Start-up businesses can conserve precious operating cash by making purchases with their products rather than their profits, thus freeing up cash and bringing in new sources of business through the drawing power of the exchanges. When business owners “buy” products or services first by using trade dollars, they are essentially able to make purchases with interest-free credit lines.
Another key benefit to the entrepreneur is his or her ability to purchase such services as advertising on a barter basis and attract cash-paying customers. Additionally, joining a barter exchange – either offline or online – has the immediate and important effect of creating a new sales channel for a member business: once a business becomes part of a private “economy” using a proprietary barter currency, other businesses who may never have bought and sold from one another now are incentivized to do business with fellow exchange members, thus creating new sales channels.
For those businesses and individuals considering barter as a technique for maximizing profits, the experts suggest some of the following tips:
Think barter before making any purchase for your business. This is especially critical for start-ups, when you may well be able to finance the cost of office furniture, phone systems, advertising, and the like by using trade dollars now that you won’t have to replace until later, once your business is off and running.
Use barter to maximize sales by selling unused or unsold inventory at full prices. This can include: filling empty hotel rooms and airline seats; creating new sales channels by a new group of barter buyers with available trade credits to purchase from you at full prices; and providing professional skills or services to maximize billable time and reduce downtime.
Train your vendors to use barter to your own advantage. When suppliers approach you for business, try to make barter one of the contingencies of making your deal.
Buy on trade, resell for cash. Barterers frequently have the opportunity to acquire goods on trade, which can be resold to cash customers. Graphic designers, for instance, can buy typesetting or color separations on trade and bill the cost of these expenses directly to their cash-paying clients.
Financing a start-up in this economy is challenging. Before buying anything for your start-up, consider barter for things like office furniture, phone systems, and advertising, conserving precious operating cash. Call Exmerce at (403) 215-9220 for assistance with your start-up.