Why Doing Business on Trade Gets a Bad Rap

Before I joined a trade exchange, I had some not so great experiences in trading services.  I learned that this was because for some reason, many business owners want to treat transactions differently when they trade services instead of perform services for cash. It says that they don’t respect the trade revenue as much as cash, and this might be true for a multitude of reasons.

Doing business through a trade exchange can minimize many of these issues because it makes the transactions equitable. You don’t have to discount your fees just to get someone else’s services, nor do you have to ask them to do the same. The term I have heard used is, “it’s business as usual.”  This means that you give estimates, invoice your customers, provide good service, and ask for referrals, just like you would otherwise.  Some people say that doing business on trade is better because it makes the transaction more personal. If someone brings you business and wants to pay with trade currency, you will likely engage them in a conversation and ask what they do to earn that currency, whereas if they paid cash or used a credit card, it’s not something you normally bring up.

So how does doing business on trade get such a bad rap?

Lack of Education
It would seem that most people have not been taught how to effectively do business in their trade network. They are NOT doing business as usual. I recently heard of a case where someone discussed a service with a provider and did not know the price until after it was performed. Both parties failed there. Would you ever spend cash that way? I hope not.  Again, I cannot emphasize enough, it’s business as usual. Just add “trade” as a form of payment on your invoice and do nothing else differently.

Another lack of education is not knowing what they can spend their trade currency on. I have heard business owners say that have “too much trade credit.” I usually ask them if they have all of the business they want, and they always say no. I have no vested interest other than promoting trade as a great business practice, but at that point I tell them to call their broker and find out how to spend that money to get new business. Trust me, they would want more trade dollars if they knew how to spend it.

Desperate Business Owners
On more than one occasion, I have heard someone say that doing business on trade actually hurt their business or somehow damaged them financially. This usually means they were not already a solvent business and could not pay their expenses, but somehow thought that a miracle would take place. I have seen it quite a bit, and more so with restaurants. For some reason, business owners get this idea that perhaps joining a trade network will save their business. If a business is failing, there are probably several other areas that need to be addressed to keep it going.

Typically, it is taught that no more than 15-20% of your business should come in the form of trade currency. Once you learn the secrets of converting vendors, suppliers and other providers in combination with some cash conversion strategies, you might be able to ramp it up to 40-50%. It also depends on the kind of business. If you have more fixed costs, then you need to make sure you have the cash to cover those expenses. If you perform service work (such as a home electrician) and you have free time in your schedule, I say “trade away!”

I hope you found this helpful. My goal is to see fellow business owners thrive, no matter what the economy looks like and a good trade exchange is another tool that can help. Let me know how I can help you. I am free for consultation, and I will even accept your trade dollars no matter where you live in the US – assuming you are with a trade network that is a member of NATE or IRTA.

Special Thanks
I would like to thank Bryan Moody, my broker at Tradesource and Kyle Morgan, Collaborative Business Guru at The Angle Group, for educating me in how to do business on trade. Through their expertise, this skeptic became a raving ambassador for practice of doing business on trade.

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