Sometimes you need something done for your business and you just don’t have cash on hand to pay for it. In “Bartering May Ease Cash-Flow Crunch, But Follow These Rules,” Carol’s recent post on Bank of America’s Small Business Community, she shares some tips for how to choose a “bartner” and structure a bartering agreement. Carol begins:
It is often said that “money makes the world go ‘round.” This couldn’t be truer for entrepreneurs, who may find that money goes out the door at a more rapid pace than it enters the business.
Business owners often need to be entrepreneurial when it comes to operations, including finding ways to get creative with financing. While we always think of money as our only currency, many of us provide expertise, goods and services with substantial value that can be bartered to grow your business.
Done correctly, you can use barter-based partnerships (let’s call them “bartnerships”) to take care of some business needs while building great collaborative relationships in the process.
However, like anything else, where you fail to prepare, you prepare to fail. And, in the case of bartering, that means anything from incurring hefty legal costs to unexpected tax bills.
Here’s a roadmap to help you barter and partner better so that it adds to your business.
Vet potential partners
When you go to partner on a barter deal, you want to ensure that your “bartner” has a positive reputation and shares your base business values.
One way to do this is to approach associates in your network where you already have a positive relationship. You can also seek recommendations from trusted business associates and advisors. If you expect to barter regularly, consider joining a barter group that verifies or rates participants, or even a barter exchange that intervenes in negotiations.
Whether you know your bartner or not, do an online search and check reviews, their social media postings and Better Business Bureau complaints to see if there is any history that could create an issue for the relationship and your business’s reputation.
Establish a fair exchange
Even in barter arrangements, the dollar remains the core standard of value. Both parties need to set and agree to a firm dollar value for the goods and services they’re exchanging to create a benchmark of “fairness” for the transaction.
You can read the rest of the post here.