Need a new desk? A file cabinet? Machinery? A truck?
Instead of simply buying a brand new item from your local dealer, consider some alternative ways to get what you need for little or no money. Here are three strategies to help you.
by Barbara Weltman, sba.gov Guest Blogger
1. Buy used or last year’s models
You don’t necessarily have to buy a spanking new car or the latest tablet. You may be able to satisfy your needs by looking for a pre-owned car, a reconditioned machine, or a refurbished laptop. A slightly slower tablet, such as s previous version of the iPad, may do the trick, at considerably less cost. Think about what you need the item to do and then hunt down the best deal available.
When buying a used item, look for a guarantee or a warranty so you have recourse if something goes wrong. Legally, they are essentially the same thing — both protect the consumer.
You can shop for pre-owned vehicles at dealerships and online. Find used office furniture and other business items by searching online for dealers that specialize in used items.
2. Buy from the government
You may be able to buy a new or used item at a big cost savings if you buy items that the government no longer needs (used or surplus) or has seized from criminals. Local, state, and federal agencies routinely hold sales of various items. Some are sold at auction, others at a fixed price.
Learn the steps you’ll need to take in order to participate. Each agency has its own rules and regulations. Some sales require you to appear in person and be ready to pay in cash for the items you buy. Other sales are conducted online. The US Treasury, for example, holds about 300 auctions annually. You can search online for what it is selling, but you must appear in person to be a buyer.
Helpful sites to get you started include:
- GovDeals lists items by category (e.g., janitorial equipment, office equipment and supplies, and light duty trucks).
- GovernmentAuctions.org to find the location of auctions near you.
- USA.gov for general information about government sales and auctions.
Barter is the oldest form of commerce and is still a viable option today. It’s been estimated that 65% of Fortune 500 companies do bartering, which means exchanging goods and services. You can make a swap directly with another party. For example, you are a web designer and help your local electrician with his site in exchange for new wiring at your office.
You can also use a barter exchange through which you offer your wares to accumulate credits that can be used to obtain items you need; direct swaps need not be arranged. For example, you can exchange your excess inventory through a barter exchange and use your credits whenever you need something for your business that’s available through the exchange. When joining an exchange, check for membership fees and transaction costs. Search for a local barter exchange through the National Association of Trade Exchanges.
The chief advantage to bartering is the positive impact it has on cash flow; you don’t need to spend your cash to get what you want. Ancillary benefits include a venue to dispose of excess inventory and connecting with new customers. While the trades are cash-free, sales tax must still be paid where applicable.
Bartering can save you cash, but it won’t save you taxes. If you barter in business, you are treated as making a taxable exchange and must report the fair market value of what you receive as income. Find out more about bartering and taxes from the IRS’ Bartering Tax Center.
Be prepared to put in more time and effort to be a savvy buyer. But being frugal can pay off by helping you to increase your bottom line.
About the author: Barbara Weltman is an attorney, prolific author with such titles as JK Lasser’s Small Business Taxes, JK Lasser’s Guide to Self-Employment, and Smooth Failing as well as a trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day and monthly e-newsletter Big Ideas for Small Business and host of Build Your Business Radio. She has been included in the List of 100 Small Business Influencers for three years in a row. Follow her on Twitter: @BarbaraWeltman. This article was first published on April 12, 2012.