While attending a meeting of the Women’s Initiative last week, I had the opportunity to briefly mentor some new entrepreneurs. The subject of barter came up as a strategy to get new customers and clients. I had to advise against overuse of the strategy, no matter how tempting it seems when you’re first starting out.
There’s two main reasons that I advise against it over the long term.
1. Too many times barter is done a one-for-one basis. For example, I give someone an hour of coaching for an hour of massage. Or for some dry cleaning, or a hair cut. But if I take my hour of coaching out to the money-based world, what I charge for an hour of coaching isn’t the same that is charged for an hour of massage, dry cleaning or a hair cut. However, the discussion of value of the product or service is rarely discussed. As a result, over time, one person may feel that they are getting a great bargain and the other may begin to feel cheated and resentful. And, neither person has tough conversations about value and money. Which brings me to point number 2.
2. As a rule, I’ve found that women entrepreneurs and business owners hate talking about money. They will avoid placing a monetary value on their goods or services, particularly if they perceive that what they offer has little intrinsic value. If they barter, they never have to talk about money. But, like it or not, most of the developing world functions on some kind of monetary standard. Originally, currency was an easy method of trade that relieved us all of carrying around a spare chicken or two. Obviously over time, it’s become charged with all kinds of emotional baggage and abuse. If you want to run a business, you need to be able to talk about money, value and what things cost.
So barter if you must, but have a conversation about the value of your product or service in terms of money.
Heck, go one step further and just pay each other!
