Bartering for Better Cash Management

If you are like most in my circle, you are keen on new business and financial models. But what about the transformation of ancient business models into modern-day commerce? Sometimes, what is old can be new again, especially when done in a way that serves both the greater good and every stakeholder.

We’re talking about the barter system…

I recently wrote an article on the concept of growth in a contracting economy, and as a complement to that, I thought I’d share that bartering can help people get the products and services they need without sacrificing cash flow.

I first learned about the concept of bartering when I was a little kid. My mom worked as an insurance billing clerk for Dr. Anastasiu in upstate NY in the late 70’s.?One day, I had to go to my Mom’s office after school, and the doctor noticed I was bored. He had some free time and he decided to make me a cup of tea and tell me stories about his travels to Africa where he would donate his time as a doctor. It was then that I learned that, while he wanted to provide his services for free, the people of the villages insisted on bartering. They welcomed him as a returning member of their community, and they certainly didn’t want charity. Instead, they would pay him with chickens, goats, jewelry, fruit, plants… whatever seemed to make sense given the severity of their health issue.

My mom later told me that when she was growing up, barter was a pretty normal thing in rural Pennsylvania. Neighbors helping neighbors -- a community coming together to deal with economic stresses or to each provide to the community what they each did best.

Later, when I started my first real company at 17 years old, I created logos and graphics for businesses in my small hometown. This was before computers were mainstream, and so I drew my work in India Ink and painted signs by hand. It was painstaking and exacting work that would take hours and would’ve been worth a lot of money in Manhattan, but my clients were small mom-and-pops in a town with mostly seasonal visitors to sustain them. For some, it was all they could do to place an ad in the local pennysaver, so I was often offered merchandise or services in return for my work. The health food store on 4th street paid me to design their ad …with a box of cans of Cashews. The five-and-dime traded my in-store signage for costume jewelry. (It was the early 80’s and you could never have enough costume jewelry!) and the garage on Franklin street gave me a tune-up and free oil changes in return for a new logo and 3 hand-painted signs for the front windows. There were many other transactions like that. Too many to mention.

Fast forward to the dotcom era, and I’m one of the principals in a consulting firm in Florida. We have a potential client that has started building a barter platform on the internet, matching people with products and services to share. It was an interesting consulting engagement to think about transforming this ancient commerce method into something that could be done on the "world wide web". Our scope was to work with the client on a go-to-market strategy. But there were financial and technical complexities that they hadn’t envisioned. The implications of cross-state barters, or services offered over-the-web in return for physical product, and the fact that state and fed tax code didn’t always reconcile, created scenarios that garnered differing opinions from tax and accounting firms, and complexity in business rules that they struggled to automate as part of the platform. Ultimately, this delayed their launch, and they did not survive the dotcom bust. ?Yet, others prevailed and there are online barter systems today that either pool products and services for exchange, or that facilitate trades between two parties.

In a very broad use-case, you can check your local Craigslist for items listed in the free or wanted section that are posted as trades. That may work for a bird bath or caserole dish, but it's not very practical for things like lawn care, high-price-point jewelry, or accounting and tax services, etc.

I would try and barter a cake for some help with coding. I'm not the best coder. I have some basic HTML but that's about it

~Rachel Khoo        

After the economic recession of around 2009, I saw local bartering take hold in my community in Massachusetts, and a simple Google search shows surges in bartering strategies in 2001+ and 2008+ -- a trend that is gaining traction once more in 2022.

Having focused more than a decade on SMBs before I transitioned into high-tech platforms, I especially love bartering because it has the opportunity to really help small business owners and local consumers -- the backbone of our US economy. It expands access to needed products and services while improving overall cash flow on both sides of the transaction. I believe there is a strong future for local bartering, and it makes a lot of sense in communities where relationships can be built and sustained long-term.

Given we are in a time of economic recession, I recommend people seek out what barter systems may be available to them, for business and for personal use. There’s a lot to be said for conserving cash, and also a lot to be said for better using and leveraging our assets.

PS: The part of Dr. Anastasiu’s story that tickled me the most was of one particular goat that didn’t want to leave with him. He described the tug-of-war that he had with the goat as he tried to leave, and not wanting to offend the community by leaving it behind, he carried it on his shoulders for miles until he reached his destination. Dr. Anastasiu was a large and powerful man, and if anyone could carry a goat on his shoulders for miles, it was him.