I’m not old enough to have been on the original Titanic and I’m sure none of you are either, but the activity in Washington reminds me of what it must have been like on board that ship after they hit the iceberg and realized there were not enough life rafts!
Is it just me, or does it really not make any sense to try to fix our current economic problems with the very vehicle that got us in this mess in the first place? How can we solve this decline by irresponsible lending and borrowing in the short term? The ripple effects of the Federal Reserve printing more ‘debt notes’ and selling them to the US Government to circulate among us are going to be felt for multiple generations to come.
Prior to all this economic decline, Steve Walker, the ex-comptroller of the US left in disgust after over ten years because of what he called the “$400,000 hidden mortgage” our children are saddled with due to our Social Security problem. I shudder to think what “hidden debt” our Grandchildren have now been stuck with.
Using fiscal policies of last century (predominently based upon data during the times of the Gold Standard, and prior to globalization) are not going to solve our current dilemma. It’s rather like trying to fix a hyrid car with a bow and arrow!
But nobody seems to be making much noise. That is except Glenn Beck. I have diligently been following his show and his forecasts, as mine have been spookily similar - and I’m no economist either.
The answer? We need to go back to basics. Obviously, MBE-barter is an integral part of the solution. Frugality is too. The MBE-barter system cannot solve the entire economic problem, but it is a large step in the right direction.
Unfortunately I see things getting much, much worse before we hit rock bottom towards the end of 2009. Once folks have spent their tax rebates and realized the Obama Administration has no solid plan for economic survival, I predict bankruptcies escalating to record levels, as ordinary folk just pass on the bad debt to good, taxpaying citizens. The credit card bubble will finally burst. And the effects of printing TRILLIONS of new debt-dollars will start to effect pricing.
Natural forces have a way of righting the boat, but in this case, we’ve put the iceberg directly in the way. Things will have to crash in order to fix the real problem. Hopefully you are already bartering, if not, heed my words: “Barter or go bust!”
[This is just my opinion. Anthony Donnelly]
Friday, March 6, 2009
Monday, March 2, 2009
If the Big Guys Do it... Why wouldn't you?
Please allow me to take you back to the 1984 Summer Olympics. Head of the U.S. Olympic Committee, Peter Ueberroth bartered the promotional value of his Olympic logo for a mass of products and services needed by his staff and athletes. United Airlines provided free transportation, Buick the use of 500 autos, Fuji Film 250,000 rolls of film plus processing, and Levi Strauss and Converse clothing and shoes. Ueberroth even traded the logo for a swimming pool to be built by McDonald's. Bartering got more attention when Carl Icahn set up a deal to trade some $10 million of TV time he had acquired in exchange for products and promotions to aid his newly acquired but ailing TWA.
Bartering is coming of Age with the heavyweights like:Amoco,Goodyear,Caterpillar,3M,USX,Kmart and Pfizer. Marketers at Amoco saved the company's parent, Standard Oil of Indiana, the cost of steel piping, thanks to a carefully planned barter. They supplied the latter with chemicals, which were traded to Goodyear for rubber belting materials and later disposed of in another barter. Amoco was paid for the chemicals with trade credits, which Amoco passed up to Standard Oil. It used them in a cashless deal for the pipes.
I'm not real smart, but if the big guys are bartering why wouldn't everyone else barter?
Bartering is coming of Age with the heavyweights like:Amoco,Goodyear,Caterpillar,3M,USX,Kmart and Pfizer. Marketers at Amoco saved the company's parent, Standard Oil of Indiana, the cost of steel piping, thanks to a carefully planned barter. They supplied the latter with chemicals, which were traded to Goodyear for rubber belting materials and later disposed of in another barter. Amoco was paid for the chemicals with trade credits, which Amoco passed up to Standard Oil. It used them in a cashless deal for the pipes.
I'm not real smart, but if the big guys are bartering why wouldn't everyone else barter?
Are you smarter than Einstein? Don't kid yourself!
