Current customers or potential strategic partners are another source of financing or capital. For instance, other businesses may be willing to let you use equipment or materials, or even provide funding in exchange for the work you will eventually do for them.
Issues to Consider
Customers and partners expect an arrangement to be beneficial to them, so it is important to approach them with a "win-win" strategy.
All agreements should be in writing. Consider adding a clause that will allow you to renegotiate the terms should the contract no longer reflect the market value of the bartered goods or services. Then, remember to review the agreements periodically and renegotiate as necessary.
Be careful not to barter too much of your time, services, or products.
Manage expectations from the start by telling customers and strategic partners what their participation will and will not be.
Create a backup payment plan that does not involve cash should your business fold. For example, agree to pay the cutomer or partner with personal or business assets.
Compare:
Advantages
Can be arranged quickly.
There is no application or processing fee.
Disadvantages
You are liable for the outstanding debt if your company does not succeed.
