Barter 101

What is Barter?

Modern barter has evolved to become a tremendous way for business’s to supplement their needs for goods and services while at the same time, conserving their cash.

Here is how it works: First, you’ll need to join an exchange. The exchange acts like the bank in the sense that they keep track of your activity, promote your business, improve your overall experience, build membership, and yes, charge you a small cash fee for their services.

As a member of an exchange,  the products  and services you provide will now available to the  membership of that exchange, and all of those members products and services are now available to you . It’s not uncommon for many exchanges to have hundreds or even thousands of members.

Transactions are done in the traditional way except for how they’re paid. Unlike using cash, check, credit, or debit, members contact the exchange to inform them of the transaction. Many exchanges allow you to do this on line and it’s simple and convenient. Next, the agreed upon amount is deducted from your account and a monthly statement with activity is sent to you.

Depending on the exchange, a small percentage fee is charged on the amount of your activity.  This has to be paid to the exchange in cash and is well worth the services provided when done properly. Keep in mind every exchange is a little different on how they charge their fees.

For example, some exchanges charge  a small monthly membership fee, and some don’t. Some charge a percentage on the sale of products and services while others charge  only on the purchase. Still yet, others charge on both. Some exchanges membership base are mostly services while others are mostly products. You get the idea. Not all exchanges are created equal.

 

Is Barter Right for you and your Business?

Using barter for your business can be a very smart and rewarding endeavor to help any business. Unfortunately, nothing is perfect and we will discuss the pros and cons and what to look out for when adding barter to your arsenal of business tools. The barter marketplace is different than a traditional market in several respects.

A traditional market means you can go to your local retailer and the product’s availability is usually static. This means that most of the time you can count on the products & services being there at your beck and call. If you decide you need something, you can simply drive on over and pick it up and away you go.

With barter, the marketplace is much more dynamic. This means the products and services that are available  today may not be available tomorrow. You can think of it as a flowing river of products and services.

This can be both gratifying and frustrating. For the savvy business person, this means you can have your finger on the pulse of the flow of products and services, both static and dynamic.