How Bartering Could Benefit Your Small Business
Bartering can be a beneficial marketing and management tool for small businesses – it’s an opportunity to get the products and services you need to run your business without using cash. It’s also a chance to build brand awareness and business connections.
You can conduct your bartering, which means an equal trade of services or products, with people you know or already do business with – a popular practice among solopreneurs who are just starting out, when cash supply can be low and you need the exposure.
Maybe you’re a hair salon owner and you strike a trade with a photographer to shoot the professional-style model photos you need for your new salon and website in exchange for salon services. The photography business owner not only gets the services, but credit and exposure for the pictures hanging on the wall as well as expanding his portfolio.
Another way to find and make trades, a route that can be helpful if you’re looking to find a market for excess inventory, is through a barter network or exchange.
On a barter site, which typically carries a member fee or charge a percentage per transaction, you list goods or services you have up for trade and businesses use their network currency (called exchange dollars or trade credits) to buy/trade from each other on the network.
Whether the informal kind or via a network or exchange, here are a few of the benefits your small business could experience from bartering:
The Bottom Line
For start-ups working with limited capital, or maybe you’re looking to expand, you can use trade as a strategic tool to acquire items needed to help through a transition period.
“Trading is an effective management tool that goes straight to the bottom line and makes excellent financial sense for every business,” says Tradebank, a barter exchange company headquartered in Cumming, Ga.
Tradebank says it connects businesses on the exchange so they can find ways to “convert what they have into what they need” using trade dollars on their network.
Save the Cash
Bartering provides an opportunity for you to get what you need to run your business without actually using cash.
“Your business can save cash on normal business expenses like printing, repairs and improvements, professional services, travel, office equipment, corporate gifts, company meetings, and much more,” says the barter network IMS, or International Monetary Systems, which has 16,000 member businesses.
Bartering can help businesses that have a fluctuating income flow, such companies that operate on a seasonal cycle, like a pool or lawn care company or a business that sells holiday-based products. Doing trades can help keep things level during the down times.
Market Your Business
Making informal or network-based trades can be good for business – you’re building sales and relationships, and basically marketing your products and services every time you barter.
Assuming your trade partner had a good experience – you delivered on the quality products and/or services in the trade, etc. – there’s a good chance they will become a cash customer too.
Additionally, the barter transaction can lead to increased exposure by word of mouth and brand awareness, not only with the people you’re trading with but in (and on) their networks as well – you’re tapping into potential markets you might not have found otherwise.
“These new trade customers will spread the news to their non-trade vendors about your products and services, and inspire new cash customers for you in the process,” IMS says of bartering on their trade network.
While on a network, you’re also getting your services and products “advertised” to other members by just being on a trade network. Some exchanges also offer other types of promotion, such as broadcast emails and face-to-face opportunities to network with members.
Plus, you could also use your barter dollars for a trade with an advertising or social media marketing company on the network.
Free up inventory
If your business becomes over-stocked on inventory, you can use bartering to off-load the excess inventory sitting in your office or warehouse.
Likewise, if you have excess inventory, you can liquidate the merchandise for a reduced profit, says the NFIB, a nonprofit advocacy group for small and independent businesses, in a post on its website.
Or, the group says, “alternatively, you can trade that merchandise through a barter exchange – and often receive trade credit for its full wholesale value.”