What Is An Exchange Deal or Ex Deal?

I mentioned in my post about collecting your bills and managing cash flow that my father used to own a small business. In this post, I would like to share with you again a strategy that I learned from my father when I was young. I always wondered why my father would agree to do something cash free in exchange for a favor such as being featured in a magazine.

My father told me that it's called Ex Deal,  he would say... "Ang tawag dun, ex deal". Ex Deal or Exchange Deal is a form of business transaction wherein a product or service is used as a medium of exchange in place of cash.

Filipinos can easily relate to this business strategy because in our Elementary days, we learned in our History classes about the Barter System. Exchange Deals are not so different and while it has some advantages, we should also take into account the disadvantages. Below, I will site some of the advantages and disadvantages of getting into an ex deal.

Advantages & Disadvantages Of Getting Into An Exchange Deal

Advantages

• Little or no amount of cash - The very reason why you're getting into an ex deal in the first place is to avoid getting some cash out of your pocket. You can buy a product or service of little or no amount of cash.
• Creates a bridge of trust - If successful, an ex deal can create a bridge of trust between the people or companies involved.

Disadvantages

• Little to no cash flow - You should accept the you'll have little or no cash flow when you engage on an ex deal. You should understand that deals such as getting featured in an article, in exchange for some service rendered for free can be later on pay off if that advertisement convert to real customers.
• Could take a while to blossom - If the deal you got is the same as my father's the reward might not be instant and could take a while bear fruit. This should be taken into account and should be considered as a form of investment. Therefore, you should also compute, estimate or anticipate the return of your investment. Do not get into a deal that would take too long to bear fruit.

How do you get started then with this technique? The most obvious answer to this is "you have to initiate". You have to setup a WIN-WIN situation for you and for the other end (your prospect person or company) that you plan to have an Exchange Deal with.

Make sure to identify a part of your business that you can offer to another party and would be hard for them to say no to. Also, make sure that you set-up the terms clearly so you will not be prone to abuse. You might also want to make a formal letter of intent to the other organization you wish to do business with.

Please tell us how you get to practice this technique in your business! Was this useful for you?

Photo Credit: buddawiggi