Although I haven’t figured out a way to get my local utility company to accept payment in trade I’ve got the next best thing:  Use barter to reduce your power bill.

1) Get more efficient!  Last year I hired a plumber on barter to install a tankless water heater for me (that I obtained on barter).    The new water heater is more efficient than my old heater with the added benefit of never running out of hot water.

2)  Think outside of the box.  Instead of heating  my home with gas or electricity I use a wood stove most of the time.  I love a warm fire and because I barter for the wood I can keep my house a lot warmer than I could otherwise.   One of the down-sides of heating with wood is that you tend to have a toasty living room while your bedrooms remain icy.  That is why I’ve got a heating contractor out at my house this week working on barter.  He is installing a secondary ventilation system that pull warm air from above my wood-stove and blow it out vents in the bedrooms.

Because my home has an unusual roof I have not been able to put solar panels up there, but I think that’s a fantastic idea.  Even if you couldn’t trade for the panels, you should be able to trade for installation  Personally, if I had solar installed I would get an over-sized system and look at bartering for an electric vehicle as well.  That’s like bartering for gasoline!

Bartering on craigslist may seem very simple to you, but I’m hoping that I might have a few pointers here for you that will improve your performance regardless of your experience.

1)  Post in the barter section.  It may seem counter-intuitive, but as it stands right now, Craigslist has a barter section, but it’s buried inside the “for sale by owner” area of the website.

2)  Make it clear if you are buying or selling.  The title of your post is the most important part of the post. Make sure you not only state the object/service of interest but also if you are trading for the item or trading it away.  

3)  Ask about location.  It’s a big waste of time to work out a deal with folks that are further away than you are willing to drive.  Ask where they are up front in your ad and save yourself some time.

4)  Caveat emptor.  Use your brains.  Follow the same basic safety rules that you would with a cash transaction on Craigslist.

5)  Post on Thurs.  Craigslist gets to most visitors on Fri/Sat/Sun so posting Thursday night sets you up to have all those folks see your ad.  Also, mark your calendar to repost all your unanswered ads every Thursday evening.

6)  Be looking for something specific.  I saved the best for last.  This is really the most important thing I have to pass on to you here.  I suggest that you never post something like:  “I have a purple people eater.  Email me back and let me know what you’ve got.”  The problem is that you are inviting the entire world to waste your time offering you a bunch of worthless junk that you have no interest in.  The best way to post on Craigslist is to create ads that state exactly what you are looking for .  For example:  “Wanted:  dungeness crab on barter.”  I would also suggest that you be vague about what you have to trade. I say something like, “Barter is my hobby and I have thousands of new or used items to trade.  Please contact me so we can figure out what you’d like best.”  Don’t forget that you have access to everything available in your barter exchange to trade on craigslist.  The reason for being vague is that you never know what the person who is reading your ad may want.  If you post specifics about what you have to trade, you could just as easily give the reader a reason NOT to contact you as you could give them a reason to call.

Please feel free to post your own craigslist advice in the comment area.  Thanks!

“Bird-dogging” is an old salesman term that refers to paying a commission to your own customers when they refer business to you.  I assume the term draws from the concept of a hunting dog pointing to a bird for you.  I recently ran into a barter version of this that I thought was interesting.   This vendor was being promoted within one of my barter exchanges saying that they would pay $100 in barter currency to any exchange members that refer clients to them that end up doing business.  Here’s the best part;  they are looking for BOTH barter clients as well as cash clients.  If the promotion worked, they would be pay $100 in barter for new cash clients!  How great would that be!!!

If you wanted to expand your bird dog program to your cash clients, what you would do is find a really good give-away that you could purchase on barter (like a restaurant gift certificate?) and then offer that to all your cash clients as an incentive for referring business.

I haven’t tried this technique myself yet but I can’t think of how you could lose in trying.  I’ll let you know how it goes when I give it a try.

Honestly I think this is probably the most important article I’ve written to date.  Please check it out and post questions/comments below.

