Cash Conversion: Part IV – selling to your cash clients

Another great way to turn barter into cash is to buy products or services on barter that you can then sell to your regular clients for cash. You’ve probably always been told that your easiest sale is to your existing clients and that is true for cash conversion as well.

One way that I do this in my web development business is to hire top notch professional graphic designers on trade on projects where I can bill clients cash for that work. Everybody wins. The barter designer gets work he/she would not have gotten. I get to convert barter to cash. The client gets great design work and because I did it on barter I usually can give the client a few more options/revisions than I would have been able to if I was paying cash.

This technique can also ne used with hard goods. If you run a retail shop you can supliment your inventory with items purchased on barter that you then sell for cash.

A couple things to watch out for with this technique:

  1. Of course watch out for price gauging. If you can’t purchase something at a price that leaves you with the margin you need, forget that item and look for something else.
  2.  Stay in your area of expertise. It may be tempting to buy something on barter that you think you can sell for cash that is outside of your regular business practice. Keep in mind that the intent is to sell to your regular cash clients. The last thing you want to do is mess up that relationship with some product/service that you are not familiar with.

Cash conversion: Part III – "using" your friends

A great way to turn barter credits into cash is to “use” your friends.  For example:  I’m a Deacon at my church and we usually go out to dinner before our monthly Deacon meeting.  I usually  try to suggest a restaurant that I can barter with and offer to pay the tab.  Sometimes they let me and the meal is “on me” however often times they will insist on giving me some money so I’ll go home with cash in my pocket.  I do the same thing with movies.  If I’m going to see a movie with some buddies, I’ll make sure I can barter for the tickets and buy them ahead of time.  Then my friends pay me cash.  The best example of this sort of thing for my family is actually something my wife does.  My kids are involved in a bunch of after-school activities that we pay for on barter.  Often times she’ll let her friends that have kids the same age know that we’re participating and they will too.  We’ll then pay for everyone on barter and collect cash from our friends.  Usually when we do this, we cut our friends a discount on the price and often that makes the difference as to whether they could participate or not.

A friend of mine that is heavy into barter had a slightly modified version of this.  He had a friend with a very sick cat that couldn’t afford treatment and was going to have to put it down.  He offered to take the cat to a vet that he could barter with, and now the friend is making cash payments to him.  Talk about a win-win!  The vet got business he wouldn’t have gotten, my friend turned his barter into cash and the cat got to live!

A word of warning that this sort of exchange doesn’t always work.  Here’s two things that I’ve run into:

  1. My parents needed their tree trimmed.  I tried to hire someone on barter then have them pay me cash.  It was a good idea, but in this particular situation, the two barter tree guys that I could find were both bad choices.  One was way to expensive and the other one wanted to do a half/cash deal that was against the policy of my exchange.   Since then we’ve got a new good tree guy in our exchange so I’ll try this again next time.
  2. I barter with my kid’s karate dojo and over the years we’ve recruited a number of our friends’ kids into the dojo too.  Because our friends up to this point had the cash to pay the dojo and I know that the dojo could really use the cash, I’ve never paid for my friends on barter to get the cash personally.  I’m just happy that I can barter with the dojo for my own kids and I haven’t tried to use the situation to cash convert.