Bootstrap your business with bartering
by Dani Gagnon
Every new business starts off the same: with little or no cash, and little social proof to win over new customers and clients. But some serious bartering can solve both of these problems by helping your business get what it needs and provide you with your first clients while you’re at it.
By this point in time, the idea that money is the fundamental measurement of value is so deeply entrenched that we forget that it’s a fairly recent development. Here’s a mind-blowing fact: money was originally created to aid the barter system. It was developed to be a stand-in system of value to measure debts when doing complicated trades. If the blacksmith needed food, but the grocer didn’t need the blacksmith’s services but instead needed shelter, the monetary unit prevented all of them from having to keep track of this complicated circular trade. That’s it. The almighty dollar wasn’t always so mighty.
This can be true today, if you choose to take advantage of it. It isn’t all about the Benjamins; cash is just paper because money is a placeholder for value. It isn’t value in and of itself.
Many people overlook bartering, but I’ve
used it first hand to build my business.
Many people overlook bartering, but I’ve used it first hand to build my business – especially when starting up in my first year. I own a social media marketing firm, and when my company started five years ago, I entered the global economy with a political science degree under my belt and not much else. My only experience in marketing was in retail, selling skateboards and shoes. I knew I had the skills, but I wasn’t sure how to get started. Before I could begin to earn my desired salary I needed to prove myself enough that people would want to fork over their precious cash. I needed a list of clients and a good track record.
The best solution I had was to barter. It turns out this was a solid strategy because people are more willing to part with their products, services and time than they are with their money. But whom would I trade with, and for what?
I asked myself a remarkably simple question: What do I really need? The list was fairly short: a place to live, food, entertainment, health, clothes, and the things my business needed to grow.
Having this list allowed me to target the right businesses. In the beginning I offered to take over their social media marketing in exchange for a dollar-value of their products or services. I worked with restaurants and a food delivery company to ensure I could feed myself. I found a coffee shop to barter with for coffee beans and a welcome place to bring clients in for meetings. I found a local chiropractor and massage therapist who were willing to trade for help. I even found a clothing store that was willing to part with their product in exchange for my services. I found a printing company to trade with for my business cards, and a website company to trade with for my company website.
Suddenly, I was in business. In under a month I had over twenty clients. Now that I had them, I had something to leverage to gain my first “real” paying clients. My plan worked brilliantly, and my company is still thriving five years later.
I still maintain around ten or fifteen barter clients at a time. Why should we use monetary transactions if an opportunity for barter is clearly available? I am completely happy to trade my company’s services in exchange for things I need. I always ensure I have a few bars and restaurants as barter-clients so I can take friends, family and clients out for dinner on me. One of the best parts of bartering is being able to share with friends: I love that when we go out, they can save a hard-earned buck.
Food? check. Clothes? Check. But shelter? And the big stuff that makes people stress out about money? Well listen to this: Last year I successfully bartered for a down payment on my condo. Get creative and anything is possible to build your business.
I have a vision for a future wherein more people trade their services and skills, and more people are willing to offer their services at a lower cost because money is no longer so important. People can more easily work for enrichment and fulfillment if their basic needs are met by trade.
If you’re interested in adding barter to your way of doing business, there are some things to remember.
Barter is not above taxes. You must claim barter as income and expenses so don’t forget to do so on your income tax. What you barter counts toward the value of your company and your gross profits.
Some businesses will be more uptight about keeping track of dollar value than others. Make sure you clarify at the beginning of your relationship if your tab will flow through to the next month if you don’t use the value every month. I had a barter relationship with a restaurant that I didn’t visit for about four months, so I ended up with a $2000 credit. So I brought a big group of my friends and staff and partied for two nights. Some restaurants would not be OK with banking a credit like this.
Make contracts. Bartering has a friendly connotation, and that tends to hold true, but don’t forget these are still business transactions. Even though you are bartering, you need to protect yourself and your value.
Ensure a fair deal. In many creative industries like design, development, and marketing, it’s common to have a variable price tag for clients of different sizes. I provide social media marketing and the price often changes depending on the client. But this has an added twist if you’re bartering. If you have a service with an altering price tag, ensure you make a fair deal if you are working with someone who has a product. Product-based businesses need to pay for things upfront, which puts the burden on them. On the flipside, don’t let this devalue your service.
If you have something to offer that is worth less than the thing you want, promise a larger amount of it, or trade it for a longer amount of time. If you own a coffee shop and need a website made, trade gift cards instead of cups of coffee. The web design firm will be happy to be able to give the cards to clients and staff.
Barter isn’t just smart business, it goes a long way to making trusted friends of your clients. Always be open to trading some general info with a new business connection in exchange for a beer. A little giving goes a long way.
- Related articles: Better coworking through bartering by Carlos Almansa