Tuesday, September 8, 2009

The Savvy Barterer--References, Skills, and Tools for TEOTWAWKI Barter

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Today we feature guest blogger Jim Rawles from SurvivalBlog.com
One of my long-standing Precepts is that every prepared individual should be ready for both barter and dispensing charity. Today, I'll be briefly discussing barter. Being ready to barter is not just a matter of having a pile of "stuff" to barter. While barter and charity logistics are important, what is even more important is what is between your ears.

A Bazaar Experience

Bartering takes practice. Dickering is an acquired skill. Short of buying yourself a plane ticket to Marrakech, I suggest that you start attending gun shows, garage sales, and flea markets. Learn how to haggle.

One of my long standing Rawlesian Precepts is having the skills and material acquired to conduct barter in a post-collapse society. Much has been written about what goods to keep on hand for bartering. But precious little has been discussed in survivalist literature on the skills required to barter effectively, and how to protect yourself from fraud.

I recommend that you practice bartering on a very small scale at first, to sharpen your eye for value and your ability to dicker in a manner that will result in a fair trade. (Mutually agreeable and mutually beneficial.) The occasional transaction where you end up slighted is hardly cause for concern. But unless you develop the proper bartering skills, you'll end up on the weaker side of bargains again and again, and thus fritter away your tangible working capital. The attributes that will put you in a superior bartering position include specific knowledge about what is being traded, knowledge about who's sitting on the the other side of the table, and good old-fashioned "horse trading sense".

Knowledge and References
The more you know about the goods being exchanged the better you'll be able to dicker. Armed with this knowledge, you'll be able to honestly, yet persuasively talk up the virtues of your own goods, while politely talking down the defects of your trading partner's goods. Hence, the the greater your technical knowledge of the goods, the better. Take the time to study and develop an 'appraiser's eye' for the condition of used merchandise, the relative value of goods from one maker versus another, and knowledge of the overall market . With that knowledge you can articulate the scarcity of any particular item in your barter stock. (After all, as with any other free market transaction, the key factor in determining value is the supply-demand ratio.) If you are trading for a collectible item then knowing how scarce they are can put you at a tremendous advantage in negotiation. It is important to gather as many references as possible about the items that you plan to barter. Francis Bacon said it best: "Knowledge is power." You need to authoritatively know which maker, model, variation, grade, year of production, etc. to look for. Product expertise helps makes you a savvy buyer or seller. There are dozens of references on specific types of tool, guns, and collectibles that are valuable to keep on hand. For example, two of the most important ones that I 've found for firearms are: "The Blue Book of Gun Values" and "Flayderman's Guide to Antique Firearms and Their Values."

Similarly, knowing exactly how to properly gauge the condition of a used item is quite important. For example, with firearms, the percentage of original bluing remaining, cracks or wear to a gun's stock, bore condition, chamber condition, bolt face erosion, action tightness, headspace, and so forth all make a huge difference in the value of a used gun.

Detailed knowledge is also crucial when determining the value of a rare coin. (For most of us, that knowledge is too specialized. It can take many years to develop coin grading skills, so a novice can get in over his head very easily. The difference between an MS-66 coin and an MS-68 coin is very subtle, yet that difference can mean thousands of dollars difference in a coin's price. I therefore recommend that novices only trade professionally graded coins that have been graded and sealed (or "slabbed") by either PCGS or NGC. A coin dealer Blue Sheet is a crucial reference for measuring the current value of coins with particular mint marks and dates, in any given grade on the Sheldon Scale. Even having an out-of-date Blue Sheet is better than nothing, since it will show relative values of coins, which change fairly gradually. Again, this is not for a novice, or part-time dabbler. (FWIW, even though I have been buying rare coins for more than 20 years, I still consider myself effectively a "novice" level since I don't ge frequent coin grading practice. Hence, I only buy slabs. ("A man has got to know his limitations.")

Tools

To be ready to barter with bullion gold cons or scrap gold it is important to have a touchstone, an acid test kit, test needles, a very accurate scale, and a set of Fisch coin authenticity dimensional gauges.

