Bartering works in a smart but simple way: you trade goods or services with another party without exchanging cash. Because it’s the oldest form of commerce, bartering is often associated with pastoral landscapes and farmers swapping goats with the town doctor for medical care — but the concept is evolving and still alive in the digital age.
Evidence from past recessions shows that bartering in the United States increases during periods of recession, when companies look for creative solutions to protect their bottom line.1 In many ways, bartering means partnering with other businesses or sole proprietors. These kinds of partnerships can solve multiple dilemmas and be mutually beneficial. For example, new businesses can become more invested in their community when they barter with already-established businesses.
As a small or mid-sized business, you may be curious about bartering with other companies or individuals to meet a core business function or growing business need. Here are 3 ways you can incorporate bartering into your business — and network with other businesses to save money on the goods and services you need.
1. Tapping into more resources
An advantage of bartering for services is you may be able to access some services or resources you wouldn’t typically budget for or otherwise afford. The beauty industry is a good example of small business owners or sole proprietors being financially savvy and using bartering to bridge the gap between what they can offer and what they need.2 For example, a hairstylist might swap hair services with a social media marketing specialist to better leverage social media content.
2. Boosting sales
Bartering works best for even exchanges and when each party has a need that must be met. Know your expectations from the outset when looking for a match. Say you’re looking to boost sales at your salon by booking more appointments and think social media traffic will help — but you don't know where to start and need a social media marketing specialist. You know you can offer them chair time as payment. It’s a win-win situation, especially if that social media marketing specialist acts as a walking advertisement and gives word-of-mouth referrals for your great work.
Barter exchange networks — like International Monetary Systems (IMS) — can help you zero in on a match. Or you can use social media or your own business network to find someone.
3. Building skills
Some business owners have no desire to exchange services, but plenty do. The willingness to swap services is an important part of making a barter match. Early-career individuals or professionals learning a new skill could be more willing to barter, as it’s a great chance to gain hands-on experience. Of course, it’s smart to be transparent about your experience level when negotiating the terms. You might also get some quick feedback on your work, which could be a bonus
These examples can apply to other small or mid-sized businesses. Creative services, financial planning, and construction are a few other fields where bartering can be done — and not just during recessions. You can rely on it at any time to scale your business or expand your service mix. It simply depends on your business's needs, as well as your interest in staying connected to other businesses in this way.
Bartering in the Modern Era
Because money isn’t exchanging hands, it can be easy not to think of bartering as a transaction. Know that the Internal Revenue Service (IRS) does consider bartering to be a form of income, so you’ll want to consult your accounting team about tax implications.
Bartering is a smart way to improve your company's cash flow and open up opportunities to save money on the goods and services you need. Plus, it’s a great way to network with other businesses in your community and your industry, as long as you’re negotiating even exchanges for both parties involved. If you want to recession-proof your business in an unstable economy, bartering is one option to save cash.
