Barter beware

Swapping services can seem like a great idea — until, that is, the other party leaves you hanging. A cautionary tale about in-kind trade

Barter beware

If you’re looking for a 28-foot-long bar top, Julie Rosvall would love to hook you up. After all, she’s had one sitting in her garage since a barter trade went bad way back in 2006. These days, Rosvall’s a textile artist, printmaker, and Nova Scotia Designer Crafts Council’s program coordinator, but from 2005 until 2012, she and her husband co-owned a company in Wolfville, Nova Scotia called Formed Stone Designs. They specialized in architectural concrete (making things like bar tops, sinks, and architectural details).

The 28-foot custom bar top that Julie Rosvall and her husband created for a restaurant that didn't get off the ground. They received only 25 per cent of the cash agreement, and none of the promised in-kind trade. Photo credit: Perry Dyke Photography

The 28-foot custom bar top that Julie Rosvall and her husband created for a restaurant that didn’t get off the ground. They received only 25 per cent of the cash agreement, and none of the promised in-kind trade. Photo credit: Perry Dyke Photography

Rosvall was thrilled when a well-known, reputable entrepreneur asked Formed Stone Designs if they’d be willing to cut him a deal and make him a custom bar top for a new restaurant he was planning to open. The restaurant would be a good thing for the community, so she was happy to help.

“The entire community was very excited about it,” says Rosvall. “On August 11, 2006, we entered into an agreement that stated we would provide a 28-foot bar top using stone from the beach at Ross Creek. It was a really amazing project with an interesting use of local materials. We were even able to get permission to procure the material from the province because it was a fairly small amount. We were pretty new, and this was a way to get a really spectacular project out into the world.”

The contract stated that Formed Stone Designs would provide the bar top at half price — with the expectation that in return, they would receive “goodwill” from the owners and staff at the restaurant. When we asked Rosvall to clarify the agreement of goodwill, she said, “We asked for recognition of who made the product, some sort of display stating that it was made by Formed Stone Designs. Plus, food! The expectation was that I would not have to pay for a meal. When clients came to Wolfville to look at a product, I would be able to take them in to the restaurant and treat them to a lovely meal with this beautiful bar top that we made.”

With the contact signed, Rosvall and her husband tried to move forward with their side of the deal. According to Rosvall, while Formed Stone Designs was responsible for getting permission from the province to remove the aggregate from the beach, the restaurant owners were supposed to actually “lug the buckets.” After about six months of waiting for the stone, they decided to go collect it themselves. After that, they held several meetings with the other party, looked at samples, signed a final agreement, and started building.

In August of 2007, everything collapsed. The restaurant owners came to look at the bar top and said they were ready to take it — but they hadn’t yet paid the remaining 75 per cent of the cash agreement (Formed Stone Designs had collected a 25 per cent down payment), so they weren’t permitted to take the product.

“Thank God we did that, because within two weeks, there was a sheriff’s sign on the door saying that they hadn’t paid their rent,” says Rosvall. “We still have the product, but what are you supposed to do with 28 feet of bar top designed for a custom space?”

Although bartering didn’t work for Rosvall, many businesses do find the practice beneficial. According to Laurie Sinclair, a Business Development Officer at the Centre for Women in Business in Halifax, swapping skills can be an affordable way for small businesses to get the things they need to grow (e.g. marketing copy, a new website, or business advice). The key is making sure that the trade is mutually beneficial for everyone involved. “Trading services in-kind can be very useful,” she says. “After all, when you run a small business, there’s always a cash flow crunch for one reason or another. Trading services can alleviate the crunch, because that makes it possible for businesses to get the things they need without paying cash.”

But it takes effort to make a skills swap work. Sinclair recommends doing the same amount of due diligence you would do before hiring a service provider for cash. For starters, you need to find the right person to trade with, and that alone can be a daunting task. You need recommendations, references, and work samples. You also need to find someone who’s willing to trade their services.

And if another business owner is requesting a trade, you need to take a hard look at why they’re asking. “You need to look at why that person is unable to pay you,” says Sinclair. “Is that a red flag about the quality they offer? Or are they just new? It might not be a red flag, but it’s also possible that they’re looking for a trade because they aren’t able to sell their services for cash. In this case, I would recommend some added layers of due diligence. Check the quality of their work and make sure it’s what you’re looking for.”

Keep in mind that it can sometimes be difficult to collect payment even when you’re selling your services for cash. There are a few reasons why collecting on a trade can be even more difficult than collecting on a traditional cash-based transaction. You need to be sure that the other person has the flexibility to build the reciprocal work into their schedule, and you need to know that they’re going to take the agreement seriously even though cash isn’t involved. And both parties need to make sure they’re diligent about keeping track of the hours involved. The best way to juggle all of these things? Develop an airtight contract outlining the specific details of the trade—plus a delivery timeline for both parties.

Despite the risk factors involved in an in-kind trade, you can make it easier on yourself. If you’re looking for a trade, considering signing up for a service that helps match you up with an appropriate service provider.

“I think these types of organizations are incredibly useful,” says Sinclair. “One of the biggest challenges is the time it will take you to find the right person. If an organization can take care of that for you, that’s a huge value-add. Some organizations vet people, too; you have to meet a certain level of quality before you can sign up for their services.”

The team at Halifax-based service trade management services firm, Vendeve. Photo Credit: Tim Lingly

The team at Halifax-based service trade management services firm, Vendeve. Photo Credit: Tim Lingly

Halifax-based Vendeve is just one organization offering service trade management services. A rebranded version of the women-only skills-swapping service Swapskis, Vendeve is being promoted as a skills marketplace for women. According to Vendeve founder Katelyn Bourgoin, the service is an app that gives women a place to buy, sell, and swap skills — allowing them to use their cash or time as currency.

Vendeve, a skills swap marketplace for women, requires potential barters to be recommended by members of their social network.

Vendeve, a skills swap marketplace for women, requires potential barters to be recommended by members of their social network.

In order to ensure that their members are receiving opportunities to work with quality service providers, they’ve put a few barriers in place. Not only is the service invite-only, they also have a star-rating system. “We like to say we have a closed door and an open window,” says Bourgoin. “We’re invite-only, but there is one other way into the app. Someone within your social media network has to vouch for you as a part of the sign-up process.”

As an entrepreneur herself, Bourgoin also understands the importance of protecting yourself when negotiating a trade.

“It’s so important to make sure that you both have a clear understanding of what the expectations are for the other person, and that you know you can deliver on your side of the deal. Because I think that’s when relationships fall apart, when each person has a different idea about what’s included and what’s expected and those expectations are not clearly communicated.”

Despite her unfortunate experience, Rosvall still sees successful trades happening around her within the crafts community. “At the end of an NSDCC show, I’ll see a potter walking away with a new scarf and a weaver walking away with a new teapot,” she says. “Those types of relationships can certainly work for a lot of people.”

And of course, as Bourgoin points out, we have to place a certain amount of stock in human decency. If you do a great job for someone, chances are good they’ll do their best to provide you with the same level of quality you’ve given them.

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