When you are conducting business, it’s important to know how your money comes and goes.  One of the things I keep my eye on is what percentage of my total business I do in barter.  Exactly what the ideal percentage is will vary and could be a good topic for another article.  What I want to concentrate on right now is how to put together an accurate calculation.  What really matters is your percentage of profit that is cash vs. barter, not what your percentage of sales is.

Unfortunately I’ve been operating on incorrect figures in this area for years.  In order to figure out how much cash profit and how much barter profit I made, I looked at the percentage of sales in the two areas first.  For the purposes of this article let’s say I did 90% of my sales in cash and 10% in barter.  I would then take my total profit and apply those same percentages to see how much cash profit I made and how much barter profit I made.  There are two things that are very wrong with that calculation:

1. Your profit margin for cash and barter may be different.  Even when you are charging your clients the same either way (which is what you SHOULD ALWAYS DO) your margin could be different because (for example) it may be that you sell different products/services that have different profit margins to your cash and barter clients.
2. As a general rule your expenses for both cash and barter sales are in cash.  If you spent 100% barter to earn barter then your barter sales would not effect your cash profits, BUT BECAUSE YOU SPEND CASH to earn barter, for an accurate calculation of your cash and barter profits you need to adjust your cash profits down and your barter profits up.

That second item on my list here was difficult for me to wrap my brain around.  Here are some numbers to help take this concept from abstract to concrete:

Cash sales = $900,000
Barter sales = $100,000
Total sales = $1,000,000

Just to keep this simple I’m going to keep the profit margin the same for cash and barter.

Total profit = $200,000
Profit margin (cash and barter) = $200,000/$1,000,000 = 20%

Unadjusted cash profit = $900,000 x 20% = $180,000
Unadjusted barter profit = $100,000 x 20% = $20,000

Again, just to keep things simple, let’s say that all expenses for cash and barter sales were paid in cash.

Cash expense for barter sales = $100,000 x 80% = $80,000

Next you adjust your cash and barter profit based on your freshly calculated cash expenses

Adjusted cash profit = $180,000 – $80,000 (cash expense for barter sales) = $100,000
Adjusted barter profit = $20,000 + $80,000 (cash expense for barter sales) = $100,000

Here’s the IMPORTANT PART…. although your sales were 90% cash and 10% barter your profits were 50% cash and 50% barter.

An important cost of barter that many people (including myself) forget to factor in is the time that I spend on it.  It takes a lot of time to put a deal together.  If you are like me, you’ve usually got 20 deals going at the same time so it really ads up.  Some of the things that I spend time on include:

• Staying on top of what is available in my barter exchanges
• Calling on folks in my barter network to put together deals
• Posting to craigslist and following up on responses
• Work to recruit new members into my barter exchanges
• Work recruiting new direct barter partners
• Time spent looking for good ways for my barter partners to spend credit they have with me
• Extra book-keeping to keep the records straight
• Ongoing help/training I give to everyone I ever talk to about barter

When recruiting a new barter partner I think it’s a good move to point out to the prospect that you are talking to that barter is not as simple as cash transactions.  They need to know that they will need to invest some time into barter in order to reap the rewards.  All of that being said, it truly is a labor of love for me.  <grin>  I’m a barter addict and it rare for me to resent the time I spend on it.

I recently had a great experience doing some fundraising for my kid’s school that I wanted to share.  The school is putting together gift baskets that they are going to give away as prizes in a raffle.  I started calling my barter contacts to purchase items for the gift baskets.  I’d call and say something like: “I’d like to buy a gift certificate on barter for a school fund-raiser.”  The results were fantastic!  Not only did I get quite a few great items, but I also had folks offer to just donate the items outright.  I have to be honest;  as a small business person I don’t feel comfortable calling other small businesses and asking for donations.  To call and ask to purchase something and be offered a donation is tremendous.  If you have some credit in your barter account that you don’t already have earmarked, considering using it to help a non-profit this holiday season.