Three Big Myths of Business Bartering

Why your business should use barter to increase sales and reduce your costs

I have to trade with barter members directly for each others goods and services.

This is the biggest misconception of modern business bartering. You are no longer limited to directly bartering with another business!

This is how bartering originally started but a modern barter exchange operates by making it possible to sell your products and services for “trade dollars” and then, to use those trade dollars to purchase the supplies and services you need from any of the other barter participants in the program.

This means you can trade almost any service or product for almost any other service or product. You are not limited to just business supplies or services. You will find a diverse cornucopia of offerings ranging from artwork, hotels & condos, jewelry, massages, medical and dental procedures, hairdressers, to car repair and auto detailing. The larger the barter network, the more options you have to sell your products and series as well as to purchase cool products and services. In the barter world, bigger is better.

Barter won’t increase my cash flow or sales.

On the contrary, barter should increase your cash flow. Trading a product or service (real inventory), for other products or services that are needed or desired without spending cash, actually conserves cash flow as it keeps funds on your bottom line. It can help free up cash flow to pay for, as an example, core operating costs or hiring more employees.

Barter revenue is about opening up new markets and developing incremental new sales, a distribution or sales channels. Barter maximizes a business’s chances of gaining new customers and sales revenue that doesn’t exist now, while increasing cash flow.

On the average, using barter increases a business’s overall sales by about 15%. Of course, some business get astronomical returns by using barter while others just get a small bump. However, the investment on money and time to participate in a barter network is minuscule compared to advertising.

Barter also provides what is known as social or community marketing. Because a businesses receives barter money for its products and services, it then has to use that barter money to buy products and services within that network. This give and take within the network itself establishes a community of businesses that tend to support and promote each other.

Most successful barter networks also offer a system of newsletters and emails to educate and notify the members about the products and services that are available, as well as spotlighting new members and special deals.

Bartering is an age-old strategy that never goes out of style or becomes passé because businesses always barter to move product, fill up downtime in a work schedule, fill up empty tables or hotel rooms, and conserve cash; trading what you have for what you need.

It works for brand new businesses as well as those that are decades old.

Trading products vs. trading services are not equal in a barter program.

Both a product and service have “hard” costs with each, though depending on the sector or industry, margins can be better than others. When opening a barter account it is important to assess the cost of acquiring a barter dollar. Products or services with greater margins can be very suitable for barter programs; for example, fitness memberships or green fee passes for a golf course, each offer time on a fitness machine or a golf tee, each have a cost of “zero” dollars to operate, less general variable maintenance, therefore making it highly attractive to accept barter dollars as a form of payment for that service. Consequently, for a company that sells “x” product, each product available has a cost that take various points when factoring a retail price.

Business’s that carry large inventories (manufacturers), idle inventory, short shelf life inventory, seasonal inventory, hard to move items (retailers, end of lines, cancelled orders), perishable items (restaurants) are ideal for a barter program as they use it as a distribution method to maximize sales opportunities and to increase revenues.