Cash is liquid. Is barter?

We know that when we consider the liquidity of an asset cash is number 1. Of course the flow of that liquid is generally out. Like water running downhill cash goes out of the business with ease, it’s getting that liquid uphill and into the business that requires ingenuity.

Barter is different. Finding a buyer willing to purchase your goods or services using barter dollars is not difficult. After all who doesn’t want to purchase something with little to no cash out of pocket?

So barter can flow into your business with ease, like water running into a valley, but getting it to flow up the valley wall to purchase what you need for your business can be a challenge. After all not everyone participates in organized barter.

Although a barter dollar or trade credit is taxed the same as a US Dollar you cannot pay your taxes with barter dollars. The descrepency between a barter dollar and a cash dollar is obvious; cash is easier to spend and more difficult to acquire while barter dollars are easier to acquire yet more difficult to spend. This is due to the fact that not everyone will accept a barter dollar as means of payment for goods or services rendered.

What does this mean for the trader?

Well the first thing it means is that in order to barter successfully you must have a plan. You should know how and where you will spend you barter dollars before collecting large sums. You need to account for the less liquid state of the barter credit and adjust your plan accordingly. Rather than looking in your barter account with thousands of credits and calling your broker asking for x y or z. Call your broker and find out what is available, if you find something that you want or need, then proceed to sell your goods and services to purchase that item.

Another option is the barter credit line. Some barter companies offer their clients a credit line. This can be a valuable tool in properly utilizing barter. Remember barter and cash are different, and remember how. Barter credits can be harder to spend yet easier to acquire. So credit lines can be used more liberally in the barter world due to the fact that getting the credits to pay them down would be easier that getting cash to pay down a cash credit line. Look for interest free barter credit lines for an even better solution.

Also remember that the goods or services that you are interested may not always be available in your barter system so use your credit line to make the purchase while you can. Then work with your exchange to market your offerings to the barter network being sure to note before hand the amount of barter work your business can handle in a given month.

Barter and cash are similar in many ways and they differ in many ways. Understanding how barter and cash differ in liquidity can help immensely in successfully utilizing barter to benefit your business.

How to increase market-share and reduce cash expenses; Even in a slow economy.

Every business is presented with the same fundamental “problem”. There are a number of businesses and business models and each of them attempt to answer the problem in a unique manner.

 

The problem goes something like this:

 

Businesses need cash to operate

To operate a business requires cash. The expenses of a business can make a long list; start-up capital, business machines, marketing, payroll, rent, utilities, communications, and more. There are very few opportunities out there that give away cash for nothing, it’s hard to find large payoffs that require no investment, and money certainly does not grow on trees. (It does fall from the sky on certain bank commercials but they went out of business so that’s probably stopped now.)

 

A slow economy decreases cash flow to businesses

When the economy is slow or business is just slow cash coming into a business is significantly reduced. Customers or potential customers are hindered by their tightening budget. Other, un-reached customers or markets need to be tapped into. If the percentage of buyers in your market decreases new markets must be opened up to maintain sales.

 

Attracting new business costs cash

Well now we start seeing the dilemma here. If my cash flow is reduced because business is slow and I need to reach more customers, then how can I afford to broaden my reach if I don’t have the cash to pay for marketing?

 

Credit is expensive and requires cash flow to repay

You can finance business expenses like this however with finance charges this ends up costing more in the end. Also, you may already be extended with other expenses.

 

So what businesses need is a way to

 Increase Market Share while Reducing Cash expenses.

             Businesses need to reduce cash expenses while attracting new business

             Businesses need to avoid expensive credit while paying for goods and services

 

How can this be done?

Barter is the perfect solution.

When a business can purchase marketing or other needed business services with barter credits, then the business is reducing cash expenses. If the marketing is effective you have increased your market share while saving cash flow. Here is the best part there are no expensive financing charges to repay. In fact to pay for the credits that you spent business is sent to you! I’ve never heard of a credit card company doing that.

Networking with Barter

Networking has always been an essential part of business whether it was called networking or not. If you are a seller of goods or services potential customers need to know that you exist in order to conduct business with you.

The internet has brought us new ways to network, a whole genre of websites dedicated to ’social networking’ allow users to keep in touch and communicate thoughts, opinions, personality, experiences and more. Businesses are beginging to utilize social networking sites in their web promotion with “web marketing 2.0″. This phrase describes how a new way of making your business website known is developing in places previously considered unlikely. Blogs, social networking sites, video sites and more are being utilized by businesses seeking to broaden their market reach.

As a member of a barter exchange you are automatically placed into a network of businesses doing business with eachother. When you join an exchange you are instantly broadening your market reach. Your barter broker can also assist you in advertising your business within the network as well as marketing your products and services to other barter networks that your exchange trades with.

Another way barter can assist in networking is by paying for marketing services with your barter dollars. What an excellent way to convert trade dollars to cash dollars? You can now market you business within a barter exchange and with the trade dollars you recieve there purchase advertising and marketing services to market your business to a broader cash paying customer base.

Another benefit to networking within a barter exchange is the controls that are involved in barter transactions. Members must conduct business honestly and within the rules of the exchange. Businesses that do not conduct transactions properly will be removed from a properly functioning barter exchange. A barter broker also assists in the completion of transactions helping trades to be completed smoothly. These types of benefits are not easy to find in a regular cash transactions, where a non-paying customer or shady business often leave the injured party with little recourse.

Networking is essential to business and barter is a great way to network with like minded business and property owners.