"If I had my life over again, I would elect to be a trader of goods, rather than a student of science. I think barter is a noble thing." (Albert Einstein)-
The economics of industry change daily, as gasoline and other commodities fluctuate widely, so does our relationship to those economics.The time has come to insulate your company against economic short falls and prepare for the future. Now is the time to grow your business in the direction of a lucrative 100%trade 100% barter company like mine, Merchants Barter Exchange. Start enjoying the benefits of barter! Barter accounts for nearly $1Trillion annually in world commerce.
Barter is not new, throughout history the exchange of goods or services has been the salvation of economies. Barter has always been on the sidelines awaiting rebirth at the time of it's need,and has many success stories. You have probably heard about some of the big deals, but each day millions of small deals are made which help keep thousands of small businesses in the market place.
Using barter, business owners and corporations cover such cost as travel, sales expenses, entertainment, employee benefits, bonus and incentive programs, automotive repairs, remodeling, advertising, inventory and a host of personal expense such as vacations, clothing, Christmas shopping, gifts, flowers and on …and on …and ...These expenses are covered by incremental sales of surplus products or services, that might have gone to competitors.
Incremental, meaning: within the framework of existing expense any increase in sales without added cost represents a higher incremental margin of profit than new sales with increased marketing cost. Unfortunately many business owners are not tuned in to the new sales potential through barter and the barter opportunities that exist.
Think hard for a moment and come up with at least two ways to generate new sales , then think of how to pay the cost for the increases, then think barter, Barter is smarter.
Trade your product with others for advertising, Art, auto repairs, billboards, coupons, clothing, hotels, resorts,getaways, gifts, Jewelry, printing, signs, tools, home and business services, you name it and we will find it for you.
All transactions are guaranteed, no bad checks or credit cards, immediate credit in your account.
Remember cash is not a storehouse of value, but barter is a warehouse of good will, business relationships, parity of value and incremental profits. Money is only money because we believe its money and the government tells us that it is.
Like everything else in life it costs a little to play,though much less than a low budget ad campaign. My company, Merchants Barter Exchange charges a one time fee of $795.00 to join, "cheap as chips" . We will allow you to purchase what you need($2000 barter credit line) , then guarantee to send new business to you to pay for it. Your transaction fees help defray the cost of the significant services that you receive from us.
The economics of industry change daily, as gasoline and other commodities fluctuate widely, so does our relationship to those economics.The time has come to insulate your company against economic short falls and prepare for the future. Now is the time to grow your business in the direction of a lucrative 100%trade 100% barter company like mine, Merchants Barter Exchange. Start enjoying the benefits of barter! Barter accounts for nearly $1Trillion annually in world commerce.
Barter is not new, throughout history the exchange of goods or services has been the salvation of economies. Barter has always been on the sidelines awaiting rebirth at the time of it's need,and has many success stories. You have probably heard about some of the big deals, but each day millions of small deals are made which help keep thousands of small businesses in the market place.
Using barter, business owners and corporations cover such cost as travel, sales expenses, entertainment, employee benefits, bonus and incentive programs, automotive repairs, remodeling, advertising, inventory and a host of personal expense such as vacations, clothing, Christmas shopping, gifts, flowers and on …and on …and ...These expenses are covered by incremental sales of surplus products or services, that might have gone to competitors.
Incremental, meaning: within the framework of existing expense any increase in sales without added cost represents a higher incremental margin of profit than new sales with increased marketing cost. Unfortunately many business owners are not tuned in to the new sales potential through barter and the barter opportunities that exist.
Think hard for a moment and come up with at least two ways to generate new sales , then think of how to pay the cost for the increases, then think barter, Barter is smarter.
Trade your product with others for advertising, Art, auto repairs, billboards, coupons, clothing, hotels, resorts,getaways, gifts, Jewelry, printing, signs, tools, home and business services, you name it and we will find it for you.
All transactions are guaranteed, no bad checks or credit cards, immediate credit in your account.
Remember cash is not a storehouse of value, but barter is a warehouse of good will, business relationships, parity of value and incremental profits. Money is only money because we believe its money and the government tells us that it is.
