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#999: Bartering Your Consulting Services

Posted By Mark Haas CMC FIMC, Wednesday, March 04, 2009
Do you know whether it is possible, or does it make sense, to barter my consulting services?

Bartering is a process where two people (sometimes companies) trade services instead of paying cash for a transaction. When you need a service but can't or prefer not to pay for it, and have a skill or other asset someone else wants, you may be able to barter. The goal is to trade something on which you place a relatively low value in exchange for receiving something of relatively high value to you. In a perfect world, both parties feel like they got a great deal (like in grade school when you traded away the sandwich you hated for your friend's one that you loved).

That said, management consulting, a traditionally B-to-B transaction, is a challenge to barter, for two reasons. First, finding someone with services you need and also willing to sell it in exchange for consulting services is really hard. At worst, it is hard to trade groceries for a strategic plan; at best, you might be able to barter management consulting services for accounting work. Second, it is hard to equate the value of the two providers. Is hour for hour the right balance, or should services be traded on the basis of hourly rates? What if the nature of your services requires a longer time than the service provider you want to barter with? When you want to barter a service for a product it gets more complicated.

Tip: One of the best bartering possibilities might be consulting for marketing. Consider whether providing consulting services to improve the effectiveness or operations of a marketing firm can be exchanged for advertising or a marketing plan. Consider what creative possibilities exist but just don't count on bartering being the foundation of your consulting business development strategy.

P.S. Recognize that even though no cash may change hands, the IRS considers it taxable and you are obligated to file a 1099-B, Proceeds from Broker and Barter Exchange Transactions.

© 2009 Institute of Management Consultants USA

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Mary Adams CMC says...
Posted Wednesday, March 04, 2009
Early in the development of our practice, we bartered consulting services for a new website. Both were fixed price projects. The projects were not of equal size, so the client also paid us cash. Negotiate the two projects and prices first, then it is easy to quantify the amount of the barter. Yes, we reported the bartered service as income--but it was a nice cash flow savings at the time.
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