Remember when you were a kid and traded a bag of potato chips for a peanut butter and jelly sandwich at lunchtime?  The concept was simple and two people received something they really wanted without any exchange of money.  Today’s professional service providers can enjoy that same win-win experience by bartering their talents with other businesses and service providers.

When you are starting or growing a small business, bartering can aid in preserving cash to help get your venture launched or expanded.  As everyone knows, it takes a bit of capital to get your business off the ground.  But what if you’ve got no capital and you’re having trouble getting a loan or line of credit at the bank?  Bartering can help you move excess inventory, get you through a slow business period and help you save your limited capital.  Bartering is a must have success tactic for operating your small business.

Bartering can be defined as the exchange of goods or services for other goods or services.  It is a transaction where no money changes hands.

Barter transactions can be done privately and informally where two companies exchange evenly valued goods or services.  It can also be done in a more formal exchange or site where companies earn business barter credit that can be traded for with other small businesses and vendor participating in the network.

Examples of how bartering services can work:

*  A construction worker’s business has slowed down but his truck needs major repairs that he can’t afford at this time.  He connects with an auto repair shop to trade some construction work for the repairs.

*  An Internet marketing professional needs some accounting work.  She agrees to a barter transaction with an accountant.  In exchange for accounting services, she will create an SEO-friendly website for the accountant and promote the accountant’s business in local listings.

With a bit of resourcefulness, you could potentially go from surviving to thriving without blowing your entire budget.

Ready to give bartering a try?  Keep the following things in mind:

No matter whether you’re bartering through an organization or on a case-by-case basis, you’ll still have to do a bit of research on potential barter partners before you select one (or more).  Make sure whoever you’re doing business with is reputable and not in financial trouble.  You want to make sure that they have the capacity to make good on any trades that you agree to.

*  In order for a barter to be fair, both parties have to agree with the value of what’s being bartered.  Spend some time attaching time or money values to the product or service you are offering before you sit down with your barter partner to discuss it.  Try to come as close to an equal exchange as possible.  And even if it isn’t exactly equal, try to think long-term benefits.

* Bartering does not offer a tax loophole to avoid taxation.  According to the IRS tax website, ” Income from bartering is taxable in the year in which you receive the goods or services.”  Generally, you report this income on Schedule C, Profit or Loss from Business.

Bartering has been around since the early days of civilization and the idea still works today – and thanks to barter websites and other online resources, it is increasing in popularity.  By bartering services and goods for your business or personal use, you can obtain what you need without using up your cash reserves.

Being a small business owner myself, I have used bartering on a case-by-case basis for accounting services, printing, website design, computer repairs and for some legal advice.