Is your business in a post-holiday slump? It happens every year; service companies face a dip in business as consumers tighten the purse strings to compensate for holiday spending. Coupons may help bring in some business, but they can only do so much to improve the bottom line. So how do you keep your business in the black during the first months of the year? Try barter; it’s a great way to build your business, attract new customers, and fill downtime during slow months.
Barter is a way to effectively market your business. A new customer acquired for a barter transaction can easily transition into an ongoing cash customer. Unless that customer offers a service that you routinely pay for, then you can develop a deal for an ongoing exchange of services and lower the amount you pay out for services.
Barter is simple: you perform a service for someone and they perform a service for you or give you product that equals the value of your service. It’s a powerful way to build your business, in good times and bad, as long as it is used effectively. There are a few tips to leveraging barter wisely.
First, never barter for something you don’t want or can’t use. Barter for things you need to buy, such as product for your company, tax services, cleaning services, or consulting. It’s also great to barter for things you want, but wouldn’t spend your hard earned cash on, like sewing machines, spa services, or that fabulous cashmere throw you just won’t buy for yourself. Remember, while it is better to barter than sit idle, only make trades that provide you with something of value.
Second, set your barter appointments for when you have the most downtime. The idea is to bring in new business when you don’t have any, not turn away cash paying customers. Hair stylists often experience slow periods during the day at the beginning of the week; that’s a great time for them to swap a haircut for a new sweater or a highlight for a full body massage. You can also schedule recurring appointments for slow periods, such as the personal trainer swapping a Tuesday afternoon appointment with a CPA who keeps his books.
Third, barter, like any other financial transaction, requires solid bookkeeping and clean records. The IRS treats barter transactions as income received for both accrual-basis and cash-basis clients, therefore your records and your tax returns need to reflect it as such. It is easy to manage in a straightforward exchange, and can be a bit more complex when utilizing a barter exchange where you accrue points. In those cases, follow the rules of the exchange and make sure you spend all your accrued points by the end of the year.
Give barter a try and you will be pleasantly surprised by the options available to you and the growth in your business.