Safe barter margins

Every business has cash expenses and ultimately every entrepreneur wants to earn money. Barter is a wonderful tool to get your products out there and bring in the goods and services of others, but we must all remember to earn enough cash to at least stay in business.

That's why a barter plan must involve a comprehensive look at how aggressive our barter strategies can safely fit within our cash requirements and realistic environments.

There are some barter professionals who suggest a general rule of thumb of keeping barter to around five percent of your business transactions. This is all well and good, if your business is a 'rule of thumb' business. To get the most out of barter and trade, take a look at your cash costs per sale, and your ongoing cash expenses. If these are very low, then you can afford to barter much more than five percent of the time. If these are very high, you might not want to barter at all.

Lets say you sell tables. If you're buying tables for eighty dollars each, and selling them for ninety, there isn't much room for barter. Unless, of course, you're not selling many tables and are confident in the art of bartering 'up'.

In a contrasting situation, if you provide a service but haven't been very busy lately, you can barter all day and it's all gravy. Or if you sell digital products, bartering won't cost you a thing except the time it takes to setup trades.

Consider a window washer, who has a teenage son with nothing to do during the summer. By taking on more clients and bringing his son to work so that the windows get washed quicker, the window washer has just opened up a wider margin in which to safely barter, while still meeting his accustomed cash income.

Some people may have zero or near zero cash costs. In which case they can barter for every deal and get away with it.

Get a feel for what's right for you, and apply that to your barter plan.