Bartering is an age old solution for people to get what they need, but also offer something of value in return. When bartering is effective, two sets of people are pleased with what they receive and are equally as pleased to offer their goods.
In business, bartering is one of the quickest ways to make solid connections, build relationships and decrease your expenditures. A business can barter services, products or even time– all depending on what its needs are.
Solid bartering relationships are based on two key factors. First, you should only barter for things you actually want or need. And secondly, the exchanges should be of equal value and importance. Thus, bartering a vacation to Europe for a year’s worth of basic office supplies may not be a favorable barter.
Here are a few strategies for creating a solid bartering strategy:
1. Know what your needs and wants are— Create a list of your regular business needs and wants which you wouldn’t mind bartering for. Avoid listing services or items that are critical to your productivity or general success because those things should never be bartered. Instead, list things such as courier services, meeting space or vouchers for entertainment activities that you can pass along to clients. Knowing what your business can actually benefit from allows you to make better decisions on whether or not to accept a barter proposal.
2. Understand the real value of your barter— When you’re entering into a barter agreement, one of the most important things to consider is the value of the services or products rendered or received. It’s very easy to assign a price to an item, but it doesn’t make it of value to you or the other bartering party. Know the value of the exchange. Will bartering this item save you time or money? Will it create better opportunities? Will it improve a situation? These are things you should give hefty evaluation to before entering into a bartering agreement.
3. State your contingency plan— It’s dreadful when you’ve entered into a bartering agreement and the other party doesn’t fulfill their role–especially when you’ve fulfilled yours. Make the other person aware of the contingency of your bartering agreement with clear outputs for each party. Perhaps you’d state that for every 5 restaurant vouchers you receive from the other party, you’d provide 5 hours of event space in your facility. The contingency in this agreement is that 5 hours of space would be scheduled in advance, but can not be confirmed until the vouchers are received at least 48 hours before the event takes place. This contingency option gives both of the parties the option of canceling or rearranging their offerings without compromising the agreement.
4. Keep accurate records--Barter agreements should be treated like a regular payment transaction or business deal. Keep receipts of your activity within the agreement to ensure that both parties are receiving a fair exchange.
5. Put your money where your barter is— If you have a concern with a full barter agreement, consider a partial barter agreement. Offer certain products, services or phases of a project under a barter and then agree to exchange cash for the rest. In this method, neither party overextends their resources, whether it’s time, money, space or otherwise. Just make sure to state those terms at the beginning of the barter agreement and clearly state what is covered under the exchange and when financial payment should be expected.
These are just a few tips on creating a successful barter agreement. For more tips, please contact me. Do you have a few tips of your own? Please share them. I’d like to have your feedback.