Bartering dates back to 6000 BC where the Phoenicians traded goods/services with their counterparties with no money involved; however, one of the obvious problems with the system was the inability to standardise the “unit of account”. In the 21st Century, entrepreneurs are using the same principle to grow their businesses without impacting on their bottom line and cash-flow; but how does this work in practice? Mike Lander looks further.
There are of course online bartering platforms today such as http://www.bartercard.co.uk/ and http://www.u-exchange.com/home but how does the principle apply to SME service firms looking for support growing their businesses?
One example is where a digital marketing SME trades SEO services to improve online visibility/sales lead generation with a Professional Services firm providing Business Strategy Consultancy to help the digitial marketing SME achieve rapid, profitable growth.
If you are intrigued by the application of bartering to grow your business, I recommend you adopt a few basic principles before negotiating:
- Have a clear vision of what success looks like over what time period
- Know your counter party and check out the value/references of their core service you are interested in bartering
- Place less emphasis on economically valuing the services being traded and more emphasis on reciprocal, balanced scorecard benefits
- Set success criteria for the barter and measure value every quarter
- Build trust with your trading party prior to the transaction
The key to success with modern day services’ bartering is for both parties to identify something that they have, which the counter party values, yet has a low/zero marginal production cost to the provider.