Like everything else in life it costs a little to play,though much less than a low budget ad campaign. My company, Merchants Barter Exchange charges a one time fee of $795.00 to join, "cheap as chips" . We will allow you to purchase what you need($2000 barter credit line) , then guarantee to send new business to you to pay for it. Your transaction fees help defray the cost of the significant services that you receive from us.
Sunday, March 1, 2009
Survival of the Fittest(Smartest)
I'm a firm believer in this: If you're not standing on the edge you're wasting space. In today's economy if you are in business and you aren't implementing new and innovative concepts in to your business plan, you're inevitably going to be history. Our politicians and economists are continuing to put on a brave face. The global economy is collapsing around us and we continue to artificially inseminate it with worthless paper. The world needs a secondary economy to resuscitate the current one that is on life support. My company Merchants Barter Exchange is doing just that. We are educating the business community on the oldest form of commerce...Barter. If there is one thing that I'm irrevocably convinced of is that we live in a barter economy. To date 19 banks have failed and experts forecast at least 100 more before 2009 is over. Businesses are folding at a record clip and some Fortune 500 companies are included. The writing is on the proverbial wall; BARTER or BE HISTORY! Business owners heed my advice, HELP YOURSELF! The government has forgotten about Main street and left you to fend for yourself. Let MBE insulate your business from the impending DEPRESSION. Stop spending cash on things you need and want, reduce your cash expenditures by 40%, allow us to expose you to new business that you wouldn't have the reach to find, move your excess inventory and surplus, fill the inefficiencies in capacity and time and above all else... distance yourself from your competition by doing something that they aren't.
“I am convinced that most companies don’t maximize their barter possibilities. Instead of aggressively reducing costs by trading their services with those of their suppliers, they seem content to pay top dollar for everything.”
-Mark H. McCormack
“What They Still Don’t Teach You at Harvard Business School”
“I am convinced that most companies don’t maximize their barter possibilities. Instead of aggressively reducing costs by trading their services with those of their suppliers, they seem content to pay top dollar for everything.”
-Mark H. McCormack
“What They Still Don’t Teach You at Harvard Business School”
Saturday, February 28, 2009
Barter - An Introduction to the Oldest Marketing Tool for Business
When you hear the word 'Barter' do you instinctively think of two farmers trading a horse for a cow, or the likes of latter-day trappers carrying furs to a trading post to exchange them for food and provisions, or like millions of savvy business owners around the globe, do you think of a high-tech way of marketing your goods and services beyond your usual scope, and becoming more efficient in the process?
It's strange that during my entire business education at university (and I was fortunate enough to be educated in some of the best business establishments in London, Munich and Florence)not once did the word nor concept of barter ever surface - even in economics. Strange, don't you think, when barter was the foundation of all modern commerce?
So, how has barter stayed the 'best kept marketing secret in business'? Simple, it has never been perfected on a larger scale until recently with the advancement of computers. Globally barter accounts for almost $1 trillion in annual business. Little 'mom and pop' stores all the way up to Super Power governments barter, some with more success than others. Most recently, in fact, the entire country of Argentina had to utilize the incredible power of barter to pull itself out of bankruptcy, and today over 500,000 companies barter there on a regular basis.
Bartering is a very simple concept: it is the exchange of goods and services for other goods and services. In an ironic manner, workers all over the world barter their time and skills for a salary. As a child, you possibly traded playing cards. It's all the same concept. BUT, how is this an effective advertising/ marketing tool?
Reciprocal trading, whereby two businesses directly trade with one another (radio advertising for airline tickets, for example) is not as effective as trades that occur through barter exchanges and often create less publicity and marketing opportunities. Utilizing an ethical and trustworthy barter exchange on the other hand can be a very effective means of bartering.
There are more than 1400 barter companies in the US alone, varying wildly in size and scope, and therefore in effectiveness. The two major players in the national barter arena are ITEX (a consortium of smaller barter companies) and Merchants Barter Exchange (one of the only 'true' 100% bartering companies in the US). Both companies offer many benefits, some of which are:
+ Greater efficiency (better use of time or inventory)
+ Increase in customers
+ Improved purchasing power
+ Cost-effective exposure to national markets
+ Measurable ROI
+ Word of Mouth Advertising
Since only businesses can be members of barter companies, there is a huge propensity to generate new cash clients that are not business owners. Outside of effective networking groups, like Business Networks International (BNI), barter exchanges are the most effective tool to generate word of mouth advertising and track it.