When bartering for canned goods it's important to have a Julian Calendar (since some packers use Julian dates) and a hard copy of this chart showing how to decipher date of pack codes from various canners and packers.

For liquid fuel it's important to know if the fuel has been contaminated or adulterated. (Coincidentally, one of our newest advertisers, UR-2B-Prepared.com sells water test strips.

For batteries, it's important to have a voltmeter. (For the greatest versatility, buy a Volt-Ohm meter with test probes on leads, rather than a typical tray-type home battery tester. )

For examining the the fine details of just about anything--such reading hallmarks--a jeweler's loupe (magnifying glass) is a must.

For evaluating firearms, as a minimum buy a 6 foot tape measure and a fiber optic bore inspection light.

Dickering Tactics
Above and beyond getting technical knowledge is the hard to quantify "people skill" of dickering. Dickering skills can take years to develop. Part of this is learning how to "read" the face and body language of the gent on the other side of the table. How anxious is he to unload something that he has, or to acquire something that you have? How quick they are to make or accept an offer is a key indicator. And if there is a savvy trader sizing you up, you have to learn to keep a "poker face", not revealing how excited you are to see a particular item being offered.

Take your time in carefully examining any item offered to you. This accomplishes two things. Firstly, it gives you the opportunity to spot any flaws, defects or signs of wear on the item being offered. Secondly, the more time that you spend examining the item will lead the seller to subconsciously start to doubt the value of what he is offering. If you're in a flea market or gun show situation once you have an item in your hands you are essentially free to examine it without fear of someone else buying it. Take your time!

If you make an offer for an item, and it is rejected or the counter offer made is ridiculously low than the very best thing you can do is put the item back down on the table. This psychologically distances you from the item, and again, makes the seller begin to doubt it's value. In the dickering process one of the most valuable phrases that you can use is "Is that the best you can do?" If the seller won't budge, and you are close to an acceptable price, the next best thing to do is to offer to sweeten the deal with additional goods offered on your side of the bargain. If you still can't reach an agreement it probably wouldn't hurt to subtly talk down the value of what's being offered to you, and talk up the value of what you are offering. "This is a mighty fine widget it's too bad about this crack and this wear... If it weren't for that, I think your asking price would be fair."

The next most valuable thing you can learn to say is to say nothing. After making an offer and receiving a counter offer, silently start counting to twenty. There is something about a long pause that causes all but the most stalwart dickerer to want to fill that silence And nine times out of ten, they will fill that silence with another offer, usually one that is more agreeable.

As a last resort, if you are still at an impasse in reaching an mutually-agreeable trade, your tool of last resort is to thank the seller and start to walk away from the table. This will be your final gauge of just how anxious the seller is to move his merchandise. If you hear "Wait, wait, wait, come back here...", then you know that the seller still has room to negotiate on price or quantities. Keep in mind however, that this is a dangerous tactic. Once you walk away from a table without he seller voicing objection, but return later, you have subconsciously boxed yourself into the previously-offered price. If you come back later for the same item, the seller will know that you are anxious to purchase it, and did not find a better deal for a comparable item elsewhere, so they'll probably hold to the same price.

When selling, keep in mind that you can negotiate downwards, but not upwards. Always make your initial asking price somewhat higher than what you really want out of it. Some people will not agree to even a good deal, unless they can extract at least one price concession from you. So, set a fairly high price, and then negotiate downward.

If your counterpart brings an item to offer to you, but that item is of no interest to you, always thank him for his time: 'Thanks, but I'm not interested in that right now. Do you have any X available?", describing what you are looking for in trade. Remember, a sales venue is an opportunity to gather information about other items a seller may have available, but may not physically have with them. It may not hurt to make arrangements to see them at the next event, reminding them to bring those items so you can make a deal next time.

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When going to attend a flea market, gun show, or horse trading session, it is important to "dress down". If you wear a fancy Rolex watch, or fancy designer clothes, consciously or unconsciously your counterpart will size you up as being made of money. So dress very casually, including your shoes. Leave your jewelry, pens, and nice watch at home. Wear your cheap plastic-cased digital watch for these excursions.

