Saturday, May 12, 2012

The Tumultuous World of Trade

Do you trade services with other businesses? Do you find that is a benefit to your business? My dad, a business owner, taught me the value of trade at an extremely early age. In retrospect, I am not sure if we  got the best end of the deal or my dad was just being his usual generous self but let's just say in exchange for cold air at our local Greek restaurant, I never went without a lifetime supply of barley soup. Which sounds a little funny, but it was really good. More importantly, it taught me the value of trade, or barter as it was called back  then. When I worked in radio, our trade department was as important as any area of the business. I haven't paid to wash my car or go to the movies in almost two decades, it rocks!!

When you start your own business, trade with cash may be something you wish to consider. I feel with some cash behind it, it shows responsibility on both ends. Trade is actually kind of cool if you manage it properly. Think of things that you don't want to lay money out for and see if the two of you can utilize each other's services. I currently have awesome trade agreements set up and they work really well. 

Any trade deal may be beneficial if you lay down certain parameters. Some that I have learned along the way:

1. Know if you are the kind of person that can work on trade. If you separate your trade clients from your paying clients and think of them different in any other light, than trade might not be for you. When you negotiate your agreement, you have to have a number or value in mind that will make this worth it for you. You can not put these people to the side and work on them later because they are trade. They should be treated exactly the same as a full paying client. If you don't think of them in this light, you need to reevaluate this agreement, as you are providing a disservice to your client as well as a successful flow to your business. 

2. Make sure the other party have the same goals in mind. The ideal trade investment scenario is this: You provide a normal bill of service and the client pays cash with a agreed amount gift certificate for you to use as you wish. No stress! The situation stops working when you the agreement is service for service. When you are providing the same amount of service month to month and the other party starts wavering on their end of the agreement, that is a red flag. When you feel cheated or you feel that you are last on their list for them to provide the service on their end, it is time to get out.  

3. Trade can also be used as a negotiation tool for leverage of a cash investment. You can easily look like The Negotiator if you have someone wavering at your fee, and you take $50 bucks cash off and ask for it in trade.

4. Be weary of people who have the moo and want to trade only. Since you are providing the service, it should be your ultimate decision if you want to go this route. There is a difference between a struggling business owner like you that wants to work out a trade so there is a mutual benefit, and a business that is trying to get out of spending money with you, just for the sake of saving money. Know the difference and make the best decision for what works best for you and your business.

5. Be clear that this deal can be renegotiated at any time You may start doing this for a couple of months and realize that this may not be the best deal for either of you. Make sure when you start this agreement, both parties will feel comfortable revisiting if it isn't working. 

How do you deal with trade? Any nightmare stories? I would love to hear them!


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