From time immemorial, barter trade has continued to dominate our markets, and it is still a popular type of trading today. Barter trade refers to the trading of goods or services for other goods or services. The trade does not involve money or any monetary medium. For example, a carpenter helps a farmer build a fence. Rather than pay the carpenter in cash, the farmer gives the carpenter crops worth the labor in cash.

For the most part, mainstream trading has moved on from this practice. But it is slowly becoming a legitimate mode of trading for small businesses. It removes the financial risk, builds goodwill and creates better business relationships. However, your success will depend on your ability to trade fairly.

How to strike a fair trade

You aren't trading marbles for sticks of gum here. The trades are much more high-risk and have bigger consequences should the trade be unfair. So, consider these tips.

Identify your resources

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What assets do you have that you are willing to do away with? Look around your office and check for possessions that you think would benefit another person or business more. In some instances, you can choose to trade your services for other services.

For instance, if you run an event planning company and want more exposure, invite a company with more exposure to use your auditorium or events hall for free. In exchange, you set the event's theme, use your colors and provide branded products to the audience.

The other company doesn't have to pay venue fees, and you get free advertising.

Use barter sites

Using these bartering websites, you can meet other people who are willing to trade different goods or services that you may need.

Keep it legal

Just because barter trade does not involve money, it does not mean that it is unregulated (or taxed). Like any transaction, keep records and receipts of any bartering you do. This "evidence" will be useful if you need to take something to court. The trade you're doing shouldn't violate any industry law, either. Obviously, avoid black market barter trades. Double checking the legal end may not be the most exciting thing in the world, but it could prevent a lot of legal trouble in the future.

Polish your negotiation skills

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Ideas of value and worth are subjective, so always ask for what you are comfortable with. If the other person doesn't think it's a fair trade, they'll speak up. Negotiation is the name of the game. Still, you should learn about how skill, time, effort and the availability of goods or services affect the price. Having something to go on will improve your negotiation skills and make you a more confident barter trader.

Ask questions

In a barter trade negotiation, do not be afraid to ask any questions regarding the proposed trade. Go ahead, ask for reviews, seek clarifications and ask for referrals. It is better to call off a deal that would have gone wrong than to risk the reputation of your business.

Advantages of barter trade

For any business, barter trade may present the following advantages:

  • It allows you to get what you want in exchange for something you don't mind parting with.
  • It does away with problems that come with monetary exchange. These include problems with balance repayments and foreign exchange crises.
  • Natural and personal resources are easier to work with.

Disadvantages of barter trade

Barter trade may seem like an idyllic system, but there are some annoyances associated with it.

  • There is no common measure of value.
  • Though you don't lose money, you also can't make money.
  • There are no standards for deferred payments.

Who is barter trade suitable for?

There is no specific group that barter trade targets. Anyone, or any country, can do it. If there is a mutual agreement on exchange terms and regulations, a barter trade transaction is anyone's for the doing.

The key takeaway

Barter trade does away with the complications that come with money and places the value on skill and product exchange instead of profit. It's a great option for businesses that don't have a lot of money -- small businesses starting out, for example -- and an effective way to collaborate with other companies. Yes, it may seem like an old-world system, but it is increasingly modern in its thinking.