Bartering is fast becoming a smart strategy adopted by large corporations to scale their businesses. It is however unfortunate that most startups are not taking advantage of this smart business move.
One of the biggest challenge for an early business or startups is scaling after the initial investment. After a major breakthrough or a successful deal for a series A fund, a business founder is cut with the challenge of increasing its market share as well as growing its brand.
The believe over time is that achieving the feat of rapid business growth does not go without a huge budget.
For example, if you ask a random business person in Ikeja (One of the business hubs of Lagos, Nigeria), why He/She has not scaled or done any expansion for many years of its business operation, it is not uncommon to get responses like “If I for see person wey fit give me better loan ehn, I for don expand this business” (meaning: If I had somebody to give me a loan, I would have expanded this business). Some even justify their failure to scale with the harsh economic reality in the country.
Having consulted for a few startups over the years, I have come to understand that this is a misconception or at best a distorted philosophy. I discovered that with a lean budget, a founder or business owner can leverage on the old business principle of bartering to scale his/her business.
What bartering means
Bartering is the exchange of goods or services for an equivalent value in either goods or services, without the use of a legal tender – Money. It is a creative way of exchanging service/goods for service/goods with the intent of reducing your running cost and rapidly growing your business. In layman term, bartering is simply using what you have to get what you want.
Some have argued that the bartering system is old fashioned, but hey, this is deceptive because the underlying business principle of bartering is actually the “New Normal”.
Smart ways large firms leverage bartering to expand their businesses
Do you know big coys or large firms practice the bartering principle?? Here is typical story that explains this.
Few weeks ago, I walked into one of the major eateries in Ikeja (KFC to be precise). After placing order for my favourite delicacy, the attendant added a bottle of coke. Since I’m not a fan of carbonated drinks (yes, I wouldn’t mind a bill passed into law against consumption of carbonated drinks), I quickly hit the dislike button and requested that the bottle of coke be replaced with a bottle of water.
The reply of the attendant shocked me: “Sorry Sir, the bottle of coke comes with every order and cannot be replaced.” Well, I have been forced to take a
poison drink I didn’t order for.
The business game that played out here was that Nigeria bottling company partnered with KFC to promote the Coke brand. Now that is bartering!
How a startup can leverage on bartering
To leverage on bartering, all you need do is to approach another business (preferably a leading business which is not a competitor) and request a mutual partnership (which does not require direct exchange of money but exchange of service for service or product for service) with the business. This partnership should be done with clear intention on the mutual benefit for both parties involved.
For example, a tech startup offering travel and hotel booking services can Partner with leading hotels to give say, 5% discount to anyone booking a room in the hotel through the startup’s app. The result of this partnership benefits the Hotel in terms of increased patronage as well as the tech startup in terms of increased number of downloads. Also both parties will up their games to sustain this mutual benefit leading to long term turn-over.This is bartering!
The big catch here is that, the growing startup leverages on the well recognized brand identity and media exposure of the hotels while the hotels leverages on the novel technology for fast and convenient booking and ease of payment of the startup.
A Nigerian tech startup that has efficiently leverage on this bartering system is travelstart (an online travel agency). This startup offers its users a voucher code to fly at a discount on Emirate Airline.
Do you desire some business expansion and increased market share? then give bartering a shot!
Got some thoughts or opinion about this article, kindly drop it in the comment box. I will be glad to read from you.