7 Tips for Becoming an Expert Barterer

Post by  Via Entrepreneur.com

When Logan Hale moved his 5-year-old company, V3 Media Marketing, from Los Angeles to Fort Collins, Colo., he needed traction in his new town. To get work and create relationships as soon as possible, he bartered his video production services in exchange for advertising, gym memberships and more.

The result? “I got in with businesses I might not have been able to talk to otherwise,” he says. “It was a good accelerator, a way to get me into the swing of [a new] community very quickly.”


Barter–the exchange of goods and services rather than money–can help your company at any stage, but there’s no question that it can be especially useful in the lean startup phase.

“We used to not choose a service provider who wouldn’t barter services with us,” says Miki Segal, chief marketing officer of Jmac Supply, a Valley Stream, N.Y., security-equipment supplier that has bartered with lawyers, accountants and others. “I could go as far as saying that these types of deals kept us alive in the earlier stages of our startup.”

The practice offers countless opportunities, but successful bartering deals start with who you know. When Britt Menzies launched her Atlanta company, StinkyKids, she bartered her paintings and T-shirts in exchange for web design, attorney fees, public relations and other services through personal contacts. “I made a list of all my friends and family members, people I knew in high school or in college or even went to camp with,” she says. “Then I found out what each of those people did for a living.”

Formal barter exchanges–paid membership organizations where you bank trade credits to use with other group members–take the practice to the next level, connecting startups with vendors and potential customers. Regional and national barter groups can be found through the National Association of Trade Exchanges.

“The primary reason any business participates in organized barter is to increase sales,” says John Strabley, CEO of IMS Barter, a national barter network based in New Berlin, Wis. “Doors open to business-to-business customers that haven’t traditionally been loyal patrons.”

That’s in part because barter exchanges connect a much broader array of businesses than most companies could find on their own. The other main benefit is that unlike in one-to-one trading, exchange members don’t have to trade with each other; instead, they can “sell” to one company and “buy” from another, depending on their needs, all using barter credits that are tracked independently by the exchange.

Want to get in on the barter game, either person-to-person or through an exchange? Here are some rules of the trade.

1. Be selective.

Trade only for what you actually need. “I bartered web-development services with a business coach, and we delivered on our end, but the coaching fell through. We kept rescheduling and postponing,” says Elise Whitworth, co-owner of Satdaya Studios in Hurricane, Utah. “On the other hand, if I bartered with a graphic designer, I would definitely use that. Or a bookkeeper: I would delegate that in a heartbeat.”

At the same time, offer only what you can give easily. Instead of liquidating excess inventory at a loss, Royce Leather, an accessories manufacturer in Secaucus, N.J., used its leather duffel bags, totes and wallets to tip delivery drivers and pay the janitor. “We transformed slow-turning goods into cash equivalents,” says marketing director Billy Bauer.

2.Tap the marketing potential.

Bartering isn’t only for products and services–it can get your foot in the door, too. That’s how Philadelphia’s MVP Interactive is building its sports-entertainment business, accepting season tickets and event passes in exchange for putting fan-photo kiosks in venues such as Lincoln Financial Field, home of the NFL’s Philadelphia Eagles.

It’s also how Princeton, N.J.-based Resound Marketing signed its first restaurant clients. “We wanted to build a practice around food products and restaurants,” says co-founder and principal Kevin McLaughlin, explaining that the agency offered restaurants a discount “with the understanding that we’d increase that rate once we’d demonstrated value.” But when it came time to renegotiate, some restaurants couldn’t pay full price and instead offered credit for meals. Now Resound works on retainer for a combination of cash and credits; the latter are used for team and client lunches, happy hours, dinners and gifts. Restaurant clients “aren’t our most profitable accounts,” he says, “but they’re a hell of a good time to work on.”

3. Go beyond business.

Dan Cumberland, owner of Seattle’s Sparkfly Photography, trades event coverage, headshots and other camera work for yoga classes, massages and chiropractic care for himself and his wife, Stacia, Sparkfly’s business manager. He plans to use some of the bartered perks as gifts for interns, too. “By bartering for services we were already using, we’ve been able to offset some of our living and lifestyle expenses while we’ve been starting the business,” Cumberland says.

Trisha Craig, owner of Music Makers music school in North Hampton, N.H., trades lessons for cleaning services, farm-fresh vegetables and eggs, and
fundraising for nonprofits she supports. In one case, she bartered with a young tech whiz who organized all her music in exchange for flute lessons. “The project was overwhelming for me but fun for him, and we were both thrilled with the exchange,” she recalls.

4.Make the price tag reflect real value.

When V3′s Hale bartered a video series for a local gym chain, he factored in not only the actual production costs but also “the usual profit portion of a standard budget,” he says. In trade, he got advertising on the chain’s website, a prominent sponsorship at an annual charity event and gym memberships for his staff.

“We made sure to do a true dollar-for-dollar barter of our services vs. their services,” he says. Doing so is key because otherwise, “it’s too easy to just say yes to offers that land in your lap, and then have to react and find value.”

Whitworth of Satdaya Studios used to offer discounts on the premise that a barter carries additional perks like publicity and networking. But now she’s back to valuing her services at the actual cost. “It sets the expectation that once the barter is over and they want to hire us, they can expect to pay that rate,” she says. “It also creates increased respect for our time, with a stronger sense that the value is high.” One more reason? “If the other party doesn’t come through on their end, we can charge them retroactively at our full value,” Whitworth says.

5. Get it in writing.

Draw up a contract and include the value, scope of work and, most important, deadlines. “I had a couple of instances where a [web design] firm I was working with got busy with their client work, and since my deal was purely barter, they bumped me to work on their billable client projects,” says David Menzies, a public relations consultant who owns Global Media Strategies in Raleigh, N.C. “That delayed my plans for marketing my business, which bled into my revenue stream.”

