Barter: This type of trade as old as civilisation is seeing a resurgence as a legitimate business strategy to manage the age old problem of cash flow shortages in companies big and small. As the inefficiencies of these forms of transaction are ironed out through clever technological advancements, an increasing number of forward-thinking, resourceful businesses are taking advantage of the opportunities inherent in reciprocal business relationships.
A sophisticated and effective trade exchange relies on it being mutually beneficial and each party giving in getting in equal measure. The following tested tips are the building blocks to a simple, replicable path to stunning exchange success:
1. Be selective
Reciprocal exchange relies very heavily on relationships, and nobody wants a relationship with a dud. Take the same care in choosing a barter buddy as you would with any business supplier. Due diligence will pay dividends, so get a referral, approach someone you already know and trust, or if you’re using a barter marketplace like GiveGet read reviews and ratings of potential givers.
2. Trade only for the services you actually need
Trade isn’t free; it’s just not paid in cash. This means there is a cost to you such as your time or your social capital (by way of network connections or a follower audience). Don’t waste it by getting something which isn’t really worth anything concrete to your business.
For example, if a fellow entrepreneur offers to do your social media in exchange for you doing their tax but your target market are mostly tradies who don’t use social media to find business services, it’s not a valuable addition and will not give you return on exchange investment.
3. Only offer what you can reasonably give while keeping the high quality standards of your usual work
It’s important you don’t over-commit by offering more than you can handle. By recognising that exchange is often used as a ‘try-before-you-buy’ strategy, putting forward your usual high standard work will provide your contra client a real taste of what you could for their business. Even if it is a one-off job, such as a logo design, the reputation boost from a raving fan will reward your efforts tenfold.
4. Make sure the value of the exchange reflects the real cost
One of the overlooked advantages of barter is that no discounting is required! By tapping into value of another kind, you are shifting from a finite resource – money – to infinite worth. You may struggle to find clients willing or able to pay you $400/hour in cash, and probably find yourself reducing your hourly rate just to get the business. A trade exchange alleviates this barrier.
That said, the ‘cost’ of your exchange should reflect the actual cost of providing your services/time/knowledge etc, and your barter partner must be willing to pay what you propose and able to fulfil her obligations in return.
5. Be clear on what you’re getting – the scope of work and deadlines should all be laid out in advance
Business people are still business-minded, and one of the best ways to avoid potential issues – including collateral damage to a relationship – is having it in writing, in detail, in advance. This need not be a legally drafted contract, but a clear MOU outlining all details of the trade ensures clarity and fairness.
6. Track for taxes and provide invoices
Contrary to popular opinion, like all tax departments around the world, the ATO has their hand in the barter pie. In the good news, barter is a deductible too.
For more info about tax implications, refer to the ATO website.
7. Tap into the marketing potential – ask for Testimonials & Referrals, and post about your trade on social
It is not uncommon to ask happy customers to refer you, or to provide a testimonial. Everyone knows Word of Mouth is the best marketing you can benefit from. As I’ve already highlighted, at the core of reciprocity is relationships – these people will be your advocates, the mouth piece for your business.
Equally as powerful, there is a societal shift towards common good, purpose-driven businesses, conscious consumerism. Leverage it in your marketing. A little quiet boasting about your giving will do wonders for your rand.
8. Treat trades with the same importance as cash business
Some people give barter a bad rap as being poor quality, shabby, leftover junk. DO NOT make a trade exchange with these people! It is their fundamental misunderstanding of the opportunities of innovative win-win agreements that will leave you high and dry. Going back to Point 1, choose your partner wisely.
For your part, the worst thing that could happen is that you get your end of the bargain, but when it comes time to reciprocate you make excuses about being under the pump and put your barter buddy on the backburner indefinitely. Very uncool.
9. Go beyond business – get creative in how to use exchange to boost your budget in other areas of your life
I’ve talked a lot about barter for business, but in fact that’s a very narrow view. For every cash dollar you save – whether through a coupon, a promotional deal, or through no-cash exchange – you have one more dollar to spend elsewhere. It’s about getting the most bang for your buck. Ask your hairdresser if her website needs a spruce up.
10. Relationships matter! You get out of it what you put in.
Trade exchange isn’t for everyone. Some people simply can’t tap into it because they incur too much real cost, and others just don’t get it. But for those who can and do, you have a huge lead to help ride the waves of the ups and downs of business, not to mention the quality of relationships you’re building. The Law of Reciprocity is funny like that. People want to give back when they have received. Leverage the shizzle out of that competitive advantage.
Give as much as you get, and make it count.