Ask Mr. Marketing: The pros and cons of bartering
How does barter work? — Sydney Astor, San Diego
New presidential candidates means tax talk.
Rob Weinberg
Men’s beards were taxed in 182 B.C. Colonial Americans were taxed based on how many closets their home had.
No wonder Ben Franklin observed, “Nothing can be said to be certain except death and taxes.”
Barter has created viable non-cash business alternatives in this country since 1626, when Peter Minuit swapped $24 worth of trinkets for Manhattan Island.
So it remains today, with entire networks (i.e. thebarternetwork.net) offering scrip (their own currency) to encourage barter.
Within these networks professionals of every type swap information, services, and goods, with no money changing hands. A marketing person may receive two credits for writing a brochure, then use those credits to “buy” bookcases from an area carpenter. The carpenter uses the credits to get his taxes done. And so on.
Others prefer bartering one-on-one. The carpenter builds the accountant’s bookcases, who does his taxes in exchange.
Either arrangement potentially provides you with a vast supply of business-related items.
Barter works well when acquiring things your business actually requires. However, using barter to “purchase” stuff you don’t need will probably distract you from growing your business while cluttering up your life.
Barter also limits your choice of suppliers. If the carpenter dawdles when delivering those bookcases you’ll have little leverage.
The good news from all of this is your ability to acquire what you need without touching your credit card. The bad news is you’re spending too much time working without getting paid for it.
There’s also the inconvenient truth that your friendly neighborhood tax collector still values what you’re producing and wants his piece of the action. There may be penalties and interest if you’re caught without paying the tax that’s due, and you should discuss the entire matter with a tax professional.
And no, the IRS won’t barter with you.
Long-term, barter isn’t the best way to increase your revenues, since it doesn’t provide cash allowing you to hire the right people. The money needed to build a company must come from actually selling your products and services. Employees are rarely willing to be paid in doughnuts.
Avoiding barter eliminates those problems.
With that said, I wish you a week of profitable marketing.
Reach Weinberg at www.askmrmarketing.com.
Related posts:
- Ask Mr. Marketing: Finding more money for marketing
- Ask Mr. Marketing: Failure to plan at magazine
- Ask Mr. Marketing: Good things in different-sized packages
- Ask Mr. Marketing: Doing the right thing helps bottom line
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Posted by Steve Dreyer
on Aug 18 2011. Filed under Business, Mr. Marketing.
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