Barter companies like ITEX (www.itex.com) and Merchants Barter Exchange (www.merchantsbarter.com) act as 'third party record keepers' - similar to credit card companies - brokering and tracking the trades between members. In essence each member has a bartering account - just like their bank account - and are allotted barter credits (usually the same value as the currency of the country - but make sure to check before joining, as some exchanges have inflated economies!). Members purchase things they need - printing, cars, advertising, etc. - with credits in their account, similar to writing an IOU, and owe back the amount of those goods and services with their surplus inventory or down time.
Membership fees for such exchanges are very affordable compared with other forms of advertising, usually much less than $1,000 for a one-time set-up charge, and broker commissions are usually levied on purchases only (generally 10% of the total trade). Again, be warned when checking out bona fide companies, as some charge a lower fee, BUT on both the sale and purchase of goods and services.
Barter: The Oldest and Most Effective Marketing Tool - So Simple, The Cavemen Invented It...!
It's strange that during my entire business education at university (and I was fortunate enough to be educated in some of the best business establishments in London, Munich and Florence)not once did the word nor concept of barter ever surface - even in economics. Strange, don't you think, when barter was the foundation of all modern commerce?
So, how has barter stayed the 'best kept marketing secret in business'? Simple, it has never been perfected on a larger scale until recently with the advancement of computers. Globally barter accounts for almost $1 trillion in annual business. Little 'mom and pop' stores all the way up to Super Power governments barter, some with more success than others. Most recently, in fact, the entire country of Argentina had to utilize the incredible power of barter to pull itself out of bankruptcy, and today over 500,000 companies barter there on a regular basis.
Bartering is a very simple concept: it is the exchange of goods and services for other goods and services. In an ironic manner, workers all over the world barter their time and skills for a salary. As a child, you possibly traded playing cards. It's all the same concept. BUT, how is this an effective advertising/ marketing tool?
Reciprocal trading, whereby two businesses directly trade with one another (radio advertising for airline tickets, for example) is not as effective as trades that occur through barter exchanges and often create less publicity and marketing opportunities. Utilizing an ethical and trustworthy barter exchange on the other hand can be a very effective means of bartering.
There are more than 1400 barter companies in the US alone, varying wildly in size and scope, and therefore in effectiveness. The two major players in the national barter arena are ITEX (a consortium of smaller barter companies) and Merchants Barter Exchange (one of the only 'true' 100% bartering companies in the US). Both companies offer many benefits, some of which are:
+ Greater efficiency (better use of time or inventory)
+ Increase in customers
+ Improved purchasing power
+ Cost-effective exposure to national markets
+ Measurable ROI
+ Word of Mouth Advertising
Since only businesses can be members of barter companies, there is a huge propensity to generate new cash clients that are not business owners. Outside of effective networking groups, like Business Networks International (BNI), barter exchanges are the most effective tool to generate word of mouth advertising and track it.
Barter companies like ITEX (www.itex.com) and Merchants Barter Exchange (www.merchantsbarter.com) act as 'third party record keepers' - similar to credit card companies - brokering and tracking the trades between members. In essence each member has a bartering account - just like their bank account - and are allotted barter credits (usually the same value as the currency of the country - but make sure to check before joining, as some exchanges have inflated economies!). Members purchase things they need - printing, cars, advertising, etc. - with credits in their account, similar to writing an IOU, and owe back the amount of those goods and services with their surplus inventory or down time.
Membership fees for such exchanges are very affordable compared with other forms of advertising, usually much less than $1,000 for a one-time set-up charge, and broker commissions are usually levied on purchases only (generally 10% of the total trade). Again, be warned when checking out bona fide companies, as some charge a lower fee, BUT on both the sale and purchase of goods and services.
