Barter Your Way to Profit

Have you ever faced any of the following situations? 

One: You need a lawyer but you don`t have the cash for 

the retainer. Two: You have a warehouse full of 

inventory that just isn`t moving. Three: Sales are 

down and you need more customers.

Each of the above problems might be alleviated by 

bartering.

1. What Is Bartering?

Bartering is simply exchanging goods or services 

without money.

For example, you give your accountant and his family 

a meal in your restaurant in exchange for the 

preparation of your income tax return. This is a 

barter transaction because no cash changes hands 

between the two parties.

2. Bartering Improves Liquidity and Profits

A shortage of cash is not an unusual situation for 

either businesses or individuals. Perhaps you would 

like to advertise in a certain publication but just 

don`t have the money. Have you considered exchanging 

something of value that you have (a service or product) 

for the advertising you need?

Such a barter deal is mutually advantageous. Neither 

party has to part with cash to obtain the desired goods 

or services.

Not only does bartering conserve cash, but it can 

actually generate sales and profits. Inventory turns 

over more quickly. Service providers sell more of 

their time than they would had they insisted on cash.

3. Bartering Creates New Customers

Notice, also, that both parties just made a sale to 

someone they wouldn`t normally have. You both just 

received a new customer.

If happy, your new customer can refer you to many 

more customers, including ones who pay cash. Perhaps 

your original barter customer may also start paying 

cash in future transactions with you.

4. Barter Exchanges

In addition to trading with individuals and 

businesses, you might consider joining a barter 

exchange.

A barter exchange is a business that facilitates the 

exchange of goods and services between its members. 

There are membership fees for joining. Also, the 

barter exchange charges a commission on transactions 

made through it.

5. Tax Aspects of Bartering

Barter transactions made by your business must be 

reported for income tax purposes. Also sales taxes 

may apply on such transactions.

For increased liquidity and new customers, consider 

bartering your way to profits.