As small business owners you likely have most of your capital invested in the services you offer, so when it comes time to redesign your website or hire a CPA to file your state and federal taxes, consider bartering. Tradespeople have been swapping services for centuries, and given the shaky economy, many new business owners today are opting for this thrifty way to expand and revitalize their businesses without dipping into cash reserves.
IDENTIFY YOUR NEEDS AND CONTRIBUTIONS
Before you even seek out partners to barter with, you first need to assess what your studio’s greatest needs are. Photography, graphic design, branding, promotional items, social media, legal advice—these are all services that are likely being bartered in your community right now. But you can’t spread yourself thin by getting everything at once, so instead highlight a service or two that you’d like completed in the near future, and then once you go through the bartering process, you can apply lessons learned in your next go round.
You also need to identify what you’ll be offering your partners in return. What’s good about business bartering is that there are finite dollar amounts attached to services, so even exchanges are easier to figure out. (Two neighbors swapping home-cooked meals for yard work, for example, is a murkier trade.) Regardless, assign a value to what you’re offering ahead of time and come up with multiple value options—like a 5-pack of classes, a 10-pack or a monthly membership.
FIND YOUR MATCH
Now that you’ve decided which services you need most, it’s time to find the businesses or people you want to work with. Just because you’re bartering doesn’t mean you’re resigned to the bottom of the barrel when it comes to who you’re trading services with. Identify companies that you vibe with, have work you like, or you’ve heard good things about. Due diligence is a must here, so check them out with the Better Business Bureau, read their Google reviews and see if you can find other companies they’ve worked with that you can chat with ahead of time. Bartering is a delicate process—you want to trust the people you’re working with and ensure core values are shared between both parties.
Once you’ve identified the person or company, it’s time to pop the question! We advise reaching out via email in advance—showing up at someone’s business means that you could catch them at a bad time, which isn’t a great way to start a relationship. Introduce yourself and your business and propose swapping services; it’s really that easy. The worst thing they can say is “no,” in which case, reconsider your list of contributors and how you might be able to find a better match the next time around.
Another route to consider is joining a local bartering organization, a membership-based group that allows businesses to access each other’s services, or a time bank, where users can “bank” dollars for services earned. Both the National Association of Trade Exchanges and the International Reciprocal Trade Association hold their bartering org members to strict standards—meaning if a local group belongs to one of these associations, they are on the up and up. Check out TimeBanks.org to find your closest chapter.
Convenience is a selling point to these organizations, but it comes at a price. As we mentioned above, annual membership fees can be expected, in addition to administrative fees and percentages charged for each transaction (up to 15 percent). If you’re new to your community and the bartering process, one of these organizations can be very helpful—but if you’re entrenched in your neighborhood and have a laundry list of contacts, the bartering process can also be handled easily on one’s own.
Once you’ve reached a verbal agreement agreement with your trading partner, it’s time to put it in writing. Having a contract to reference will remind both parties that this is a business transaction and needs to be treated in a professional manner. Points to highlight include the exact details of the barter, with dollar amounts assigned to the services being doled out—partial barter/partial payment exchanges are also common, and just need to be hashed out in advance. You’ll also want to run the agreement by an accountant, as business bartering is often considered taxable income, and would need to be claimed in your year-end returns.
Putting a time frame on the exchange is also imperative. You don’t want a graphic designer using ten classes but only having turned in one or two designs for you. If the service you’re enlisting is a complicated one, you need to negotiate deadlines in advance so that you’re both on the same page from day one.