20 May

How set up the impossible barter deal

Posted in Bragging, Resources by

impossible

Let me state the obvious first:  It’s not actually possible to do the impossible.  That’s what “impossible” means.  That being said, over the years I’ve made some barter deals that were hard to put together.  Deals that my friends and family said couldn’t be done.  These are the deals that make people say “Wow.”   I’m talking about bartering to pay employees, or bartering to put my kids in private school or any number of other unusual barter deals I’ve put together over the years.

Right now I’m working on one of the harder deals I’ve tried to put together:  Bartering to rent high end commercial office space.  It hasn’t happened yet, but I’ve got two different contacts that I’m negotiating with and I think I should be able to make it happen.  I’m hoping that the trade will be “full service” and include power/heat/Internet/cleaning/etc.

There are two main components to putting together the impossible deal in my opinion:

  1. The deal HAS to be a win-win for both parties.  As long as both parties gain, the deal is always doable.  It only gets truly impossible when you get greedy and are only looking out for yourself.  In the case of the office space deal I’m working on, I’m specifically looking for occupied space that is too big for the current tenant.  The ideal partner for this would be a firm that did some downsizing and has had a bunch of  empty space just sitting there for a year or more.  Because all of their office expenses are sunk, if they were to allow my office to move into their space, they will get all the benefits of whatever I trade with them at almost zero cost.
  2. You have to be tenacious.  When you are trying to do something unusual you have to expect that many people won’t understand the offer or will be frightened off by it.  That means that you  have to look at your deal like a salesman talking to prospects.  When I do this I know that what I’m offering will be a really good deal to the right company and I know that that right company is out there.  I tell myself that I will find the right deal if I talk to enough people.  It’s simply a numbers game.   If only 1% of my deals will close then I have to be ready to get 99 “nos” before I get one “yes.”

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10 Mar

Barter BEFORE your business is in trouble

Posted in Training by

closed

The other day I was telling my son about someone I was trying to recruit into my barter exchange.  To my surprise he said he hoped they won’t join.  When I asked him why he said that too many of the businesses that I barter with go out of business.  I couldn’t help but laugh out load.  He’s right!  Too many do go out of business and I think I know why.

First, let’s be honest here;  cash is better than barter.  Yes, I said it…. and it’s true.  So with that in mind, any business that already has all the cash business they can handle shouldn’t bother with barter.  So the businesses that should be using barter are the folks who would like more business than they currently have.  Many of the organizations in that category are great healthy businesses that simply have some excess inventory or service capacity that they want to take advantage of.  These are folks with vision who can think outside of the box and are interested in new ways to expand their business.  Those are generally the best people to barter with.

Another group of potential barter partners are the folks that have businesses in various stages of failure.  These are folks who are using barter in desperation because their business is going so badly that they are willing to try anything to keep it afloat.   As you may have guessed these are less than ideal people to barter with.  Not only are relationships with these businesses often short-lived, but it is not unusual for people to be more …. morally flexible… as their financial situation goes downhill.

The solution is simple;  Use barter as one of your many tools to keep your business profitable so you never fall onto hard times.    Use it early.   Use it often.  Find a mentor who has experience with barter to help you get the most out of it.  Businesses that I’ve bartered with don’t fail because they trade.  They do however sometimes fail because barter was their last resort.

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25 Feb

Accurate Accounting for Barter

Posted in Training by

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I keep track of barter transactions to the penny.  OK I admit it.  I can be a little uptight and “Type A.”  Personally I blame my mother.  I remember borrowing money from my parents when I was little.  I little paper IOU was posted on the fridge and it was slowly reduced penny by penny until it was paid back in full.  Not a single cent was ever forgiven.  And I’m not complaining about that.  It just helps explain who I am.

Anyway… personally my advice is to conduct your barter transactions in a very professional way.  That means that both parties need to agree to the cash value of the trade, contracts are signed and both parties are assured to received the correct value for what they’ve traded.  It’s very rare for me to run into a disagreement about a trade, but when it does happen, I’m always happy to have a written agreement and a set value for our trade.   I also believe that good accounting helps avoid issues in the first place.  It’s harder for someone to feel like they got the short end of a stick if they are looking at a statement that shows the details of each transaction.

Another reason that good bookkeeping is important for barter is to keep the IRS happy.  Although I heartily encourage everyone to conduct tax planning and legally avoid as much tax as they can, barter is NOT a tax dodge.  Remember to report all barter income on your 1040 exactly the same way you would your cash income.

I have found that keeping good records as an active trader is challenging.  My two secret weapons in this area are:  1)  A good book-keeper who understands barter (tough to find by the way) and 2) A barter exchange that will do a lot of the book-keeping for me.

Let me know if you have any questions on this topic and keep those pencils sharp!

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