You have to spend money to make money

I don’t know about you, but my Dad always said you have to spend money to make money.  Certainly this axiom holds true as I’ve tested in the “real world.”  Before you can sell your inventory you have to buy it and and before you can buy it you have to have somewhere to put it and it goes on and on.  Business people understand this and don’t generally fret too much about it if they have suitable cash-flow.

That being said, I find that a lot of folks that are new to barter somehow think that when they trade they can get something for nothing.  They are surprised that they are expected to spend some of their hard earned cash to earn barter credits.  In the last couple weeks I ran into this twice.  Once was with a shop owner that was looking at cutting back on barter because her exchange fees were costing her a considerable amount of cash.  With the other example, I had a potential direct barter client who didn’t want to barter for the materials portion of a project I wanted to hire him for.

For both of these people I have the same advice….you have to spend money to make money.  It’s the same in the barter world as it in the cash world.  When I trade with someone I have to spend cash to either buy product or pay my staff.  Either way I am spending cash to earn barter credits.  When I barter with you I expect you to do the same thing.  The key of course is to know if that exchange is to my advantage or not.  If I spend too much cash to earn barter credits or if I don’t spend the barter credits (regardless of their cost) then it’s a failed deal.  On the other hand, if I earn the barter credits with a relatively low cash cost and I know how to spend the credits then I am way ahead of the game.