Barter: The Oldest and Most Effective Marketing Tool - So Simple, The Cavemen Invented It...!
To Barter or Not To Barter
Elsewhere in the world, bartering is as commonplace as accepting credit cards, and an integral element to almost every business model. Here in the US, predominantly due to the fact we have been the strongest and most affluent global economy for so long, barter was never a necessity. Until now, that is. With the current collapse of the monetary infrastructure here in America and around the world, increasing numbers of people are flocking to the age-old system of bartering. At the turn of the new millennium, countries like Argentina, who were on the brink of bankruptcy, were forced to revert back to bartering in order to ‘reboot’ their cash economy. Employers were forced to pay their workers with products instead of money, which they then took to large, communal warehouses and bartered their wares with other workers. Hopefully this will not be the plight of the US, and this article aims to highlight some solutions that are already in place and are laying the foundations for a working alternative economy.
Bartering in its simplest definition is the exchange of goods and services for other goods and services without the need for cash. It makes sound economic sense, because a business owner can trade out things at their wholesale (their cost of goods) for things they would have to pay the full cash price for otherwise. If you are a restaurant owner, why wouldn’t you trade $100 worth of gift certificates with the company that does your pest control each month? Or if you own a repair garage, if you can get uniforms for your mechanics and trade out oil changes and services, you’d be daft not to. The benefits are not just improved cash flow and better efficiencies, it’s also a great way to get new customers. Many people are told during their occupational schooling - especially Chiropractors and massage therapists - to barter for many of their start-up needs to conserve their seed capital, because their cost of goods is so much lower than the retail cash price.
But how do you find other business owners to barter with you, or what if you want their stuff and they don’t want yours? Even though bartering makes perfect sense to any business, the simple fact is that most owners don’t have the time or resources to call twenty or more companies to find a partner to trade with, and when profits are up, it’s faster and more convenient just to pay cash. Barter for the most part just happens by accident; two owners meet, they start talking, and decide to swap – much like you might have traded baseball cards in the school yard as a kid. Organized barter companies arose in the mid-50s to address just this problem.
In the early days, the technology to work a little barter company was simple: a phone and a rolodex. As time passed and technology improved, slightly more advanced barter organizations emerged, but merely adapted a similar system of a printed member list and put the bulk of the trading upon the members. By default of this system being cumbersome, organized barter never seemed to get past second base, especially with the advent of payment by charge and credit cards. In America today there are over 1,000 barter companies of varying sizes, from small local collectives of less than 50 members, to national corporations like ITEX and Merchants Barter Exchange (MBE). Non-profit organziations like IRTA (International Reciprocal Trade Association) and NATE (National Association of Trade Exchanges) have attempted to consolidate and uniform bartering via small exchanges, but due to the fact that each barter company does things in slightly different ways with different fees, and most accepting cash as part of the payment it is not a perfect system to manage.
To date, the only national barter company to totally reinvent organized barter is Merchants Barter Exchange. Because they do things so differently to all the other exchanges out there, they do not belong to either IRTA or NATE, as MBE does not allow its members to inflate prices, nor do they allow any part of the exchange to be paid in cash, which makes them the only ‘true’ barter company in the US today. In fact, MBE has made bartering similar to spending cash within a private bank or economy, which accounts for their incredible growth since their inception in 2000.
The downward economy and the improvements in technology have given rise to many ‘me-too’ barter firms that are solely internet-based looking to cash in on this lucrative industry. A quick Google search will bring up a torrent of ‘new age’ online barter clubs. On closer examination, be wary of the jumble in the internet jungle. Start-up costs for an online ‘portal’ – as most of the online-only barter clubs are – are much lower than a bricks-and-mortar barter company and the majority are merely a swap-exchange. A serious business owner needs to look towards a business-focused barter company that has new, rather than used, goods, and services that are suitable to his business.
Other important factors to consider when scouting a good barter company are the membership fees. If a barter exchange does not charge fees, chances are they are not worth joining. Any business service that has benefits to membership should feel totally justified charging a sign-up fee and fees for using the system. Usually it is the brand new start-up exchanges that have to waive initiation fees because they have no members, or the older barter companies that cannot iron out the flaws of inflated pricing and cash-barter blends.
