Modern startups avoid cash flow during setup to sustain the business and lower expenses by exchanging goods or services. Unlike direct trading in the past, lately, there are bartering networks or platforms that help different businesses find collaborators or contacts that may be interested in what they’re selling or offering.
A large client base is essential for a company’s survival, and advertising alone is not enough to meet the demands of changing times. A barter exchange opens up avenues for expanding a new business. One can also turn debts into workable assets that benefit both parties.
Barter members and connectors are captive customers as it allows them to use their trade credits how and when they like, and the exchange is safer than buying in cash from someone else. They can sell idle inventories at full retail price on trade without suffering a huge loss. One also builds a network of service providers and clients with scope for referrals and repeat business.
In today’s fluctuating economy, especially after the COVID-19 pandemic, it’s really important to save up on cash. So read ahead to find out how bartering can help your new business.
1. Saves cash
Without enough cash, businesses and consumers can land in major trouble. In rare situations like demonetization, marketplace swings or losses, businesses need cash on hand to invest in new infrastructure or deal with unexpected expenses. Even a company with reasonable profits or income could have negative cash management.
An organization’s potential for long-term success also depends on its cash flow. Although not too common, a bartering economy saves cash by exchanging goods or services immediately. The trade is reciprocal and fair as each party gets the thing they want or need. The barter system is rarely used for trade exchange between big companies but is valid for small businesses or startups. A startup can save on spending dollars by exchanging their goods or services to pay for things they need to run their business successfully.
2. Expands market beyond cash-paying accounts
The history of bartering, defined as quid pro quo in Latin and meaning “something for something”, dates back to Mesopotamian tribes, long before the invention of monetary currency. Babylonians further improved the system.
Lately, small businesses use bartering to reduce financial risks, build business relations, and secure supplies and services. A barter company has networks across the nation, and business owners can find what they need without affecting their organization’s cashflow. The exchange of services goes beyond cash-paying accounts, like direct or one-to-one bartering, which works when two parties offer exactly equal amounts and quality of work. For example, a graphic designing company can provide services to a printing house in return for print advertisement. Although time-consuming, trade can be made easy with a wide network of connections.
3. Allows negotiation
Bartering goes beyond just paying a sticker price or asking for a wholesale discount. There is always room for negotiation as service or goods providers consider factors like time, skill, labor and rarity when they quote a price, and the deal is settled only after the consumer finds it fair and justified. Barter networks provide a range of options to new businesses that help them negotiate and choose services based on their affordability.
4. Saves time on developing business deals
Well-known barter sites list goods and services with a price or “trade” option that indicates that you’re willing to exchange. Sometimes websites even allow you to put what you’re looking to trade so that you know if contacting a consumer or seller is worth your time.
Barter exchanges are taxable, and new businesses should keep tabs on their trades to avoid fraudulent activities.