inKind
A Better Way To Barter
Friday, July 14th 2017
Keeping on top of cashflow is key for every small business. Without careful maintenance, a small hiccup can easily snowball.

Part of keeping a healthy cashflow is to conserve cash where possible. This isn't as straightforward as saying no to something until it's necessary. Spending a hundred bucks every few months on servicing your refrigerators is a better long term investment than leaving the fridges until they break and have to be replaced with costly, brand new units.

One way to conserve cash is to use your goods and services to "pay" for someone else's goods and services, also known as bartering.
What is Bartering?
Bartering is a system that has existed for centuries, particularly when currency is unstable or unavailable. It briefly got popular at the beginning of this decade as people started to feel the pinch of the financial crisis. But it doesn't need to be restricted to times of hardship.

At a very simple level, you might see a handyman fit some shelves in a restaurant and take dinner and a drink instead of a cash payment. In this case, the restaurant trades its goods and services (i.e. the meals it prepares) for the services of the handyman (i.e. his time and expertise on the job).

The Ups
The big benefit for you is that the perceived value of your services is often a lot more than the actual cost you incur to produce the good or service. Let's use the restaurant example. If a restaurant sells a pasta dish for $10, the cost of the ingredients would likely be about $2.50, since most restaurants operate with 25% food costs. The other costs associated with putting that dish out - utility bills, labor, rent – are realized whether the dish is produced or not, as simply being open for business and serving regular guests requires those costs. So the marginal cost of the pasta dish is $2.50 while the value to the consumer is $10.
The Downs
The big downside to bartering is that there needs to be a "double coincidence of wants." This means that for barter to occur between two parties, both parties need to have what the other wants. A restaurant might love to be able to "pay" a PR company in the form of food and beverage credit at the restaurant, but considering that PR companies usually charge up to a couple of thousand dollars per month, would they want to have that much F&B credit to one restaurant? Would a refrigerator supplier want F&B credit if they were located far away from your restaurant? These questions demonstrate how the double coincidence of wants can be a major hindrance to successful bartering.

The Answer (hopefully!)
At inKind we have come up with a solution to this problem, that gets your customers involved. If there is a service you want to engage or an item you want to purchase, we provide you with the funding for it, and take credit to your business in exchange. We then sell that credit as high dollar gift cards to members of your local community. You get the service/item you need, and you "pay" for it with your goods and services when someone comes in to redeem a gift card.

Want to know more? Click here.
Get Updates
Get periodic updates on our company's mission to provide 0% financing to the best mission-driven, local businesses in the US.