Have you ever thought about what money is? If I look on a note in my wallet (it’s a British £10 note), it says “The Bank of England promises to pay the bearer on demand the sum of £10”. USA, Canadian, and the Euro notes say something very similar. So money, the cash we use is really an “I Owe you”. It’s an IOU from somebody you do work for, and you give it to somebody else for the product or work that they do. We are just passing IOU notes around. And IOU’s are just a projection of the barter system.
Barter is the original form of trade – from the dark old stone or bronze ages. Barter worked when one person said “You look after my sheep, and in return I will catch you some fish”. Barter was a trade of skills. The money came from this, allowing people to exchange the IOU work notes – and a way to put value against things that they exchanges.
Projecting this forward to today, and the question is, should Freelancers, Contractors and other Small Business Owners barter and trade skills instead of payments? If cash is short, it may be tempting to do some technical work for say another freelancer who can provide marketing copy if you can in return, give them some web site coding (or visa-versa).
There are Pro’s and Con’s for the barter system in business:
- No money changes hands, therefore no taxes to pay
- If you have free time, it’s a handy way to get outside skills into your set-up without having to hit the bottom line
- It generates working relationships which can then be extended into other work by creating working partnerships
- Exchange of work can lead to additional publicity (additions to portfolio, web sites posted, credits etc)
- When work is hard to find, a skill exchange keeps you busy, active and in work mode
- Money is not involved, and if you need money, it may not help your business
- There is a lot of trust that both parties will carry out the agreed work
- There may be some discussion of the relative values of different work and skills (is 1 page of copy text worth an hour of coding or page of web site design?)
- The barter system is deemed out of date by some freelancers.
What do you think? Are there other freelancers you can barter or do a work exchange with?