This for That – A modern look at bartering

Before money existed, the first Americans bartered for all of their necessities. Tobacco, corn, pelts, and beads–these goods were the Native Americans’ currency, which they traded for European goods of equal value. Because our nation was built on the principles of barter–the exchange of goods and services–business sectors have historically used barter to replace money transactions during times of monetary crisis. In a deep recession, some in the skin care and spa industry are using the trade method, seeking dollar-for-dollar values to augment their businesses.

Marketing Tactic
According to Maureen Vipperman, founder and president of The Urban Spa Group, CEO of The Los Angeles Spa Association, and director of Glen Ivy Spas, bartering is a necessary part of the skin care or spa business because it’s a great way to save money, network, and partner with other businesses.

“I think estheticians should consider bartering tactics if they work on their own; however, if they work for a company, it is the company’s responsibility to do it for them,” says Vipperman, who adds that bartering is an option for marketing and promotions during financial difficulties.

Larry Oskin, president of Marketing Solutions, a marketing firm that specializes in the beauty industry, agrees. “Today, you can trade spa and skin care services for flowers, limousine services, professional photography, restaurant meals, automobile leases, freelance PR, staff contest prizes, and much more,” Oskin says. He thinks bartering isn’t a necessity, but rather a smart and economical way to help market a skin care or spa business.

Along the same lines, Nancy Reagan, esthetician, distributor, and former spa owner in Florida, sees bartering as a way for a spa or esthetician to become more involved with the local community. “I believe estheticians should absolutely build their business on barter, from the salesperson at the cosmetic counter to the bartender who spreads the word,” Reagan says. “Look for people in your community who are influencers–those people who tell all of their friends about a service or a product. Those are the people you want to barter with.”

Patrice Dickey, an author, yoga instructor, life coach, and public relations professional, is an active barterer who, for more than a decade, has bartered her writing skills for spa visits. “Currently I swap PR, marketing, or editing services for Botox, intense pulsed light treatments, and Accent Laser treatments at three different med-spas,” she says. “I also swap coaching with my hairdresser and marketing consulting/coaching with my massage therapist. Bartering will become more common as the economy becomes more unstable. People tend to become more creative in getting their needs met when they can’t throw money at every problem.”

Not Always an Option
But bartering isn’t an option for all professionals. Because barter doesn’t include the tangible exchange of cash, using barter to gain more capital may not work. It will, however, help preserve current reserves.

“As money gets tight, we all find ways to save, but I do not think that bartering is the answer,” says Blanca Caballero, founder and president of AvantGard Spa in San Carlos, California. “This will not get you out of financial difficulties.”

Oskin agrees with Caballero and says estheticians should barter only to a point. “You should not do everything in barter, as you will still need hard green cash to pay for your supplies, rent, food, and bills,” he says.

Caballero says estheticians should only barter for services in exchange for their work and only for things that are wanted or needed.

If considering a bartering relationship, keep in mind every good has a dollar value and every service fills a measure of time that equals a dollar amount. Strive to barter for equal-value items “like a massage therapist wanting facials and an esthetician wanting massages,” Caballero offers. “For example, I would write a gift certificate with a year’s expiration date for $200 and the massage therapist would do the same. Every service they receive, the balance gets adjusted. If the services do not get redeemed within that year, they are voided.”

Fairness can be an issue if no dollar amount is worked out. Vipperman insists this could be a problem if a spa decides to barter its services. “If your company uses your services for bartering, you should still be paid for your services, unless it has been made clear and agreed to that your services are being used to gain more business for you in the long run,” Vipperman says.

Having a dollar amount assigned to the items being traded will also help when tax forms are filed. Keep good records and document all of your trades, because the Internal Revenue Service regards barter exchanges as taxable. Barter participants are required to file Form 1099-B for all transactions, whether Internet-based or with a physical location, unless the arrangements are noncommercial in nature or if there are fewer than 100 commercial transactions during the year.

With Whom Should I Barter?
It’s sometimes difficult to know with absolute certainty if you should steer clear or proceed with a barter partner. One of the biggest hurdles is simply finding barter mates. Oskin says you need look no further than your own clients and local businesses and suggests searching the Internet for barter networks, which are available at local, regional, or national levels. Visit Craigslist.com, he suggests. But Dickey has a stronger opinion.

