Even in modern times, bartering remains a practical choice for small businesses. It's a cash preservation tool, something that's especially useful in a tough economy. It can also help move unsold inventory or put idled staff to work. Done right, bartering can even drive new cash business.
Stories abound of bartering during the Great Depression. From the doctor who got paid in chickens to the grocer who clothed his family by trading food for shoes, resourceful folks swapped what they could to make ends meet.
-The Times Picayune
Independent restaurants are turning to an old-fashioned method to fill tables—barter.
As they struggle to keep customers and pay the monthly bills, restaurants are swapping food for services like oven-hood cleaning and pest control.
-Wall Street Journal
Bartering in goods and services is making a comeback during the economic downturn.
-New York Times
Why would a small business bother with barter? "The main benefit is the new business we bring to them.
"Small business owners tend to be the biggest beneficiaries of barter because they can trade goods based on their own wholesale cost."
Think of barter as a supplement to your regular cash business, not a replacement for it. For most businesses, producing a 6-8% of sales per year by barter is a reasonable ceiling.
The key to successful bartering is knowing how to use the system. Learn to be flexible in your buying habits. Give your trade broker time to find what you want, and be willing to help by giving referrals.
There's no tax advantage or disadvantage to bartering. Cash sales and trade sales are treated identical under the tax law.
-Kiplinger Personal Financial Magazine
Businesses are bartering for many reasons. Most important, perhaps, is that it gives them the ability to leverage their cash reserves into more purchasing power while increasing cash flow and lowering overhead expenses.
Businesses are discovering that barter not only has financial advantages but it has marketing benefits as well. Barter brings in new business that could never be acquired in any other way.
It's best to work through a barter exchange network, which acts as a broker for its clients' goods and services. Such networks have thousands of clients, making them a viable source for many business needs, such as office equipment and supplies, printing, advertising, cleaning and maintenance services, professional services and travel and entertainment.
-Journal of Accountancy
As things become more and more competitive, and as more people start their own businesses, trading is likely to become more popular. It makes sense. Businesses will discover that barter can become an integral part of their business plans, enabling them to see higher profits, meet like-minded business owners and improve the quality of their business and personal lives.
-Print & Graphics
A barter exchange … Customers sign up to sell anything from drywall to dentistry, the exchange compiles the listings in a directory, and buyers contact sellers directly or through a broker employed by the exchange.
Barter is a powerful cash saving tool.
-Wall Street Journal
Businesses by the thousands are turning to barter. Creative entrepreneurs quietly have made barter a $600 billion industry.
Barter is not only a big help to my cash flow, it brings me new customers who often become repeat customers.
-Rob Ferguson, Owner, Café Continental
American Express Smart Marketing
Barter exchanges help cash-strapped entrepreneurs stimulate sales, develop new clients, convert excess capacity or inventory into revenue, and acquire goods and services needed to conduct a business. The most important benefit of barter is cash conservation: keeping cash in the bank while using barter revenue to offset normal operating costs.
-Nation's Restaurant News
Bartering turns empty rooms into valuable commodities. Trading room nights brings hotels new customers to feed other profit centers - such as food and beverage, telephone, laundry and parking -- with opportunity to return as a cash customer and even refer a few friends.
-Hotel & Motel Management
Bartering is an age-old practice that has always been particularly common among businesses in small communities. But it has exploded in recent years into a sophisticated undertaking backed by a huge network of third party players. Perhaps imbedded with the spirit of trade-savvy school kids, meanwhile, many business owners and executives have thrust bartering into a multi-billion dollar industry that spans the globe. To its champions, bartering has become a vitally important tool for maximizing a company's return on its assets while building a network of potential cash customers as well as trading partners.
Companies are starting to understand how they can use their products and services as a form of capital to buy things they need. The types of connections offered by bartering are virtually unlimited. To name just a sampling; Hotels unlock their rooms for advertising space in newspapers and magazines; printers roll their presses in exchange for legal services; manufacturers trade widgets for share of another company's stock; accountants offer tax preparation services for seats on airplanes; and employees of various kinds barter to provide incentives for employees, such as vacations at exotic resorts.
-The Practical Accountant
Barter doesn't change the way companies do business…just the method of payment.