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Tuesday, February 03, 2015

Bartering for a Living, by J.J.




Just as we will need people with blue-collar skills, like farmers, carpenters, mechanics, welders, and so forth, society will also need entrepreneurs who have the inventory and negotiating skills required to open stores and to restart local economies in the event of an economic collapse. In such times, it will be mutually beneficial for a farmer to let the local trading post sell his produce as a middle man while he is working the farm rather than spending precious hours each day trying to sell that produce himself.
Most preparedness articles talk about the importance of having extra items on hand for bartering when our economy collapses, but have you ever actually done any bartering? Have you ever thought about how you’re going to trade those extra goods you’ve stockpiled? There are some specific strategies you must know in order to make bartering profitable; there are strategies that will enable you to not only make a living to feed your family in a post-SHTF setting but may even set you up with a thriving business that endures long after your community recovers.
I have 20 years of experience running a variety of different businesses– two of which involved constant bartering as their primary profit generator. I’m going to show you some of the specific methods and strategies I used to make these businesses profitable, using examples that would be relevant in the event you found yourself playing the role of local merchant as your community starts to rebuild.
Pricing and Negotiation
I think most people reading this agree that silver coins (pre-1965 U.S. dimes, quarters, and half dollars) will be the new currency of choice in most of the United States if the dollar collapses, so I will be using that as the medium for my pricing examples. Every item in your store needs to have a separate sale and buy price. These values stay the same in trade deals too. For instance, you might sell a tool for $2 in silver coins but only pay $1.50 to buy it. So then a trade might look like this: your $2 tool for their $1.50 and .50 items, which you could then sell for $2 and $1 respectively, resulting in a profit of at least $1.00, depending on what you paid for the original item. Trading (as opposed to selling) is your real key to thriving, because every time you do a trade similar to the example above, you are growing the value of your inventory exponentially. So, unless you need the coin for something specific, you should always push trading your goods over selling them.
The law of supply and demand is also a factor. If you happen to have a lot of those $2 tools in stock, but it’s something that is always in demand, then you might still take them in, but only at $1 trade-in value. However, your sale price should still stay the same, unless you foresee demand decreasing for that item in the future and should then lower your price or offer quantity discounts accordingly (i.e. $2 each or 2 for $3). On the other hand, there might be times when a particular item is in very high demand and you are the only one who has any. In this case, you can raise your retail price accordingly. If a single item in your inventory is especially rare, you can also demand a higher trade-profit because you are “trading down” a harder to replace item for things that are more common, even though their added value might be equal. An example of this would be trading your spare horse for a pile of silver, seeds, and food.
Even today, there is no exact science to pricing goods and services to achieve maximum success. Supply, cost to produce/replace, demand, demographic, competition, operational costs, and location are all important factors. However, at the end of the day, an item is only worth what someone is willing to pay for it.
The keys to my success were that I had things people wanted and zero emotional attachment to them. This meant I had walk-away power, which is absolutely essential to making a profit in a barter/trade environment. That being said, you must not be greedy! God gives us multiple warnings against greed in His Word, such as Proverbs 1:19, Proverbs 21:6, and Jeremiah 17:11. Expecting a profit for providing desired goods and services is reasonable, but ripping people off will quickly lose you customers (or get you shot), and your business will not last. Your goal should always be a transaction that is mutually-beneficial, where you make a profit and they get the item(s) they desire. Also, do not underestimate the cumulative effect of making small profits! When my dad trained me in business and sales, he always reminded me of the famous saying, “If you watch your pennies closely, the dollars will count themselves.”
From time to time, you may also find yourself in the opposite position where you don’t have large stockpiles of an item for personal use. In fact, you might be trying to trade for enough food to feed your family that day. In this case, you do not have walk-away power and would need to adjust your strategy. If someone has an item that you need/want for your personal use, be prepared to value that item at your retail price for trade-in rather than expecting to make a profit.
Location
An established physical presence is also crucial to having the upper hand during negotiations. The location of your post-collapse trading post will look different depending on your setting. If you live inside a town, you might transform part of your house or garage into a storefront; or maybe you can rent a vacant store nearby. Perhaps your town will host a weekly public market downtown, in which case you will need to be able to transport, set up, and take down your inventory quickly and efficiently. A good location will look completely different in almost every area, depending on regional stability, population density, availability of space, amount of foot/vehicle traffic, and ease of customer access.
With a fixed storefront that is open regular hours, security will be a big concern. There are some great examples in James Wesley Rawles’ book “Survivors” of fixed storefront security, but every unique situation will change the variables and solutions. With a mobile trading post, you will most likely be a one-man show in charge of your own security and will be the most vulnerable traveling to and from the market. In either case, you need to be prepared to protect your life and inventory (since it feeds you and your family), while your business is open and when it is closed.
Marketing
Advertising would be a tricky aspect of running a business when society starts to recover. In my years of experience, I’ve found that the best advertising is a combination of word of mouth and having a great location. Most marketing experts say that it costs many times more to attract a new customer than it does to retain and grow an existing one. Plus, there is the concern of attracting unwanted attention if you used interstate billboards or similarly “loud” advertising after TEOTWAWKI. The best way you can attract customers to your trading post is by choosing a great location from the start and having lots of essential items that everyone is looking for. That way, you become the go-to source in the community. Also, don’t forget about planting seeds in the minds of your customers for repeat visits by going above and beyond in your customer service, store environment, and product conversation.
Starting Inventory
This is by no means an exhaustive list, but having extra quantities of the following items WTSHTF will most certainly give you a head start in your bartering:
Also, make sure you have a couple of “spare” bigger-sized items in your starting inventory. It’s important to make sure that you always maintain a mix of both smaller and larger items in your inventory to maximize your trading leverage.
Add-On Services
Another key to running a successful retail business is having multiple profit centers or services that draw people to your location. I have used this strategy very successfully in my retail businesses. This principle could be applied post-TEOTWAWKI by selling services, such as knife/tool sharpening, water filtering, cigarette rolling, battery charging, and others alongside your goods. People, especially Americans, are by nature impulsive shoppers and often remember they need or want things only after they see them. Diversifying your business also heeds Ecclesiastes 11:2 advice: “Give portions to 7, yes to 8, for you do not know what disaster may come upon the land.” This might necessitate involving the skill sets of family and/or friends in your community. Doing so would accomplish three things:
  1. It would give your business more profit centers and ways to draw customers,
  2. It would lift up others as they share in your success, and
  3. It will provide more security for your (hopefully) thriving business.
If you are reading this article, you have the same advantage I have had in my successful businesses– you know the types of items and services that will be in demand if our economy collapses and you can start stockpiling those items and developing those services right now so that you have a head start to generating an income and feeding your family when it does. As a disclaimer: Make sure you research and follow any and all applicable laws and licensing/permitting/insurance rules in effect before engaging in any business activities, especially in regards to regulated substances, such as alcohol, tobacco, or firearms.

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