Although many economists claim the barter system is outdated, other people are finding new reasons to barter. So, what has people losing faith in paper and coin currency and turning to exchange instead?
The Origins of Bartering
Dating back to 6000 B.C.E. with the Mesopotamian tribes, humans have used the barter system to exchange goods and services. To support themselves and their community, people would trade with other members to get what they need.
The system worked well in small, local communities. However, the barter system has limitations, particularly when there is an imbalance in supply and demand. And, the model became less sustainable as society grew. So, humans adopted currency to allow a medium for trade. When you rely on currency, even if there are mismatched demands and needs, trades can still take place.
Now that trade is being done on a global scale and digital currency is becoming more widely accepted, it has some people rethinking the value and reasons to barter within new online and small business communities that are forming.
The Evolving Barter System
As society became more complex, humans had less need for the barter system. And while paper and coin currency have supported human trade for millennia, they may soon face a similar fate to the traditional barter system.
The advent of cryptocurrency and digital wallets has completely revolutionized how businesses think of trade and ways to generate profit. It has gained more traction in recent years, with some supporters even claiming that digital currencies may soon replace coin and paper currencies.
Although it seems a bit farfetched, the idea does have its merits. First, traditional currencies are vulnerable to devaluation from inflation and theft. Digital currencies are more secure due to encryption and decentralization. Plus, they offer lower transaction fees and greater accessibility for faster payment and transfers.
And if you stop to think about it, you likely already have a digital wallet if you use digital payment apps like PayPal, Venmo, or Cash App. As people become more familiar with them, digital payments may become the standard.
Since we have already digitized the valuation of money, why not do the same for our goods and services?
5 Reasons to Barter Instead of Buying Goods
With the wider acceptance of digital currency and access to global networks, it makes it more worthwhile to barter for what you need, especially for new ventures and small businesses. For those who are interested in alternative business models, here are 5 reasons why you should consider a barter instead of buying goods.
1. It generates more business.
The most fundament rule of business is that you must bring in new customers and sales to survive. One of the advantages of this approach is that it finds new ways to attract buyers through a barter exchange.
There are several exchanges you could join to build your networks and help you reach a larger client base that also understands the benefits of the barter system. And you never know, there may already be a demand for your product and services.
However, the greatest benefit is that these exchanges provide new opportunities to trade with other businesses outside your normal markets. A larger pool offers more potential customers. And depending on the goods or services you provide, it could allow you to trade on a national or global scale.
2. Bartering reduces the cost of doing business.
Another one of the best reasons to barter is that it reduces the cost of doing business and helps move inventory. Items that remain on your shelves unsold equate to lost money. You may even have to slash prices to get rid of it if your inventory sits idle for too long or loses value over time.
But, the barter trade exchange provides another avenue to sell your inventory at the full retail price. Opening the door to new ways of doing business ensures that you don’t have missed opportunities to generate revenue. And even if you do wind up liquidating your inventory, bartering may allow you to get something of value for it.
3. It will help you conserve your cash.
Cash is a valuable resource in the business world. The more cash and purchasing power you have, the longer you can sustain and grow your operations.
But no matter what business you are in, you need to have some liquidity and cash on hand. One way that bartering helps support new businesses is by helping them conserve cash. Trading for goods or services allows you to get what you need by using what you already own or possess. Reciprocal arrangements like these are mutually beneficial for both parties and allow them to use cash resources for other expenses.
4. It’s easy.
Beyond the most obvious reasons to barter, you can’t deny that it has become much easier than it used to be. If you decide tomorrow that you want to barter your goods and services, there are hundreds of online networks you could join. Since they host thousands of businesses that barter, you can immediately start looking for partners.
Your membership grants you access to active and exclusive markets. However, you can make it even simpler by hiring a broker to represent you on these online platforms and facilitate the exchanges for you. Many will reach out to potential customers on your behalf so you can avoid cold calling. Furthermore, a broker will also help you build your e-commerce presence to attract even more business. And with access to their marketing team and resources, you won’t have to handle the advertising by yourself.
5. It provides businesses with one more way to support themselves through the startup phase.
The sad reality is that 18% of new businesses don’t make it through their first year. This number increases to over 30% after two years. One of the common factors among failed ventures is that many businesses remain cash poor.
Every business will experience limited cash flow at some point. However, bartering provides businesses with one more way to support themselves through this startup phase. Since you don’t have to solely rely on cash revenue, bartering allows you to continue doing business until the cash flow improves.
Most importantly, it connects you with other service providers and vendors across different industries. Not only will you be dealing with people who understand the challenges you face, but they also believe in the benefits of bartering. Building a network of people who share your ideas and values makes doing business easier.
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Jenny Smedra is an avid world traveler, ESL teacher, former archaeologist, and freelance writer. Choosing a life abroad had strengthened her commitment to finding ways to bring people together across language and cultural barriers. While most of her time is dedicated to either working with children, she also enjoys good friends, good food, and new adventures.