, you can’t guarantee the quality of the professionals in the system. Just because they’re in the system doesn’t mean they’re the best ones for the job.
And let’s face it…your mortgage company and the utility companies probably don’t accept bartering dollars. You need real dollars for the real world, and bartering dollars just don’t transfer.
4. Spend your bartering dollars right away.
There’s another truth about bartering dollars, and that’s that all of these bartering systems are businesses that are owned by someone. In this uncertain economy, companies go out of business in the blink of an eye. So make sure you don’t leave your bartering dollars in these systems for long. Spend your dollars quickly, just in case, so you don’t have thousands invested in this system that could drop off the face of existence without any warning.
5. Transition bartering relationships to cash relationships.
When clients ask me about entering into bartering systems, I advise them to keep their offerings to introductory services only. Figure out which services frequently act as a “point of entry” to your business and offer those as barters, then convert your bartering clients into cash-paying clients as quickly as possible to avoid getting too heavily invested in the long-term.
And, make sure you don’t get behind the eight-ball on any transaction — don’t offer to barter for something you yourself have to pay real dollars for.
6. Prepare for taxes.
Finally, don’t forget that the IRS views bartering dollars as exactly the same as real dollars. Earn a dollar in a bartering system, and you’ll still have to pay taxes on that money in real dollars later. Plan accordingly!
Bartering can be a great way to market your business and gain new clients and trade for services you need for your business. However, there are pitfalls. Plan ahead, avoid being too heavily invested, and transition barter clients into cash-paying ones, and you can benefit greatly from these systems.