You also need to learn to be observant about your counterpart. Is he a collector, that happens to sell on the side, or is he a journeyman salesman, who makes a livelihood at the business. Is he retiring and selling off inventory? Is he someone selling merchandise on behalf of a friend or relative? The bottom line is: just how anxious is your counterpart in making a deal?

Timing and Rapport

When approaching a vendors booth or table for the first time it is important to first wait until the vendor has finished dealing with any previous customers. Don't interrupt a man when he's making a deal! Smile and make eye contact, and if appropriate for the venue, introduce yourself and shake hands. If you are a fellow vendor, it's important to wear your badge, or otherwise make it known that you also have a table or booth. This lets the seller know that he is talking to a wholesale rather than retail customer. This can make a tremendous difference when negotiating price. Even if the vendor appears to have a pile of worthless junk on his table (with perhaps a few nice items of interest) make a point of expressing your admiration for his merchandise. Say something like "You've got a real nice inventory here" or "I can see that you have good taste in widgets". This is an important step in developing rapport with you counterpart. While it doesn't hurt to point out a defect on an individual item while negotiating for it, do not "run down" the quality or condition of everything that you see. Doing so could skunk the entire deal-making process. OBTW, don't be shy about pointing out defects in your own merchandise. "Oh, in case didn't noticed, there is one dent here..." That lets your customer know that you are reputable.

Another key aspect of understanding buying and selling psychology is the "stage of the game". At the beginning of a show or sale most journeymen sellers arrive inventory rich, and cash poor. Near the end of the show, they will likely have more cash (or precious metals) on hand and then will be in a better position to make offers. Although some of the best items may have already been sold, one of the best times to make a purchase or trade is near the end of a show, when some sellers have had a "slow show" At flea markets and gun show wait until just before the vendor's "tear down" and pack-up time begins. Depending on their situation they might feel desperate to make a good sale or a couple of good swaps so that they can feel that they've made the show worthwhile. So, if you saw an item earlier in the show, and could not negotiate an agreeable price, wait for the end of the sales event. This, BTW, is particularly valuable tactic if the item in question is particularly bulky or heavy. It is the unspoken goal of every seller to "go home light".

If you encounter a seller that has the sort of merchandise that you think would be of future interest, then it's important to get that seller's particulars so that you can contact him later. Take copious notes. The same applies when you encounter a seller that has a particularly valuable area of expertise or a rare stock of items--especially spare parts. These are people well worth "networking" with.

Never Trade Hard for Soft
When negotiating a trade, keep in mind the absolutely fundamental rule: "never trade hard for soft". This means, if what you are offering in a trade is a compact, valuable, durable, tangible item, that is in short supply, or highly valued, the don't make the mistake of trading it away for items that are less durable or desirable. Otherwise, at the end of the day, your counterpart will be going home with the better goods than you. The only exception to this rule would be if your counterpart is willing to trade a much greater quantity of his items and that you know that you have a ready market for them. A corollary to this rule is, that it is better to trade your bulky for his compact. (Or as one aging gun show vendor I met in put it, "Don't never trade away handguns for rifles or shotguns." That is simple yet sage advice.) This is particularly important in venues where space is at a premium, and you are paying for the use of that space.

In closing, barter takes time to learn. Invest that time. Also invest in the proper references. Lastly, invest in a stock of top quality barter goods that you predict will be sought-after in a post collapse world. With the right goods and the requisite knowledge, you and your family will never starve.

About the author: Jim Rawles is a survivalist author, former U.S. Army Intelligence officer and technical writer, and now full-time blogger at SurvivalBlog.com, retreat consultant, and freelance writer. Since its launch in 2005, SurvivalBlog has become established as the Internet's most popular daily blog on survival and preparedness topics. Jim Rawles has written a number of books, including Patriots: Surviving the Coming Collapse and How to Survive the End of the World as We Know It: Tactics, Techniques, and Technologies for Uncertain Times.

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