This week's Small Business Survival advice and podcast is about "The Power of Bartering".

I remember learning about “the barter system” when I was probably in 7th grade or so.  Within that system, someone agrees to provide their products or services to someone else in exchange for products or services in return.  Essentially, no money changes hands, but both parties walk away with something of value after the transaction is completed.

If memory serves me correctly, this was a system that was pretty big during times before currency became the really widespread way that people exchanged goods and services, and in today’s society (before the recent market meltdown and recession), it was kind of looked at as an outdated practice.

In fact, I can distinctly remember a few years ago, that it was virtually unheard of to even suggest such a thing to someone if you were “in business”.  Today, I think the climate has changed somewhat, and surely there are still people who won’t consider it, but the upside is, with “money being funny” all around, there are plenty more people that are willing to work with you within a barter agreement, because the times really make it a necessity.

So, here’s my tip: If you’re just starting off in business, or you’re branching out into a new field where you don’t have a huge portfolio of clients or list of references that can vouch for your work, bartering may very well be the way for you to go to get certain things done so that you can be able to get more customers down the line.

Here’s how I envision this working, and this is based on what I did at various stages in my own business:  If you’re a start-up, or still in your early stages, find another start-up or person still in their early stages and see if you can’t work out an arrangement where you provide your product or service in exchange for theirs, with the expressed purpose that you’re doing so to be able to use them as a reference (and vice versa).

What this bartering agreement does is it allows you to get one more “customer” under your belt, and you also walk away with a needed product or service that can help you grow your business.

Now, there are a few caveats to bartering that I should mention.  First, it’s virtually impossible to set up a bartering agreement with someone who is established in their field and used to getting a certain price or hourly wage, especially if that person has work lined up or people in the queue waiting for them.  There’s no need for that type of person to barter honestly, unless they just want to help you out.

Second, you can’t barter with everybody.  Even if you meet someone that might be amicable to having a bartering agreement with, there are all sorts of things that can transpire to where the agreement never actually gets underway, either because “life happens” or because you may have found yourself involved with someone who seemed passionate about their product or service when you first met them, but when trying to move forward, they just don’t have the zeal or gusto to complete the deal.  Consider yourself lucky in this case, as it probably wouldn’t have led to a good long-term business relationship anyway.

Finally, be sure to value your services accurately and make sure that the other person is doing so accordingly.  Don’t just jack up your prices so that you can get more from the bartering partner, and at the same time, consider when you stamp out what you’re giving within the bartering agreement that you include your costs (if there are any associated for materials), because ultimately within a barter agreement, these costs are being paid by YOU, out of your own pocket.

These are just a few things that I want you to keep in mind prior to entering a barter agreement.  At the same time, I’d like for you to know that there are benefits to having a barter agreement with someone that offers a product or service that you need, and that potentially your new clients or customers may need.

First, you can build a working relationship with someone, and maybe even make a friend.  Second, you can get what you need to help grow your business, while saving money, or at least not spending the money it would have cost you if you had to pay for it outright.  And finally, each bartering agreement you make has the potential to turn into one of those great stories that you can tell when you “blow up” and you talk about how you had to barter a few dancing lessons to pay for the website that got the attention of the “Dances with the Stars” producers that led to the gig that made you a household name!  I’m just saying, it could happen!

Lots of really successful people have these really great stories of things they did before success struck and they make cute and inspiring stories for future generations of entrepreneurs, so hopefully you’ll at least consider bartering in the early stages of your business, and if you do, please send me an email or leave a comment and let me know about your experience with it!

By the way, you can now get a Sample Barter Agreement in our new Bartering Tips eBook to help guide you in the right direction for what a Barter Agreement looks like, and what information should be included on it.

So to summarize: Consider bartering with someone to get a product or service that you need to grow your business.  Be reasonable in valuing your products and services, and be sure to specifically articulate the terms of the agreement so that both parties walk away happy.  Remember, you both can stand to gain from a positive outcome from your arrangement, so definitely look to the positives that can be acquired through the Power of Bartering.

By the way, since we’re not spending any money using the power of bartering this week, nothing is being subtracted from our remaining balance of $353.34.

Don't forget to check out the other YouTube videos that have already been uploaded to my Youtube Channel which can be found at YouTube.com/BootstrappingWithout

Leave comments on this blog, or send me an email at “podcasts[@]bootstrappingwithoutboots.com”.  There’s also a Twitter account where you can reach out to me in 140 characters or less, and that’s withoutboots.  Finally, you can give me a call on my Google Voice Line at 615-59-BOOTS (that's 615-592-6687).

Kindra Cotton, Small Business Survival Specialist
Serial Entrepreneur: Jill of All Trades and Master of Two (Information, Technology)

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