“Bartering should be avoided when you don’t already know, trust, and have an established relationship with the person with whom you’re bartering,” Dickey says. “I have never operated through a professional barter service; perhaps those would be worth a try. I prefer having the personal relationship and trust–that way people can be honest with each other if they think they’re getting the short end of the bargain.”

Caballero, like Dickey, prefers to barter only with people she knows; for example, her hardware support technician likes to give his wife a gift card or products and, in exchange, he deducts the service or product dollar amount from his bill for labor.

“Some hotels, airlines, art dealers, and automobile dealerships will entertain bartering with you through an independent barter program. These programs take a fee or require a membership fee,” Oskin says.

Vipperman says to avoid any deal when a company that wants to barter does not reflect the same values as your company.

Bartering for Clients
Experts agree that bartering, when done correctly, can increase the number of new clients who come to you.

Dickey says she knows of a massage therapist/spa owner who barters with concierge and front desk personnel at local hotels to increase new client traffic. For every five customer referrals a hotel concierge sends over, the concierge receives a complimentary
“automatic treatment,” such as an ion foot spa or far infrared therapy; in other words, a service that doesn’t require much or any hands-on time from a professional. To initiate the barter, the spa owner also offers a complimentary 30-minute to hour-long massage and sample sessions of the ion foot spa and far infrared services so the concierge can go back and tell hotel guests about the treatments.

“If you barter on a regular basis and for large amounts, try to barter for smaller $25- to $50-value gift certificates,” Oskin says. “This will give you and your barter partner the opportunity to help each other with cross-marketing. For example, you can barter $500 at a time with a restaurant, while receiving 10 $50 gift certificates. These restaurant gift certificates can be used by you to enjoy yourself. Some can be used as staff and client incentives, contest rewards, or bonuses. You should give the restaurant owner 10 $50 skin care gift certificates, so they will in turn send you at least 10 of their best clients. The smaller the bartered gift certificates, the more opportunities you will have to be networked to potential new clients,” Oskin says.

According to Reagan, the classic barter is when you offer a free service for a referral. “Word-of-mouth advertising is a gift, plus in this economy, it is critical,” she says.

Trading for Anything
Caballero likes to work with her competitors. She gets together with a group of spa owners who have similar revenue and barters with each one.

“We each issue gift cards for a specific amount and we give them as incentives and education to staff,” Caballero says. “The latest one was for the top retailer in the esthetics department. After they receive the service, they need to return with a report on their experience, what they learned, and what ideas they have. This allows them to become clients and see things from a client’s perspective, from making the appointment to the service. It’s an eye-opener.”

Reagan has done tons of bartering, she says. “I bartered my annual membership with the chamber of commerce,” she says. “In exchange for membership, the staff of the chamber (eight people) could have a discounted (30 percent off) facial or massage six times a year. This was great because I was still receiving income, plus eight new clients, and word-of-mouth advertising.” She says she also bartered for her drinking water system, public relations services, radio advertising, and with the local PBS television station.

Vipperman has also bartered with a local radio station as well, and says it was her best experience. “The station owner, his wife, and family got free services in exchange for live broadcasting from my spa for a live auction from our location,” Vipperman says. “I promoted an evening of giving and had local businesses give items or services to be auctioned off. I did this during our slow period and we far exceeded our revenue at that time than we did during our busy season. And we had a ton of fun doing it.”

Bartering can help businesses achieve goals, can expand a client base, and can be used to stimulate employees when done fairly. “Stay tuned to your energy and if you sense things that hint of unfairness, or your own feelings of martyrdom or victimhood come up, have another discussion with your barter mate,” Dickey says. “Maybe it’s time to move on or start paying each other for services in the future.”

By Monica Schuloff Smith a Miami-based freelance writer, editor, and industry consultant, and is the former editor in chief of Les Nouvelles Esthetiques & Spa. She has authored hundreds of articles related to the skin care and spa industries. Smith is serving her second governor-appointed term as a member of the Florida Board of Cosmetology. She can be reached at aldsmith@bellsouth.net.

Originally published in Skin Deep, March/April 2009. Copyright 2009. Associated Skin Care Professionals. All right reserved.

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