Sadly things can and do go wrong with contra-deals. Many of the problems start with the expectations that each party has of the other, and the value that they put onto their own service compared to the value that they attach to the other. Price is only ever an issue in the absence of value, and this can also apply to doing an exchange of service.
Here are a few tips to help you protect yourself when you set up contra-deals.
- Make sure that you both know and understand the value of each other’s service provision right up front. If you are not bringing the same value to the table this needs to be addressed before the contra-deal begins as money issues and value always get in the way when one person feels undervalued or taken advantage of. If your services are worth more than the other party, make it clear the amount of service that is included in the deal, and what additional payments need to be made.
- Get everything you agree in writing – this will come across as very formal if you’re doing a contra-deal with a friend, but without agreement in writing you will leave yourself wide open for misunderstandings or even having the other party ‘forget’ the deal.
- Agree timeframes for delivering the service so that when it’s time to end the contra-deal there is no misunderstanding between you. Include targets for delivery and treat the whole deal as if it’s a regular business transaction between you both. I once had someone who wanted to come back a few years after our deal had come to an end and claim additional work from me – the lack of an end date to our arrangement made this an awkward situation.
- Invoice each other for the amount that your relative part of the deal comes to that you then zero it out. It reminds the other party of the value of your service, and keeps the contra-deal on a business footing.
- When the contra-deal isn’t working, get out, even if it means you need to pay for some services you have received. It’s not worth continuing with a deal that isn’t working for you, or where you are out of pocket as a result of the provision of your service under the contra-deal agreement.
- Contra-deals seldom lead to additional paid work or to marketing your business, particularly when they are set up badly and without paperwork in place. This is not a strategy for getting more business, however the other party package the thrilling opportunity to work for each other for an exchange of services. Be careful not to become someone who is incredibly busy working on delivering your service for a return that doesn’t take your business anywhere. It's not necessarily what's best for YOUR business.