This post is part of the January Word Carnival — a monthly group blogging event specifically for small business owners. (It’s the most fun you’ll have all month!) Check out the rest of the fabulous carney work here. And don’t forget to join us for our Twitter Chat on Thursday (Jan 26) at noon (Pacific). We’ll be tweeting up a storm under the #WordCarnival hashtag.
I’ll be clear from the beginning: i’m totally a fan of the barter philosophy, as it’s especially good for new businesses, folks with skills but little dinero (hey, that’s me!….is it you, too?), and moving unusual or one-off tasks or items. There are some bits of how to barter, however, that i’ve not completely figured out yet. Fortunately, bartering goods and services is not a new concept, and it’s even a re-emerging one, so there are lots of online and offline resources to draw from.
Part of the reason that bartering seems attractive is because it takes the proverbial “middle-man” – $$$ – out of the equation: i have something (a good or service) that i’ve not yet converted into money, and you have the same. As long as we can figure a fair exchange rate, we’re golden. So money doesn’t completely leave the picture: it’s important to know the value in money of the things being exchanged so that they can be matched up properly, whether that means using the monetary value as a hard exchange rate or simply as a guide. That’s one of the parts i haven’t gotten a firm grasp on yet, so i like what Arthur at BarterQuest.com has to say about formalizing the process just a bit to protect the arrangement. This advice seems particularly sound if an actual business is involved:
Evaluate the Value
You want to make sure the arrangement isn’t lopsided, and that both parties are getting what they put into it. A mismatched barter can result in resentment, frustration and potentially even legal issues. To start, assign a dollar value to the goods or services that are to be traded. If there isn’t an even comparison, adjust the trade to make it comparable (i.e. trade 5 hours of a service A for 8 hours of service B).
Do your research into the person you’re considering bartering with, just as you would if you were hiring them to do something. Ask for references, check past work, dig into who they are and verify they have the skills and experience they are claiming. Just because bartering doesn’t involve money doesn’t mean it should imply discounted or less professional services, and you’ll save yourself a huge headache by verifying this in the early stages.
Use a Written Agreement
Again, just like any other business relationship, you should have a written agreement that explicitly outlines the terms of the arrangement. This is especially important when there isn’t a clear one-for-one exchange. Your agreement should outline the scope of the work on both sides, identify the deliverables, specify the duration or deadline for the work and spell out what happens if either side wants to end the arrangement before completion.
Keep Open Lines of Communication
Stay in the loop with your bartering partner to ensure that the trade is effective and that both sides are happy with the service they’re getting. If something isn’t working out as expected, or if you’re unhappy with the work you’re receiving, speak up and work toward a resolution. It’s also a good idea to schedule regular check-ins and milestones to make sure the bartered services don’t get dropped below paid work and forgotten.
Don’t Forget About Taxes
The rules for reporting barter transactions may vary depending on which form of bartering takes place and where you are located. According to the IRS, in the U.S. barter dollars are identical to real dollars for tax reporting, so you need to treat barter income as you would any other business activity. Keep good records and consult an accountant if you have questions or need advice.
Now, i’ll admit easily that formalizing a barter situation also seems to grate against the point of this human-connected, get-everyone’s-needs-met, don’t-fret-over-to-the-cent-accuracy exchange practice, and i definitely wouldn’t take it to that level for every arrangement. “I’ll let you borrow my ladder if you give me a few of the avocados” is just fine the way it is. If the goods or services up for exchange are of great monetary value, however, or if they’re completely unrelated, a little something more might be required to ensure that expectations are met and nobody gets burned.
In the small town where i live, there’s a thriving Facebook Group called the Ojai Barter Bin, and some amazing things are on the move around here: juicers for graphic design, tables for different tables, produce when the Farmer’s Market runs out, massage for just about anything, piano lessons for pilates…you get the picture. The Group operates on some reasonable ground rules:
One thing that rises out of such forums that i see as problematic – well, perhaps a minor nuisance – is the posting of “Here’s what I need…what do you want?”. For me, this feels like a lazy, one-sided entrance into “bartering”…i am always left unclear about what i’d want in exchange. It’s too nebulous, the wide range of possible fair trades are too great for me to consider. So, i’d say the Barter Bin’s guideline of “All offers must be well described and an equitable detailed exchange noted (be specific and fair)” is a great practice for any bartering situation.
This is a place for bartering or trading goods and services in the Ojai Valley ONLY (please no outside members). Please refrain from posting anything that involves a money exchange or blatant advertising of your business. All offers must be well described and an equitable detailed exchange noted (be specific and fair).
PLEASE also delete your post once a transaction is completed!
Last thing: don’t barter for things you don’t need, just because it’s what the other person’s offering. To me, that just seems like setting yourselves up to be disappointed or resentful, and what we’re after here is a mutually beneficial exchange. Bartering has a smidgeon of human soul in it that money transactions rarely do, so let’s be careful with one another’s living investments, shall we? Bartering only works when we are honest and fair, so it’s a great way to practice being that way for all of our relationships and transactions.
evan austin is a graphic designer and social media helper in California, and has bartered those services for massages, website help, business advice, advertising, and has even received one offer to pay part of a logo fee in “medicinal herbs”. See what he has to offer at eadesign.me .
[tweet2download file=”Barter-January2012.pdf” tweet=”#Barter Smarter: Opportunities & Cautions + free ebook! %%post-url%%” follow=”@graphicsbyevan” /][/tweet2download]
You can barter with me right now! i have this great ebook with myself and 10 other amazing business bloggers dishing out their best bartering advice, and you have a Twitter account! Wanna trade a tweet for a download?