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A Primer on How to Barter
As you’ve read, barter was the first medium of exchange. When a hunter or a gatherer or a farmer had too much of something, they would trade it for something they had too little of. When others who crafted tools and horseshoes and pots and pans and blankets and candles got into the game, we had a whole economy cranked up fueled by barter.
Barter is just a fancy word for trading one thing for another. One of the coolest games to watch on the Internet are the folks who start with something simple like a pencil. They trade the pencil for something else and the something else for something else and the smart ones manage to keep increasing the value of what they trade until they can trade for a car or something of significant value. Kyle McDonald, a Canadian blogger started with a single red paperclip and ended up a year later with a house in just 14 trades. You can learn more at the link in the article below the video. He says he was inspired by the childhood game of Bigger, Better. I think that should be your motto when bartering on PartnerHere!
Yale students Thomas Powell and Manus McCaffery started with a paperclip and ended up with a 2000 Volkswagen Passat in just 10 trades over one week.
Now, if cars and houses are possible, imagine what you could do with all of the talented folks on PartnerHere? How fast could you build your business with hundreds or thousands of likeminded barter partners? How much wealth could we create collectively if we all got serious about this? The key to a great trade is to find something that is much more valuable to you than it is to the person trying to sell it. I paid $600 for a table and chairs for my house but now I have a new one and I can’t move in my house because they are in the way. I REALLY need to get rid of them. I posted them on Offer Up for $250 because PartnerHere isn’t up yet, but truth be told, I just want them out of my house. I’d give them to someone if they wanted them. You could get them from me and then trade them for a used laptop or printer or both and you’d be in business!
My first business deal for my training company was a trade. I had moved to Buffalo, NY from my hometown of Derrick City, PA to start my company and on day two my car broke down on a busy street in rush hour traffic. I was in a panic. Not only because I didn’t feel safe standing in the median at rush hour with everyone honking and yelling at me, but because I didn’t have any money. I couldn’t afford to get my car towed and I certainly couldn’t afford to get it fixed, and I NEEDED it because I had to make sales calls to get my business off the ground. I was screwed!
BUT…I was a HUGE believer in positive thinking, so I was pacing the median saying to myself, “With every adversity is the seed of equivalent benefit! With every adversity is the seed of equivalent benefit. With every adversity is the seed of equivalent benefit.” Then I said to myself “I am going to need a HUGE equivalent benefit because this is a GIANT chunk of adversity!”
Then I looked up and about two blocks down was a Mobil gas station. I took my life in my hands and crossed the street and walked up to the gas station. I found the owner about to close. I told him my predicament and he quickly hopped into his tow truck and retrieved my car. One problem solved. One new problem created.
He gave me a ride home and told me that he would call me the next day with an estimate. He did. It was $2750 dollars to fix my car. It may as well have been 2 million because I didn’t have it. I thought I was going to have to sell my car to pay for the repair and then I would be even more screwed. One more time I repeated “With every adversity is the seed of equivalent benefit.” I really need to thank Napoleon Hill for that quote because it changed my life. I had an idea.
I took a cab to the gas station and I sat down with the owner and went through my Collaborative Sales process. I learned that he wanted to grow his business and that he had two sons. He wanted to open two more stations and have each of his sons run them. He wanted to learn how to be a better leaders so he could build his gasoline empire. He bought $7500 worth of leadership and sales training from me that day and I drove my car out of there free and clear with a gasoline credit of $4750. Barter had saved my car and my business. He got to build his dream empire.
I never forgot that lesson and I have bartered for many things in my career, including vacations, cars, watches, office supplies, computers, cameras, conference room space, presidential suites, fine dining and much more. Keep in mind that all of the things you receive count as income and you’ll have to pay taxes on that income so only trade for things you really need. Also know that if you are trading one business service for another and the amounts are the same, they will offset each other because one is income but you will have an offsetting expense for the service you are giving. Check with your accountant to be sure you are handling your trades legally.
My most powerful trade
My most powerful trade was with a television station. I did $50,000 of sales training for them but they didn’t want to pay cash because they were either smart or cheap! But it didn’t matter to me because I learned how to do a triangle trade. I triangle trade is simply trading the thing you don’t need or want for something you do need or want. I was too small to need television advertising but I simply used that airtime as cash. I would find a business owner who had something I needed, like a refrigerator, and I would offer to pay them in airtime. They were happy to do it since they used airtime every day. To them it was the same as cash. We both walked away happy. Sometimes I had to give a bit more airtime than normal because they didn’t want the airtime as much as I wanted the thing I was buying. That was fine with me, I had a pocket full of airtime and it got me a whole lot of what I wanted.
One more lesson
I just want to say that it is REALLY IMPORTANT to deliver real value for your trading partners just as you would if they were paying cash. That way everyone wins and everyone walks away happy. If you shortchange your barter customers, you’ll quickly get a reputation as a loser and no one will want to do business with you. If a barter is a good deal for everyone, they will want to do more with you and your business will grow. Take good care of your barter partners. Make sure they feel like they got the better end of the deal.
How to calculate the right value
If you are not sure how much of what to trade for what, use one of two methods. The first method is think cash for cash. In other words, if you are an accountant or a website builder, start with what you would normally charge for that service in cash. Then have the other party do the same. Once you have the cash value of the trade established start making offers to each other to find a way to make it work. For example, let’s say your accounting is worth $100 per hour. Let’s say their website building is worth $50 per hour. You can adjust the hours so they come out the same or you can ask for $50 in cash for every hour you trade. Sometimes you’ll just call it even because you really need that website! Or maybe you’ll have a credit with them for future work. Get creative and be flexible so you can make a deal work.
The second way to think about this is time for time. You might be a high-powered lawyer who charges $1000 per hour. But you really need a babysitter for your anniversary weekend with your wife. So what! Get over your ego and realize they are giving you 48 hours of their life and you should give them 48 hours of yours. OMG you scream. I’m leaving 48K on the table. Babysitters are cheap. Yeah? Well then, why don’t you have one already? Do you want to tell your wife that you are too cheap to trade so you can’t go away for the weekend? Or do you just realize that sometimes you need what you need and they need what they need and trading hours just makes a whole lot of sense. You are going to do their legal work nights and weekends anyway so those are hours you wouldn’t normally bill and they are giving up their weekend with their family for you so it’s worth more than a typical babysitter would charge anyway…plus…these are YOUR KIDS we are talking about…YOUR KIDS. What is it worth to know they are safe and taken care of by a responsible adult? Get the deal done and everybody wins.
I know this is an extreme example of disparity in rates but I did that to make you realize that to make deals work, you cannot think selfishly. You have to be flexible and creative so everyone gets what they want and need and we leave that whole cash and ego thing behind. Let’s barter so we can keep the deals flowing and keep the economy growing! That’s the entire point of PartnerHere!