Small Business Returns to Bartering
According to a recent New York Times article by Mickey Meece, bartering in the United States is on the rise at a time when cash is tight and small businesses are letting workers go. And while bartering has been around since the beginning of time, there are more and more barter exchanges competing nationally and regionally to sign up new participants. In fact, there are more than 250 exchanges, according to Robert B. Meyer, who edits the trade publication BarterNews.com, and many of these exchanges are reporting double-digit increases in membership.
With cash tight these days, more small business owners and professionals are exchanging services instead of money. And a barter exchange brings businesses together, so a wine dealer, for example, can exchange wine for legal services, or a violinist can trade violin lessons for web site design services.
It seems small businesses are recognizing benefits from bartering that extend beyond cash preservation, too. Interviews with barter exchange customers reveal that exchange membership leads to new business from other exchange members and more referrals from the same. So while bartering is not yet mainstream, it might be a viable option for small business owners to consider and combine with the old standby, the business credit card.
Entrepreneurs have been funding small businesses for years with credit cards, and they continue to be a valuable resource during this period of declining loans and tighter lending standards. It is wise for small business owners to shop around for a business credit card that best fits their needs, and to use it responsibly once it is chosen. The business must be able to pay back all charges and pay statements on time; interest rates can go up quickly if just one monthly payment is late or missed.
The Small Business Administration just reported a 30% decline in loans approved for small businesses since October of 2007. In times like this, in which lending standards are tough and cash is scarce, we may see more and more business owners turn to bartering while they continue to depend on credit cards to manage their finances.
