During this edition of FranNet’s blog, we’re going to discuss the age-old concept of bartering. And you may be surprised to find out that bartering isn’t as age-old as you think. In fact, the process by which two business trade in-kind benefits in lieu of cash payment is actually experiencing a revival of sorts. And the benefits can really add up for a startup business like a franchise.
Bartering is supposed to be an equal trade between two parties. It’s also referred to as “in-kind” meaning no actual cash trades hands. Startup companies, who typically have tight cash flow restrictions, can find the activity a liberating exercise, allowing it to build and maintain assets without having to write a check. Examples of bartering run from small exchanges all the way up to bulk transactions.
How about a real world franchise bartering example? Suppose you recently acquired a business consulting franchise. Your aim is to counsel and assist other small businesses in matters related to accounting, productivity, and operating procedures. You found a perfect lease for your operation in a trendy, but older downtown building that isn’t necessarily up to code. But you don’t mind because your commute is only 10 minutes. Also, you have wires sticking out of your ceiling that the building inspector needs you to update. Why not contact a local electrician and offer a quid pro quo bartering opportunity. You help the electrician improve his business, he brings your office up to code. And it won’t cost either of you a cent in actual cash.
An added benefit to bartering comes with establishing a reputation for the goods or services you provide. Keep in mind that when you’re just starting out, you need that credibility on the street. And bartering is a good way to dip a toe into the water of your local economic feedback loop. The boundaries of bartering are only limited by your imagination.
To test out a bartering opportunity for your small business or franchise, begin by developing a list of critical needs. It may not be as pressing as wires dangling from the ceiling, but we’re certain you’ll find a couple of items you could stand to have. Next, assess exactly what you have to offer. This will vary quite a bit depending on what type of business you’re running. But you have to come up with a fair proposition. Once you’ve decided upon an exchange, carefully select a bartering partner and lay out your case.
It could be as simple as lawn care. It might be improving the infrastructure of your brick and mortar location. It could even be tax preparation services. If you’re a simple dry cleaning franchise, you have something to offer in return. Free service. Just make sure you can demonstrate a fair trade based on cost. If so, convincing your bartering partner shouldn’t be difficult.
We all know that opening a new franchise can be a vulnerable time and a strain on your resources. Because your bottom line financials are important, there’s nothing wrong with trying to mitigate the impact of spending. Bartering offers you a way to lessen the worry of your first few months in business. And if both partners are satisfied with the bartering arrangement, there’s nothing to say it might not become a permanent solution, thereby saving you an untold amount of money in the long run.
Bartering has gone mainstream to the point that several national networks may even offer the chance to join a group in your own area. With a little bit of research, you can find other small businesses who have signed up to list and offer goods in exchange for service and vice-versa. Typically, barter groups charge a nominal fee off the top of each transaction as a fee for inclusion in the network.
You may not have considered bartering to advance your small businesses’ interests, but the evidence is mounting that the age-old tactic is quite worthy of investigating.
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