Is Internet Bartering Right for Your Business?

Do you have extra stock or unbilled hours on your hands? Would you like to turn it into corporate gifts, travel, or services for your business? Well you can - quickly and easily - with the help of Internet-based barter networks. But is it really the best option for you?

What is bartering?

Small business owners barter all the time. It's simple to make an exchange of copywriting skills for web design, or bookkeeping services for radio airtime, and it happens on a daily basis.

But what if you have something that James needs for his business and you don't currently require his services? Well, you can look for a third person who has something you are interested in, and who does need James' time, or you can bank his hours for later, but after a while keeping track gets complicated.


And don't forget the tax man

In Canada there are strict rules around trading your labour or stock. When you own the business, all bartered goods and services must be claimed as "capital gains". You have to claim the value of the item bartered as if you sold them to a stranger. Additionally, you are responsible for collecting and remitting any GST that would apply to a cash sale of that amount.

Internet bartering makes it easy

Not only does technology make it simple enough to track what has been exchanged, it also makes it easy to find people who are looking for items or who have surplus - around the globe and around the clock! So now if you want to trade those spare umbrellas for a hotel stay in Sydney, Australia during a conference, you can!

What kinds of businesses benefit most?

Bartering works best when your business is margin-driven - when you sell services or specialty items where production costs are a (relatively) low percentage of the ticket price. You'll do much better than businesses that rely on turning large quantities of stock at a smaller profit margin.

Other types of businesses that benefit from bartering are those with a strict production schedule. They often go to market with unmet potential (unsold ad space or unfilled airline seats, for example) and can use bartering to turn that waste into something they need. Same with knowledge-based services; you can't recoup lost hours. Once they have passed, that's it.

Why does it work better for these businesses? Barter exchanges typically charge 5 - 7% on a transaction, plus an initiation fee that can range from $160 - $595. Some charge a monthly fee on top of that. If your margins are low, exchanging your goods for an equivalent amount in products or services may not cover the cost of the transaction.

So when you have a surplus that you are considering deeply discounting, or you have unbilled hours on the books, don't sell them at a loss. Trade them for something that will help you grow your business.