Grow your business, enhance your bottom line, with barter

May 11, 2011 bruce Blog No Comments
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Whether you work through a direct trade or through an exchange bartering can boost your business’s bottom line without spending a lot of cash.

If you’re looking to expand your business connections and bring in new clients, barter is an excellent way to grow. By becoming involved with barter, you can more fully spread the word about your company’s products and services and explore other revenue streams.

As one of the oldest forms of commerce in the business world, barter is gaining a foothold in Arizona’s business environment. In its most basic form, barter is the exchange of products or services for other goods and services in cash-less exchange; with barter, you use barter uses what you have to get what you need or want. If you’re a restaurant owner you can barter meals for cleaning services or an accountant could barter services for air conditioning repair. The earliest form of barter in our youth probably happened when we traded baseball cards for bubble gum with our friends. For today’s business owner, trade opportunities can benefit businesses of all sizes, from self-employed individuals to multi-million dollar corporations.
There are myriad ways to participate in barter, one of which is direct trade – also known as one-on-one trading – where you negotiate with another professional, come to an agreement and complete the transaction. And if you are bartering one-on-one, be careful. Misunderstandings can arise if you don’t have a formal contract. Then there is the IRS: Barter deals are treated like regular cash sales in federal and state filings. If a business owner uses barter services for personal reasons, the cost of the item is considered compensation on your income.
Having access to a network of other trade partners through a barter exchange that acts as a clearinghouse for the members who have bought your services to make “deposits” on your behalf as well as allowing you to make “withdrawals” to make purchases from other trade members. Joining an trade exchange entails a joining fee and commissions on trades. If you run a very low-margin business, those commissions may make bartering a money-losing proposition. Every business will want to limit its barter business to 5% to 15% of total revenue so that cash flow remains at healthy levels.
Being a member of a trade group is an efficient way to participate in a barter relationship because it brings like-minded business owners together and helps maximize the barter exchange.
You can even pay for your on hold messaging services using barter. AAA Phone On Hold is a member of several trade organizations offering their message on hold services to members.
Whether you work through a direct trade or through an exchange bartering can boost your business’s bottom line without spending a lot of cash. There are about 400 barter exchange groups in the United States and Canada and they process close to $4 billion a year in transactions. Barter benefits start-ups as well as seasonal businesses and year-round organizations.

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