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barter Martin Lee on 24 Jan 2007 11:23 am

Creating Cash Using Barter

If you have a product or service that is easily reproducible, not in short supply and has a decent margin, then the use of barter can be extremely profitable.

Suppose you want to buy some service which would have cost you $1000. Instead of paying $1000 in cash, you barter $1000 worth of your products (with a cost price of $500) in exchange for the service. So in actual fact, you are only paying $500 for the service.

Not only that, it helps to improve your cashflow and moves your inventory.

Of course, you can only barter if you have excess inventory (for a product) or excess manpower and resources (for a service).

For example, you could barter your empty hotel rooms for unused print or radio advertising. Tickets, carpets, electronics, accommodations, consulting, etc. The permutations are endless!

But there are a couple of things that you need to take note.

First, there are still tax implications when you do barter.

Second, to have a succesful one-to-one barter, party A must need what party B is offering and vice versa. Thus, the chances of finding such a match might not be high and will be time consuming. Furthermore, if a party has not been exposed to the concept of bartering, he or she might be reluctant to barter.

An advanced technique involves triangulation whereby party A barters with party B and takes what he received from party B to barter with party C.

Sounds confusing? By being a middleman and using triangulation, it is even possible to create an entire new profit center using bartering.

In my next post, I will talk about a way to barter more effectively compared to using one-to-one barter.

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