Meanwhile, if discounts are being offered, add a contract provision stating that “any discounts will go into effect only once the other party has completed their end of the deal,” Whitworth advises.

6. Track for taxes.

Barter deals may not be cash, but they still result in income and are taxed accordingly. Organized barter exchanges must report goods and services sold through barter to the IRS, and so must people and companies trading directly. So keep accurate notes about transactions on both sides of the trade, including the estimated market value and whether the service or product was work-related or not (e.g., a head-shot vs. a haircut).

Keep all receipts and invoices, and track related expenses on your end, since those, like all business expenses, can be deducted. More information can be found on the “Recordkeeping tips for barter transactions” page at IRS.gov.

7. Know when it’s time for a barter break.

Barter groups helped RoyalText.com build a client base for its text-message marketing campaigns. “The demand was overwhelming,” says Robert Livingstone, CEO of the Weston, Fla., company. However, he adds, it eventually became clear that clients take their campaigns more seriously “when they have skin in the game with real dollars.”

Mary Juetten, founder of Phoenix-based Traklight, which helps companies identify and protect their intellectual property, has bartered her time and services in exchange for access to conferences, workshops and exhibitions where she can promote her business. But she offers this caveat: “I volunteered for a conference because I wanted to hear the great content, and I was stuck at a door checking badges or at a table out of earshot, therefore defeating the purpose of the barter.”

Lesson learned. “Ask upfront what the trade is and be specific about your role,” Juetten advises. If it’s not a value-for-value proposition, skip it.


The reviews are in… exchanges that started using VB CRM to enhance brokering and customer relationship management love the flexibility and ease of use to track and manage notes, reminders, tasks, emails, calls and appointments, as well as email campaigns and trade opportunities.

VirtualBarter now includes commerical strength, cloud hosted, managed CRM with every Enterprise or above subscription at no addtional cost! Exchanges get the powerful benefits and features of a commercial CRM platform without the typical $35 to $75 per month per user cost of hosted CRM software such as Salesforce, SugarCRM and Zoho, which will save many exchanges hundreds of dollars per month.

Exchanges that upgrade from a Startup, Basic or Pro version of the vBarter Exchange Management Software in January or February prior to the launch of vBarter Phoenix, also receive a free $140 CRM customization package that includes branding with their logo, member data import, tab set-up and administrator management.

With VB CRM, exchanges have the felixibility of installing plug-ins from a vast library of add-ons to enhance the features and functionality of their CRM, making customization for an individual exchange’s needs virtually limitless.

VirtualBarter is built to lead the way with great opportunities to help barter exchanges succeed.

There are barter exchange software providers, and there are barter exchange software companies that are much more than just software providers. VirtualBarter offers opportunities no other software company can match, with proprietary products and services to help businesses grow.


Due to the challenges barter exchanges faced with US banks not quite understanding the barter business model, causing them to decline most merchant account applications, VirtualBarter partnered with WorldPay to bring exchanges a variety of merchant account services for small businesses, making it easier to accept credit and debit card payments, face-to-face or on the go.


Bruce Kamm, founder and CEO says: “most banks will not provide a merchant account to barter exchanges, as bank underwriters do not understand the barter exchange business model. VirtualBarter collaborated with Worldpay underwriters to help them understand the barter exchange business model, so that barter exchanges are an approved business type at Worldpay.”


WorldPay, the third largest processor in the US, will review an exchange’s merchant account statement to determine the percentage they are actually paying for merchant services. Most exchanges will find that the 2.2% discount rate quoted by their bank is actually 6% after adding in all of the extra charges and unqualified fees.


Bruce continues: “After switching to WorldPay, we saved hundreds of dollars a month in just the first two months. An exchange can save 30% or more on merchant processing fees with a WorldPay account. For example, if your exchange processes just $10,000 a month, you can save $200 to $300 per month.”


“VirtualBarter is not your typical barter software company. We partner with our clients. We continually strive to find value-adds to help our exchanges succeed. And now, even outside our client list, we’re able to help enhance member satisfaction and increase profitability”, says Kamm.


Become an Agent and earn immediate residuals!

Not only will your business benefit by switching your merchant services, but you can become an agent and have your own co-branded website with your logo, and offer merchant accounts to members.


Earn $50 for each new account + ongoing cash residuals that have the potential to increase an exchange’s revenue by 50% or more!


Contact Lauren Shepard to get started: lshepard@virtualbarter.com


More news

vBarter Phoenix, VirtualBarter’s new exchange management platform will launch soon. Packed with a vast array of new features, including a totally redesigned user interface and many collaboration and social media features, the new platform has advanced processing, marketing, and member as well as prospect management built into the software. All built to make exchange management easier, current VB exchanges will automatically be upgraded to the new software.


vBarter Phoenix is a revolutionary, new trade exchange management platform that features a brilliant approach to the way members interact with your exchange and transact with other members. Widgets, Plug-ins & Apps integrate a brilliant array of services with extensive API’S that extend functionality and transaction processing to third party apps and devices.


“It’s modular and customizable. An exchange’s branding, and specific feature set with customized modules provides a unique user experience in a comprehensive platform. Real time alerts and integrated statistics provide a birds eye view of the data an exchange needs to make intelligent decisions. Just a low monthly software subscription fee provides for a high return by minimizing your administrative tasks while enhancing member satisfaction. We’re excited to offer this revolutionary platform to the reciprocal trade industry”, says Mr. Kamm.


About VirtualBarter

VirtualBarter is an Internet technology leader that establishes new online marketplaces, distribution channels and point-of-purchase transaction processing. Designed for worldwide barter and trade, VirtualBarter is built to improve and deliver quality services that enhance client and member satisfaction.