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B2B Benefits of Barter

Written by, Samuel K. Burlum, Investigative Reporter
and author of The Green Lane, a syndicated column
Published on 6/06/16, a SamBurlum.com Exclusive

Small businesses life blood relies on cash flow in order to support its needs and make a profit for its owner. Not all businesses are so lucky to have constant clientele to provide ongoing patronage that will allow for a business to experience growth or advancement. Today’s risky economic climate has curbed many banks from funding small ventures due to the extremely high amount of potential risk of a business defaulting on their loan. Business owners must rely on other avenues of funding their business while conserving their cash for rent, utilities, inventory, and payroll.

Businesses can enjoy the many benefits in bartering with one another, when addressing growth solutions for that business. Businesses can target needs in the areas of marketing, site renovation, advertising, meals and entertainment for events, and other critical professional services using barter. Cash conservation seems to be at the top of the mind awareness however there are several other benefits to having a business to business barter relationship.

“Badger Barter has worked very well for my business. I have found dozens of customers that I would not have if I did not try this.There have been a number of times where cash flow has been tight and Badger Barter has come to save the day! Marketing opportunities, printing help, and great food choices to name a few. Thanks Badger Barter!!” ~Tim O'Brien, Owner, Apple Wellness

Post feature image why you should barter

Barter Purchases Are Tax Deductible

Barter income is treated just the same as any cash income, and barter can be used as a marketing tool. Most barter platforms, like Badger Barter, will provide for you at the end of the year a 1099B, which will reflect all the sales you have made using the barter system. Barter purchases which are tax deductible when using cash to make that purchase, are also tax deductible when purchased using trade credits.

When a business signs up for a barter system, they are usually interviewed by a Trade Consultant, whom helps you review all of your spending habits and your future sales projections to see which other businesses would be the right trade partners in the barter system. Even larger companies have begun to adopt bartering. It is estimated that over 65% of Fortune 500 companies engage in barter in one degree or another. Some barter platforms even allow you to apply for a line of credit, so your business has an opportunity to get the things it needs before it opens its doors to the public.

Business to business barter allows for each business to build a strong trust and long term relationship with one another. This new brand loyalty comes from a place where both parties mutually respect each other’s products/services, and understand how to properly engage in the barter platform. Both businesses are trying to reserve their cash, yet they are both willing to borne services that help each other grow. Business to Business Barter builds something that most cash exchanges can’t, and that comradery.

In an environment where it seems there is a cash register on every corner, businesses which offer barter and trade, can outlast businesses that offer the urgent “sale.” People who practice commerce with barter understand the importance and value brand loyalty, and would rather work with a fellow business that accepts barter, than one that is only about the hard cash in the till.
Businesses that offer barter often can have a habit of referring other businesses to the same client. Barter alliances are made when a client of one service is looking for another niche service provided by a similar type business. This usually happens under normal circumstances between attorneys that practice different areas of law; or physicians that recommend their patients to a specialist, but with barter something else takes place.
Businesses begin to work together to keep the wealth within the community, rather than see the potential customer head outside the network. The dog-eat-dog competition that occurs has a tendency to slightly simmer, knowing that all of the businesses within the barter network all have similar objectives. So businesses begin to work together in preserving cash assets; and begin to realize the true value of each other’s expertise when barter is in play.
Most barter platforms do limit the number of businesses within a specific category, to prevent “stacking” so businesses within the barter system have an opportunity to flourish. These exchanges are promoting their barter members, since participation is not always free. Barter trade platforms do charge a small fee for the services they provide, which sometimes can be paid with the barter credit itself. Usually these fees are minimal and are aimed at providing a support staff that is there to keep the barter network full of viable barter choices.

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Will Barter Work for You?

