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Bartering Is Big Business

October 11, 2016

Susan Milstrey Wells

I didn’t realize I had joined a worldwide movement—embraced by everyone from individuals to Fortune 500 companies—when I agreed to write blog posts for a colleague in exchange for career coaching. I thought I was doing something unique, but I learned that many of my fellow writers and editors do, in fact, barter their services, for everything from soup to (literally) nuts. Bartering can be a way to cut costs, build your portfolio, or engender good will. My experience and what I learned about how to barter successfully may help you decide whether this age-old form of commerce can be advantageous to your work.

Tips for Success

I didn’t set out to barter services with my colleague; our arrangement grew rather organically when we reconnected online. I recently left a full-time job to reopen my freelance writing business, and she had retired from the federal government to become a retirement coach. When she offered me a free session of career coaching, I jumped at the chance!

As we talked, my colleague mentioned that she hoped to start a blog for her new website, but she had no idea how to do that. A lightbulb went off in my head. “I could do that for you,” I said. Before I knew it, my experience with bartering began.

I know that informal bartering goes on all the time; we may just call it being neighborly. I feed your cat while you are traveling on business, and you water my plants when I’m on vacation. But I was surprised to find that bartering—once the only way to exchange goods and services—has become big business. Whether you are considering bartering as a way to cut costs, build your portfolio, or engender good will, these tips may help.

  • Barter for goods and services you would ordinarily pay for. It goes without saying that you don’t want to barter editing services for homegrown pecans, as one of my colleagues did, if you are allergic to nuts. Most freelance writers I queried barter for business services, such as website development or accounting. However, one of my colleagues helped a longtime client write a book in exchange for several years’ membership in a golf league. You can barter for everything from dental cleanings or a baby grand piano to a bar tab. Bartering for everyday business expenses helps reduce overhead costs and may make the value of these exchanges tax deductible. Observers note that bartering tends to increase when the economy slows.
  • Take bartering seriously, and get your ducks in a row. The casual exchange of goods and services (e.g., babysitting for lawn mowing) is largely unregulated. But if you barter for something that you normally are paid to do, consider the following:
  • Value your services. Bartering is assumed to be a fairly equivalent trade. In my case, my colleague and I determined, based on our customary rates, that one blog post would equal two hours of career coaching. We agreed to revisit this in a month or two to be certain the arrangement was still fair to both of us.
  • Get it in writing. You don’t need a formal contract—even an email will suffice—but do spell out the parameters of your barter relationship. The Barter Starter Legal Guide includes the key elements of a bartering agreement. It may be counterintuitive, but this is especially important if you are bartering business services with a friend. You want the friendship to survive the bartering arrangement.
  • Don’t forget your taxes. Both parties to a barter exchange must report as income the value of the goods and services they receive, in the year they receive them. See the IRS Bartering Tax Center and IRS Publication 525 for more information.
  • Consider joining a barter exchange to broaden your opportunities. The IRS defines a barter exchange as “any person or organization with members or clients that contract with each other (or with the barter exchange) to jointly trade or barter property or services.” Some barter exchanges charge an upfront cost and monthly membership fee, and they may take a percentage of the value of each transaction. In return, you can barter with trade dollars, a sort of in-house currency that allows you to accumulate credits toward anything available from other members. This means you don’t necessarily have to make a direct trade. You could, for example, use the trade dollars you receive for writing marketing copy for a guitar shop to pay for massage therapy or a new copy machine. Do your due diligence before joining an exchange. The International Reciprocal Trade Association promotes fair standards within the barter industry.
  • Recognize that even informal bartering has gone high-tech. Technology and social media have replaced talking over the fence to arrange trades, for everything from tools to trucks. Craigslist includes pages of such opportunities. If you’d rather find someone to mow your lawn than borrow a mower, consider becoming part of a time bank, a group of people who have agreed to give and receive credits for services that other group members provide. Unlike bartering, a time bank exchange is based on the value of time, rather than money. In essence, time banks are a neighbor-helping-neighbor model of building community.

In the sharing economy (think Airbnb and Uber), “what’s mine is yours, for a fee,” The Economist proclaims. Typically, no money changes hands in a barter arrangement. But both types of commerce allow individuals to participate in producing and consuming goods and services as part of a worldwide community. I know that bartering won’t pay the rent, as freelance copywriter Susan Greene made clear, but I’m eager to look for other opportunities. “Will write for toner” may become my motto!

How do you use bartering in your business?

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