Obviously, back in the 50s when organized bartering began, Uncle Sam wasn’t too concerned with barter, but obviously where there is money to be made, the IRS eventually get interested and wants its share. So too with the barter industry. Back in 1982, Congress passed the barter tax compliance provisions in the Tax Equity and Fiscal Responsibility Act. This landmark legislation acknowledged and equated barter exchanges with banks and credit card companies as “third party record keepers” of the financial records of other taxpayers. The IRS considers all forms of barter – whether direct or via a barter exchange – just the same as cash transactions, and all barter companies have to issue 1099b forms at the end of each tax year to members for accounting purposes.
Like any business decision, choosing the right barter company for you should be made carefully. Most good barter exchanges have active outside sales representatives that are qualified to answer most questions a business owner has. Consider the fees to join, the availability of goods and services, most importantly today, with increased competition and shrinking market share, make sure the exchange does not list you on an open directory so that your existing cash business is protected (there is nothing worse than having your top five cash-paying clients join the same barter group as you because they saw you on the list and then you lose that cash income!) There are pros and cons to privately owned and publicly traded companies too, obviously a privately owned exchange is not effected by the stock market fluctuations and less likely to go under.
Again, these are very tough and challenging times for all of us, business owners and employees alike. Barter as an economic vehicle has most certainly stood the test of time and will be around for many more millennia. Done right, barter can be an incredible boost to any business.
Shawn Cressman owns the Lehigh Valley, PA, license for MBE
Bartering in its simplest definition is the exchange of goods and services for other goods and services without the need for cash. It makes sound economic sense, because a business owner can trade out things at their wholesale (their cost of goods) for things they would have to pay the full cash price for otherwise. If you are a restaurant owner, why wouldn’t you trade $100 worth of gift certificates with the company that does your pest control each month? Or if you own a repair garage, if you can get uniforms for your mechanics and trade out oil changes and services, you’d be daft not to. The benefits are not just improved cash flow and better efficiencies, it’s also a great way to get new customers. Many people are told during their occupational schooling - especially Chiropractors and massage therapists - to barter for many of their start-up needs to conserve their seed capital, because their cost of goods is so much lower than the retail cash price.
But how do you find other business owners to barter with you, or what if you want their stuff and they don’t want yours? Even though bartering makes perfect sense to any business, the simple fact is that most owners don’t have the time or resources to call twenty or more companies to find a partner to trade with, and when profits are up, it’s faster and more convenient just to pay cash. Barter for the most part just happens by accident; two owners meet, they start talking, and decide to swap – much like you might have traded baseball cards in the school yard as a kid. Organized barter companies arose in the mid-50s to address just this problem.
In the early days, the technology to work a little barter company was simple: a phone and a rolodex. As time passed and technology improved, slightly more advanced barter organizations emerged, but merely adapted a similar system of a printed member list and put the bulk of the trading upon the members. By default of this system being cumbersome, organized barter never seemed to get past second base, especially with the advent of payment by charge and credit cards. In America today there are over 1,000 barter companies of varying sizes, from small local collectives of less than 50 members, to national corporations like ITEX and Merchants Barter Exchange (MBE). Non-profit organziations like IRTA (International Reciprocal Trade Association) and NATE (National Association of Trade Exchanges) have attempted to consolidate and uniform bartering via small exchanges, but due to the fact that each barter company does things in slightly different ways with different fees, and most accepting cash as part of the payment it is not a perfect system to manage.
To date, the only national barter company to totally reinvent organized barter is Merchants Barter Exchange. Because they do things so differently to all the other exchanges out there, they do not belong to either IRTA or NATE, as MBE does not allow its members to inflate prices, nor do they allow any part of the exchange to be paid in cash, which makes them the only ‘true’ barter company in the US today. In fact, MBE has made bartering similar to spending cash within a private bank or economy, which accounts for their incredible growth since their inception in 2000.
