Barter Organizations and Contracts

 

In my last article, Barter Power, I talked about the general premise of bartering and how it can work for small businesses. Now let's get into some specifics of how bartering works. When small businesses choose to barter for goods or services, there are options in how this relationship is established.

Many areas have barter or trade exchange organizations and there are similar national organizations. A barter network allows you to purchase any good or service from any member of the network. Other members of the network can purchase your goods or services. The network will keep a record of these transactions so that you have a running balance of "trade dollars." These networks generally have membership fees and commissions, and some have monthly or annual administration or maintenance fees, as well.

You can also develop your own barter contract where you trade specific goods or services with a specific business or individual. So, how do you choose what option is right for you and your business? Here are some tips to help you make that decision:

National Barter Network: A national network may make sense if your business needs goods and services offered around the country. For instance, if you are a frequent traveler, you may benefit from a network with lots of hotel and dining offerings. If you are more likely to use services like car repairs, printing, or landscaping services, a national network is probably not the solution for your business because the network members are less likely to offer services in your area.

Local Barter Network: A local network, like The Trade Exchange here in Portland, is generally made up of local businesses, but there may be a few national businesses in the mix that offer services locally and some extended services depending on that organization's connections. If your business is looking for barter options with a national office supply company or that offers the ability to trade for antiques auctions in Malaysia, a local network might not serve your needs. However, if you need plumbing services, local lodging for an out-of-town client, or massage therapy, this type of network can be ideal.

Direct Barter Contracts: If you're not sure you're ready to jump on the bartering bandwagon, but need a specific good or service without breaking the bank, a direct barter arrangement may be your best bet. If I need my car repaired and my local mechanic needs business consulting, we can easily trade our services. We both get something we need without affecting immediate cash-flow. It is important in these direct barter arrangements to create a contract that outlines exactly what each party will be delivering and what the expectations are. This contract could be drawn up by a lawyer or written by a competent business consultant. The important thing is to be explicit, even if you're doing business with a friend. A simple misunderstanding can leave one or both parties dissatisfied with the arrangement.

Now that we've covered the options in the types of barter arrangements, my next article will focus on tips for finding the right network or direct barter partner and how to avoid some of the potential pitfalls so that your experiences can be positive ones.