Friday, May 7, 2010

Barter or Not

There's been some humor lately generated by the woman who wishes to be a Nevada Senator regarding paying your doctor with chickens. Yeah, it's not something I recommend, but there are those times for all of us when we wonder if bartering is the way to go.

There's two main kinds of bartering, goods and services. Chickens would be "goods".
I would add two other categories:
Too Much Work to Be Worth it and
Great Because I'm Already Doing it.

Things to ask yourself about a bartering deal:
  • Can I afford to not make actual money on this?
  • Will the trade be an equitable one?
  • How long will the trade last if it's for services?
Some things you may not have thought about on the plus side:
  • Is this a good way of introducing someone to my goods or services who will hook me up with work in the future and be a good networker?
  • Does this person have something I really want to promote to help them?
  • Would you not be able to afford their services any other way?
Some down-sides:
  • Are you unsure that they will hold up their end up the bargain?
  • Is the trade or barter vague in some way? (scope of project)
  • Do you not know how long it will last or if it will recur?
Bartering can be a great way to get yourself out there. For instance, I have a friend who places flowers at a store, weekly from her floral shop with some business cards. In exchange she gets custom made clothes, dollar for dollar.

Goods are an easy barter and should clearly be on the books. Meaning, you want to set up a barter account as a liability for each barter that you're doing. When you get an invoice or send a "zero" invoice, it should be posted to this account. Whatever money is sitting in that account on your books should reflect the barter "dollars" as they move back and forth.

Services can be a bit more tricky, and I won't go into the bookkeeping for that, but it's basically the same. Just consult your accountant. The most important thing to keep in mind with bartering your services is that you "feel" a sense of equity. Of course, equity on paper is crucial, but so is the sense that what you are receiving in return for your services is a good trade.

I've been very lucky and bartering has been a great way to make contacts with folks I would normally not come to work with. Just make sure that your business is "balanced" as well and that you have cash income coming in as well. Until the telephone company takes a barter, you've gotta run a cash operation!

Enough with the chickens, already...