A Word from Robbin

Trade

verb

1to give one thing in exchange for another

2to engage in the exchange, purchase, or sale of goods

The word “trade” has many definitions, but today I am going to talk about the intransitive verb “to trade,” specifically as it relates to non-cash transactions.

Spring has sprung, and as we watched the first pitch thrown out on opening day this past Thursday, baseball season is now in full swing, pun intended.  And nowhere does the concept of trading happen on a grander scale than in professional sports. So, on the surface, baseball trades would seem like a good model to follow when thinking about how trading might work for the average business or individual.

But when we think about major league trades we tend to think in terms of great deals. Pretty much no one disagrees that Babe Ruth to the Yankees in 1920 was the deal of the century for the Yankees, but for the Red Sox not so much. (Yes, I know technically it was a sale, but let’s not split hairs here.) There are more debatable examples of deals that were great for one team or another. Alex Rodriguez for Alfonso Soriano? Pedro Martinez for Carl Pavano and Tony Armas, Jr.? But I digress.

The point I would like to make is that trade deals are an excellent way for small businesses to acquire goods and services they might otherwise not be able to afford. And Cape Cod is a perfect market in which businesses can effectively use trade deals. We have an economy that is large enough to contain a vast array of options but is small enough that we are able to interact with one another on a more or less personal level.

The local organizations with the most formalized trade programs are the media companies. They have a long tradition of trading ad space for services, and as a result they have a bit of corporate infrastructure in place to manage trades (i.e. they have processes and documents and appropriately oriented team members). Non-profits also, often by necessity, have perfected the art of trading with their vendors.

But what about the rest of us? I believe that trade deals work for everyone, and I use them all the time. In baseball, the art of the trade is to find someone who needs something you have and is willing to give you something of equal value in exchange for it. The concept applies to anything. I essentially rent desks to people who need them and at any given time I have some unrented desks. A radio station sells time to those who want to reach a market, but at any given time will have some spots that remain unsold. Trading each other for these services not only saves both of us money on the purchase side but also doesn’t really cost either one anything on the sale side.

Not all trades are as win/win as the desk-for-ad-spot example. If you’re a service-based business whose product is your time, and you want to trade for that same ad spot, the trade becomes not quite as painless since you have to expend valuable time to deliver your end of the deal. But assuming the hour you spend on the trade deal could not have otherwise been spent on a cash deal for higher value, you still benefit from the trade.

Aside from the economics, trade deals have an added benefit of helping to grow and solidify relationships. We talk a lot about the importance of buying local, often in an unexamined way because there are a lot of factors, often hidden, that affect whether something is truly local. But arguably the most critical benefit we derive from buying local is building partnerships that would not be possible with big national companies. Trade deals, by their very nature of requiring an understanding of mutual needs, build those partnerships more effectively than do cash transactions.

Now the big difference between MLB trades and those between local businesses is that in the MLB both sides are trying to out-deal the other.  They are trying to get the better trade. If you’re trading for services with your B2B neighbors, your goal should be equity. I don’t ever want to be in a position where my trade partner feels that the value of my traded services is less than the value of hers. So, my advice is start with the earnest desire to make an equitable trade and check in with each other from time to time to be sure that the deal doesn’t turn lopsided.

Of course, not every product or service is a candidate for trading, and there are organizations for whom the concept simply doesn’t work. And there are definitely really bad trade deals to be had. Who can forget Frank Robinson for Milt Pappas for heaven’s sake?

Nevertheless, I highly recommend exploring trade options with your B2B contacts. They can be a terrific way to save money, build partnerships, and try products and services you might otherwise never try. And, of course, consult your friendly neighborhood accounting team for advice on record keeping.

Want to continue the conversation? Email me at robbin@capespace.com – I’d love to hear from you!

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