The Pros And Cons Of Business Bartering

The Pros and Cons of Business Bartering

It’s hard to imagine that 21st century businesses would be taking a cue from primitive humans who lived in far less sophisticated societies several millennia ago. But they’re doing exactly that. They’re bartering goods and services, exchanging what they have for what they need- like our ancestors did in the era preceding the invention of money.

Business to Business (B2B) barter involves the trading of products and services between enterprises. For example, an advertising firm may offer to advertise a web design business in exchange for a facelift for its own website from that business. An accounting firm could provide book keeping services to an auto repair company in exchange for regular vehicle maintenance

It’s no surprise that B2B bartering takes place more widely and frequently during periods of general economic malaise (such as a recession). You’re more likely to find a barter partner when the going is tough for everyone.

Barter is also deployed by businesses to keep their inventories in manageable shape. This applies particularly to enterprises which deal in perishable goods. When there is an accumulation of stock that could go bad in a short while, sellers may be keen to give them to businesses that might have an urgent need for them; it’ll be a good bargain to get something in return, instead of letting all the perishable produce go to waste.

There’s a relationship-building element to bartering too. If your bartering partner finds that there are benefits to using the products or services they got from you, they’ll likely come back for more- even if you’re offering them in exchange for cash next time. But perhaps the more important part of this is the fact that relationships created through barter- especially those forged during the difficult periods, such as recessions –usually have a good chance of lasting beyond the first transaction, if both parties find that they are happy with what their bargains yielded for them.

The downside to

For example, you might be trading IT support services for legal consultancy services from a law firm. You may find that while you carry out expensive repair work on the law firm’s systems on a monthly basis, you only have to consult with the firm on a single matter for the whole year. You discover that the monetary cost of the maintenance work you’ve been carrying out on the law firm’s IT systems amount to six times the cost of the legal advice you’ve gotten from them. Considering the fact that the time you spent on the firm’s equipment could have been deployed elsewhere, you would see yourself as having been hard done by.

Another problem with barter is the time that it takes to find a party that’s willing to engage in the process. This, of course, is an ancient problem (you may even remember learning about it in school; it’s one of the reasons why people eventually ditched bartering for coins and bank notes).

You might land great deals through the barter process, but barter doesn’t generate revenue (at least, not directly). You’re in business to make profit; unless you put restrictions on how much barter you engage in within a given period, it’s likely to cause your business more harm than