How to Use Bartering in Business

Bartering is one of the fastest-growing techniques used by new businesses. With barter, you can achieve huge savings on all your purchases, acquire needed items for your business with money you’ve already spent, and finance major purchases in­terest-free.

Here’s how it works: Perhaps your business needs an accoun­tant, but you don’t have enough money to hire one. Why not work out an arrangement whereby you trade your goods or ser­vices for the services of an accountant?

Or suppose that you need furniture for your air-conditioning and heating sales and service business. To work out an appro­priate barter, you must first determine the retail value of the furniture you need. For this example, let’s say you need $5,000 worth of furniture. Go through the phone book and call every retailer of the kind of furniture you need. Tell each furniture store owner that you need $5,000 worth of furniture, for which you’d like to trade an equal dollar amount of air-conditioning and/or heating equipment and service. It can strengthen your bartering position to offer an unlimited time frame in which to use your goods or services, and to allow the owner to designate someone else to receive the credit you are offering.

In another example, suppose you are in the restaurant business and you need supplies or equipment, but are short on cash. Locate equipment dealers in the Yellow Pages and offer to trade, for example, $1,000 in restaurant credit for an equal dollar credit in supplies or equipment. Place no time limits on using your restaurant credits, but explain that you want to acquire your proceeds of the trade within the next few weeks. And stipu­late assignability on both sides of the exchange.

Here are two rules that will help your bartering be more successful:

1. Always insist on assignability rights for any item or ser­vice. This enables you to sell the goods and services you have acquired for cash if you need it.

2. Never try to trade your goods or services at anything less than retail value.

Remember: The higher the retail valuation you place on the goods or services you trade, the greater your buying advantage.