CASH IS KING

“Money, money, money makes the world go round…”

“Cash rules everything around me…”

“Money! It’s a gas…”

We’ve heard it plenty and I’m sure we think it as well; Cash is king. Cash is the liquid medium for transfer. Legal tender. Cash gives us the ability to….? Cash is power, buying power at least and in business we need the ability to buy. Cash helps us buy the marketing that we need to make more sales and bring in more cash. Cash pays the bills, payroll, insurance, rent, electricity, etc.

With cash being so important for our businesses, saving cash is a business goal that we all should share, especially during times like now when many of our customers are cash strapped.

Rising prices cause there to be less expendable cash in the hands of our customers that translates to less cash coming into our businesses, unless your an oil company of course they seem to break revenue records every year.

So how does a business save cash yet still retain the ability to purchase the goods and services we need to operate a successful business.

Barter is Duke.

In the monarchy of commerce, barter may not be king but it’s importance and position is still undeniably high. Let’s say barter is Duke but I don’t have the time to take the analogy any further.

Barter is the perfect way for businesses to save cash. By utilizing barter a business can leverage it’s unused service time or unsold merchandise to purchase the goods and services it needs for business. Purchase advertising, carpet, incentive travel, auto repair attorney services, printing and more. Use barter to conserve your cash. You can’t use barter for everything (insurance, payroll, taxes) but by working with a barter exchange you can find out all the ways that you can use barter to benefit your business and save cash.

Stretching your Advertising Dollar

Marketing your small business can be a daunting venture. So many options, so many variables, how do I know what avenue is right for my business? Working with experts will definitely help narrow the field but eventually trial and error will play a major role in finding the right mix of marketing tactics.

Of course this can be expensive. A businesses marketing budget can only be so big, and with the myriad of methods to advertise we need a way to stretch our advertising dollars.

Enter Barter Milliions of dollars worth of advertising is bartered annually, especially major media. Big advertisers know that their product has a high expiriation rate. Once the day is over newspaper, radio, and T.V. spots cannot be put back on the shelf to be sold again. This fact prompts advertisers to offer large blocks of advertising on trade. This means that you as a small business owner can advertise your business nationwide without spending cash. That’s a great way to stretch a dollar!

Working with a barter exchange you can find excellent deals on all types of advertising. Increase your advertising budget without adding cash to it. Utilize barter to expand your market reach.

Starting a Small Business

There are many obstacles to overcome when starting a small business. Taking our concepts and strategies from our brain to reality can be overwhelming at times. Aside from the often times extensive groundwork to be laid (e.g., company formation, product sourcing, location, etc.) there is always the capital question to be answered, that is “Where can I find the money to pay for these start up costs?”.

Starting a small business can be a very expensive venture. We have previously discussed how we can use our barter credit line as a type of interest free small business loan, now let’s consider more specifically how we can use barter to reduce our cash expenses when starting a small business.

Here is a small list of goods and services that can be bartered for in an organized barter exchange .

• Attorney Services (use for company formation)
• Advertising (get the word out about your business without spending precious cash)
• Signage (Does your location need a sign? This can be expensive, use barter to save cash.)
• Printing (Business Cards, Letterhead, Envelopes, Flyers, Brochures, etc.)
• Construction (From remodeling to complete build out many contracting services can be barterd for.)

If you can aquire on or more of these by barter you can greatly reduce your cash costs when starting a small business. Even obtaining a portion of the total cost via barter is an excellent way to save cash when starting a small business. This will free up cash for many of your other business expenses.

Are you starting a small business? You have many questions to anwer. Look to barter to help answer the capital question.

Interest free Small Business Loans

One thing everybody needs when starting or running a small business is capital. Finding this money may prove difficult, finding it interest free is near impossible.

This is where barter can greatly help your small business. Organized Barter Exchanges may offer Interest Free Credit Lines to their members. This is essentially a Small Business Loan. Here is the best part, not only is the loan interest free, you do not pay it back with cash. The Barter Exchange is responsible to send you business to pay the loan back! I can almost guarantee you will not find that offer from any credit company.

You can space the busines that you recieve from you barter exchange over time. Make sure your broker knows how much barter business you are willing and able to accept. This way you have a good idea how much barter business is coming and you can prepare your budget.

Small Business Loans can be very beneficial to a new business, however they can also be dangerous. Having large monthly payemts to make on a high-interest loan along with the rest of your business expenses can put you in a tough position. Look to barter to finance a portion of your expenditures and you will have an interest free small business loan that you can pay back over time by recieving business sent to you by the Barter Exchange.

Another way to utilize barter to finance your business expenses is by using barter to make a down payment on your purchase. If you are looking to buy a business machine or a piece of property find a seller that will take a down payment in barter. This helps many ways; one is that by taking a down payment in barter credits the seller helps motivate buyers, another is that buyers will have an easier time with financing the remainder of selling price because the loan to value will be significantly reduced.

From Interest free small business loans to down payments, barter can help your business reduce cash expenses on important expenditures.

Increase Business in a Slow Economy

One of the effects of a slow economy on our businesses is the tightening of our customers budget. This will obviously hamper our sales. So how do we make our products or services more affordable without losing money?

Enter Barter.

Accepting barter dollars for your goods or services opens you up to a wider customer base and this will increase sales. By bartering, you allow customers to pay for your products with something they have, their products. While there may not be an abundance of spendable cash around because of the tight economy, there usually are businesses that need goods and services who have goods and services to offer. Barter is the medium that can keep commerce moving even when things are slow.

What if you can’t find that perfect trade? Look to organized barter for the solution. Bartering in an exchange allows you to accept trade dollars or credits for your goods and services rather that having to find the exact person who wants what you offer and has what you need. When you trade into a system your options for aquiring what you need without spending your cash will greatly increase.