For many entrepreneurs, unless you’re blessed with deep pockets or a wealthy fairy God-mother, budget is always going to be an issue. Every dollar in and every dollar out needs to be optimized and leveraged to the nth power! It’s times like these when bartering for services and products makes absolute good financial sense.
For instance, if you’re an accountant and you’re in need of a new website, exchanging your accounting services with a web developer might be a good idea. But just because you’re bartering doesn’t mean you should NOT treat this just as you would a paid business transaction. Buyer beware!
One-off transactions are pretty straight forward, for instance, $5,000 worth of tax preparation for $5,000 worth of legal fees. But when the transaction is not so straight forward, even in the case above, both parties need to be very specific about the terms of service.
Having a website developed can be very involved. It usually entails multiple page designs, graphics, a shopping cart, a blog and so on. Accounting services can vary as well depending on the business or personal expenses, the size of the company, the type of company, etc. However, if you detail upfront on what you need, the service provider can give you a more precise estimate of the time and labor hours that will be involved. The value of the transaction should be based on those numbers.
The value of the item you’re giving away should be of equal value to the product you’re receiving. The dollar amount doesn’t necessarily have to match, but the stated value should be the same and agreed upon before service is rendered.
Bartering products is usually an even exchange because products are tangible items. Exchanging services can be a bit trickier. You are almost sure to place a higher value and price on the service you’re providing then the person receiving it. But that’s because you know first-hand the time, expertise, labor and benefits associated with the service. So how do you convey that?
1. Spell out the terms of the transaction just as you would with a paying client. For example, what’s the length of service? What outcome should be expected from both sides? And, what if one party isn’t satisfied with the work delivered?
2. Use a paid bartering service if the details of the transaction aren’t a one-off trade like a $500 purse for a pair of $500 shoes. Online bartering sites like an exchange or even Craig’s List are good sources to go to to find or offer services.
3. Hire a lawyer, especially if this is your first time working with this person. If you can’t afford a lawyer, write your own contract for both parties to sign.
4. Think about exchanging hours for dollars for some services. For example, you might pay down debt by providing a certain amount of hours of your service. Again, be very clear and upfront about the terms of the trade.
All-in-all bartering for services is a good idea and sometimes very necessary. As small business owners, we need to be resourceful and smart about our time and money. You can’t do it all in your business and that’s ok. Know when to get the outside help you need.
Have you ever bartered for services in your business? What was your experience?