A trade exchange can be a blessing for a mompreneur who needs a service or product but who does not have a lot of cash flow.
A trade exchange is basically swapping skills, services or products for other skills, products or services (instead of charging a flat fee)
For example, maybe you are a graphic designer, so you agree to design a new business logo for a local photography business. The swap might be an agreement that you will get a few head shots for your websites.
Ideally, both sides will agree that there is a similar value between the two services (either they would cost a similar amount if they have been paid for, or have a similar cost outlay).
In principle, the idea is fantastic. With no money changing hands there is no reason to worry about invoicing, money clearing the account, bank charges, or taxes! What could be better? Also, when we first start out in business, it can be tough to generate cash for the things you need to start and polish your business such as business cards, graphic design, website design, etc.
So theoretically, a trade exchange could be the solution.
But I’ve had a few trade exchanges which worked great and seen many more go sour, so here are a couple of pointers to help you (and your partner) get the best out of a trade exchange that works for both sides.
Only agree to a trade exchange for a service (or product) that you need or REALLY want. Something that is almost “like money” to you. Don’t agree to receive something if it isn’t THAT important. A website to a start-up company could be considered ‘like money’ because it’s something needed to get started – you would have paid for it anyway.
Agreeing to receive, say, a book in exchange for your service or product doesn’t make a lot of business sense unless it was a book that you wanted anyway!
Makes total sense, right?
Great, okay now for point 2…
Put it in writing:
Don’t let the legalize scare you and don’t worry about ruining a partnership (or friendship) by asking. Trade exchanges might seem like a less formal way of doing business but it’s still YOUR business, your livelihood (and don’t forget, that affects your family too – makes it a lot easier to get a contract in place when you realize it affects your family too – right?).
Include all aspects of the exchange, especially start and end dates. You and your partner probably have the BEST intentions right now but a trade exchange deadline that hasn’t been agreed upon (and even if it has) can change radically when a paying client appears.
Only agree to that which can be guaranteed:
(if I could figure out how to highlight this one I would!!!)
A trade exchange is not one side providing services and the other party saying they will introduce you to other business owners (in the hopes they may buy in to your products and services).
You can network yourself.
A chance meeting is not payment. It should rarely be purely commissioned based either. Earning commission on sales is not an easy task, you will put in a lot of time and resources before you see any money back and your family cannot survive on promises.
Think short term:
Be sure your agreement and delivery dates are short term and once off.
No matter how dedicated you are to seeing through your obligations, a paying client will trump a trade exchange client. Always.
Not because one side can’t be trusted or is greedy, but at the end of the day, a trade exchange will not cover gas, mortgage/rent, food, school fees.
When someone comes along, ready to pay for the product or services, it is human survival instinct to pour more energy into that client. Whatever you have agreed upon, get it done, and fast.
So bottom line: a trade exchange can be a fantastic way to get up and running, but (and there’s always a but…) be aware of the pitfalls ahead of time & avoid them completely!