Before you hit the back button, think that bartering went out of style when the money came. Think again. Bartering has not only thrived all this time, but has returned to the business world in a big way. If he International Reciprocal Trade Association is an indication, today’s barter is a huge six billion dollar business-to-business success story worldwide. And it is expected to grow more than ten percent per year.

Barter through the ages

The dictionary defines barter as the ‘exchange of goods and services without monetary transaction’. It is simply an exchange of goods between two parties, who need something from each other. This mutual give and take has been practiced since ancient times, but it too has had its problems. Picture this, a fishmonger who wants a new fishing net goes to a net maker with a beautiful catch of fish. But the net maker is not interested in his pitch. So the fishmonger has to go without a net or make one on his own. And he can’t either. Therefore, he trades his fish with someone else for an item that the netmaker would be interested in and trades it to get the fishing net from him. This is what happened until the money appeared.

But barter continued to be practiced discreetly. Remember, you’ve done it too when you were a kid, when you traded the centerfolds of your favorite beauties for really cool music CDs. Well, this was bartering in its most basic form. Only recently has the world realized the immense commercial potential of this form of trading.

Resurgence of barter

Bartering would have remained on the sidelines had it not been for the invasion of the wonderful chip called the computer and the Internet. With its introduction, barter became possible in an easy and cheap way. This is due to the computer’s ability to track barter transactions and maintain large inventories conveniently and cheaply.

To facilitate the flourishing barter trade, many online facilities were introduced. The most important is barter, the spread of which has fueled an explosive growth in barter by creating markets for traders and bringing stakeholders together.

benefits of bartering

But how is barter better than normal commercial transactions? There are a number of benefits that have made bartering a force to be reckoned with in the business world. Let’s see what they are:

    Canned Cash: Cash, the lifeblood of business, is always in short supply, whether for a corporate giant or a small-scale industry. Since barter generally does not require a financial transaction, such a deal becomes mutually advantageous, as neither party has to part with cash to obtain the desired goods or services.
    Generate sales and profits: Bartering not only saves cash, but can also generate sales and profits. This is because inventory turns faster and service providers sell more of their time than they would if they had insisted on cash.
    Create new customers: Barter brings together unlikely parties, who would never have met in the normal course of business. If they are happy with the deal, these parties can refer many more clients to each other, including those who pay cash. Even the original barter customer can start paying cash on future transactions.
    Movements of excess stock: Bartering moves surplus stock, which would have otherwise remained in the warehouse. It also saves money that would have been wasted on advertising and major discounts.
    Use idle time and unused capacity: If you are not using the full capacity of your plant or service throughout the year and can handle new customers, then bartering can pave the way for new business opportunities.
    Low prices: With barter, purchased goods and services are always cheaper than with cash, as there are no overheads. This can give you an edge over competitors.

types of barter

The most common type of online bartering is one-to-one or direct bartering which you can do quite successfully. Its defect is the difficulty of seeking the right deal. For example, you may sell plush toys and may want printing services, but it may be difficult to find a print shop that wants plush toys in return. The other type of barter is called third-party barter. It uses some form of currency to allow a more dynamic exchange between the parties. Companies generally use both types for best results.

The modern barter

If you do business on the Internet, then bartering can be a golden opportunity knocking at your door. For those serious about bartering, the first step is to sign up for a bartering exchange. This exchange will help you easily find what you need by actively searching for the product or service you want. The advantage of a barter exchange is that it connects with other exchanges throughout the country and even abroad, thus expanding its area of ​​influence.

How to find barter deals online?

There are several ways to find barter deals online. Is it so:

    Message board: You can set up a barter message board or chat room on your website to get barter deals.
    Notices: You can place notices on your website that you are willing to trade goods and services.
    Newsgroups: You can join newsgroups or email discussion groups that discuss bartering.
    Bartender Club Online: Joining an online bartering club can help you learn about other businesses that barter.
    Search engines: By searching for keywords like ‘barter’, ‘trade’, ‘exchange’ and the like on search engines, you can get a wide variety of barter portals to choose from.

Is bartering right for your business?

Before taking another step forward, remember that some companies do not lend themselves to bartering. Obviously, bartering won’t work for you if the product or service requires only cash. For example, car payments, mortgage payments or children’s education fees and the like. Therefore, find out when bartering will not work. Some points are given below:

    Don’t worry about bartering if your profit margins are low. Your gross profit margin should be fifty percent or more, as payments to barter exchanges and others can make bartering uneconomical.
    Don’t go into bartering if you’re operating at full capacity and don’t have anything to spare for your bartering customers.
    Don’t barter if you can’t generate enough trade volume for your product or service.

Steps for a successful barter

Before launching into bartering, it will be wise to prepare yourself well. First, look at your products and services, and your buying and spending methods, and see if they fit into the bartering scenario. Your local barter exchange can provide you with a list of members along with products and services. This will make it easy for you to know what is available and who your potential customers might be.

You must be clear about all the goods and services that you are willing to exchange. The best way is to make a list of what you need for your online business. Calculate the approximate monetary value of the goods or services you seek or intend to exchange. This information will help you negotiate a successful barter deal.

Sometimes you may find other online trading houses reluctant to barter. You may need to educate them on the benefits of bartering, why it will be a win-win situation, and what a fair trade will look like. The following tips can help you gain the trust of your potential barter customers:

    Only barter if the other party needs your product or service and vice versa.
    Be specific about what you have to offer and what you want. This will save time and energy for both of you.
    Be fair in sharing a fair value for goods, including shipping.
    Keep the lines of communication open at all times with the person you are exchanging.
    Keep all records of barter deals, just as you would for an actual sale.

Is bartering taxable?

Tax authorities treat barter like any other business transaction. It has no tax advantages or disadvantages. The barter exchange you have signed up for keeps track of what you buy and sell and reports your trades to the IRS. Even sales taxes may apply to certain transactions.

The barter system offers a wonderful opportunity for you to get what you want by offering what you have left over. Although bartering can’t rescue your failing business, it can certainly improve your business’s market and profit potential. So if you’re looking for a great way to trade, try bartering. It may very well turn out to be a blessing in disguise.