Before the notion of buying and selling, there was the concept of bartering. With so much financial uncertainty looming over the country for the past decade, many businesses have turned again to bartering to procure services and render payments. While bartering doesn’t pay employees, it can still serve as a useful resource for businesses of all types. Here is how your business can consider utilizing bartering.
How it works
According to the National Federation of Independent Businesses, “Through a barter site, businesses list goods or services for trade, receive a trade credit and then use the credit to obtain goods or services offered by other businesses. The barter network or exchange then takes a percentage of the transaction value.”
This system can also help your business broaden its reach and attract new customers. If your barter transaction with a business partner is successful, you can potentially use it to help spread word of mouth. Keep in mind that bartered goods and services are also subject to income taxes. Look at the IRS website to see guidelines for bartering.
The trade should be equal
One of the advantages to bartering is that it has the potential to provide returns on minimal investment, and it can help your business save some capital for other endeavors. However, for the barter to be successful, it needs to be fair. A blog posted by Alternative Funding Options states, “In order for a barter to be fair, both parties have to agree with the value of what’s being bartered. Spend some time attaching time or money values to the product or service you are offering before you sit down with your barter partner to discuss it.”
Bartering is also beneficial because it can help you build your network. By introducing your business to other business owners in your area, you can potentially tap into a different market of customers. There are advantages to bartering, including freeing up capital for other avenues and helping increase brand awareness. Some barter situations can also lead to mutually beneficial partnerships between business owners. Operating a small business comes with its share of difficulties, so consider bartering as part of your daily operations.
This article was written by Alaina Brandenburger for Small Business Pulse