Written by, Samuel K. Burlum, Investigative Reporter
and author of The Green Lane, a syndicated column
Published on 6/06/16, a SamBurlum.com Exclusive

Are you a local or regional business looking for a competitive edge? Or maybe you are a business located on Main Street that has a limited budget set aside for marketing your business however you know you need to enhance and increase your marketing efforts. You tried getting a small loan to grow your business, however like many small business owners you find out that the banks are not lending money to entrepreneurs like they once did. You also find out that yes, you can use your credit cards but they come with a price of steep interest rates.
So how do you, as a small business how do you get the things you need without the consequences of racking up debt? The wonderful thing about your situation is that your business is not alone. Many businesses find this situation frustrating, during a time when cash is limited and competition is fierce.

 

“Badger Barter is a wonderful way for our nonprofit to stretch our limited resources. We are able to offer more services to members, because of products and services offered on Badger Barter. The customer service from the Badger Barter Staff is top notch. They are always responsive and find a solution to my questions.” ~Colin Murray, Executive Director, Dane Buy Local

Barter post

Barter is Smarter

Well, take a moment to consider barter. Yes, barter, which offers significant purchasing power for a local and regional business which has limited cash flow, yet desires to grow its business and acquire its business needs. By joining a barter platform, that is already established with a large number of participants, your business can take advantage of an existing business network of other businesses that utilities barter to fulfill their growth needs.

Businesses within a barter platform can trade services to fit their growth needs, reserving their cash for necessities such as rent, utilities, and inventory. If one thinks about all of the items a local business needs, there are many items which are common to all new start-ups. Business cards, a sign for the business location, marketing materials, legal and consulting services, and equipment repair, can all some of the products and services that can be exchanged for using a barter system.

If your business has a mark-up of at least 30% margin on your products and/or services; and are in need of expanding your business, yet lack the cash to do so, then barter may be an excellent choice for you. If you’re a business who appreciates a financial model to limit debt and wishes to leverage your skill sets to create value, the barter is a great way in achieving this goal.
Barter also offers lead generation and brand loyalty. When a business is engaged in, and implements barter as part of its ongoing business strategy, it will usually remain doing business with fellow bartering businesses due to the benefits of the barter. This gives new businesses an advantage to build its B-2-B clientele, while also accumulating barter credits it can spend on its growth needs.

So if you are a local or regional business owner whose business is a sole proprietorship, an limited liability company (LLC), or a family owned business, you could also pass along the barter credits to your personal use for at home needs. Barter can be used for other types of purchases such as meals and entertainment at participating restaurants; or for general lifestyle services such as salons and spas, or even for a home renovation.
Statistics show a recent rise in the use of barter by small to medium businesses. The latest study conducted by International Reciprocal Trade Association, or IRTA, estimate over 400,000 businesses worldwide transacted in barter that was equivalent to $12 billion dollars, worth the products and serviced exchanged, in 2010, and expects that number to increase by 5% to 10% in next coming years.
“A barter exchange acts as a third party record keeper for its participating business clients. These member businesses buy and sell products and services on a barter basis using credits to account for each transaction. Barter exchanges practice third party bartering, meaning the seller does not have to buy from whom he or she sold to, rather, the seller’s account is credited the value of the sale in trade dollars. This modern trade and barter method is different than the ancient “direct trade” when people swapped one thing for another. Modern trade and barter has evolved into a sophisticated alternative way for business owners to increase sales and revenue conserving cash, move inventory, maximize their excess or unused capacity to improve their financial bottom line” according to the IRTA.

Some examples of barter platforms are that of Badger Barter, located in Sauk Prairie, Wisconsin which hosts over 600 businesses in their barter exchange. The largest exchange is operated by the IRTA itself, called Universal Currency, the largest of its kind in the world. Since 1982, such barter exchanges were formally recognized by the Internal Revenue Service, where one must declare the value of the goods/services they obtain via barter. This action by the US IRS has aided in legitimizing the value of a barter system.

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  • About Badger Barter

    Badger Barter is a vast network of businesses that utilize the platform of barter, a type of trading, for goods and services; an alternative to traditional currency exchange when using cash to make purchases. Badger Barter is designed to help grow your business, by helping you conserve your cash for other business growth needs; while offering a credit system where you can purchase business needs, vital to sustain business operations.

    By trading, or “bartering” between a host of businesses within the organization, a business can virtually get started and secure needs such as... READ MORE >>
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