The downward economy and the improvements in technology have given rise to many ‘me-too’ barter firms that are solely internet-based looking to cash in on this lucrative industry. A quick Google search will bring up a torrent of ‘new age’ online barter clubs. On closer examination, be wary of the jumble in the internet jungle. Start-up costs for an online ‘portal’ – as most of the online-only barter clubs are – are much lower than a bricks-and-mortar barter company and the majority are merely a swap-exchange. A serious business owner needs to look towards a business-focused barter company that has new, rather than used, goods, and services that are suitable to his business.
Other important factors to consider when scouting a good barter company are the membership fees. If a barter exchange does not charge fees, chances are they are not worth joining. Any business service that has benefits to membership should feel totally justified charging a sign-up fee and fees for using the system. Usually it is the brand new start-up exchanges that have to waive initiation fees because they have no members, or the older barter companies that cannot iron out the flaws of inflated pricing and cash-barter blends.
Obviously, back in the 50s when organized bartering began, Uncle Sam wasn’t too concerned with barter, but obviously where there is money to be made, the IRS eventually get interested and wants its share. So too with the barter industry. Back in 1982, Congress passed the barter tax compliance provisions in the Tax Equity and Fiscal Responsibility Act. This landmark legislation acknowledged and equated barter exchanges with banks and credit card companies as “third party record keepers” of the financial records of other taxpayers. The IRS considers all forms of barter – whether direct or via a barter exchange – just the same as cash transactions, and all barter companies have to issue 1099b forms at the end of each tax year to members for accounting purposes.
Like any business decision, choosing the right barter company for you should be made carefully. Most good barter exchanges have active outside sales representatives that are qualified to answer most questions a business owner has. Consider the fees to join, the availability of goods and services, most importantly today, with increased competition and shrinking market share, make sure the exchange does not list you on an open directory so that your existing cash business is protected (there is nothing worse than having your top five cash-paying clients join the same barter group as you because they saw you on the list and then you lose that cash income!) There are pros and cons to privately owned and publicly traded companies too, obviously a privately owned exchange is not effected by the stock market fluctuations and less likely to go under.
Again, these are very tough and challenging times for all of us, business owners and employees alike. Barter as an economic vehicle has most certainly stood the test of time and will be around for many more millennia. Done right, barter can be an incredible boost to any business.
Shawn Cressman owns the Lehigh Valley, PA, license for MBE
To Barter or Not To Barter
Elsewhere in the world, bartering is as commonplace as accepting credit cards, and an integral element to almost every business model. Here in the US, predominantly due to the fact we have been the strongest and most affluent global economy for so long, barter was never a necessity. Until now, that is. With the current collapse of the monetary infrastructure here in America and around the world, increasing numbers of people are flocking to the age-old system of bartering. At the turn of the new millennium, countries like Argentina, who were on the brink of bankruptcy, were forced to revert back to bartering in order to ‘reboot’ their cash economy. Employers were forced to pay their workers with products instead of money, which they then took to large, communal warehouses and bartered their wares with other workers. Hopefully this will not be the plight of the US, and this article aims to highlight some solutions that are already in place and are laying the foundations for a working alternative economy.
Bartering in its simplest definition is the exchange of goods and services for other goods and services without the need for cash. It makes sound economic sense, because a business owner can trade out things at their wholesale (their cost of goods) for things they would have to pay the full cash price for otherwise. If you are a restaurant owner, why wouldn’t you trade $100 worth of gift certificates with the company that does your pest control each month? Or if you own a repair garage, if you can get uniforms for your mechanics and trade out oil changes and services, you’d be daft not to. The benefits are not just improved cash flow and better efficiencies, it’s also a great way to get new customers. Many people are told during their occupational schooling - especially Chiropractors and massage therapists - to barter for many of their start-up needs to conserve their seed capital, because their cost of goods is so much lower than the retail cash price.
But how do you find other business owners to barter with you, or what if you want their stuff and they don’t want yours? Even though bartering makes perfect sense to any business, the simple fact is that most owners don’t have the time or resources to call twenty or more companies to find a partner to trade with, and when profits are up, it’s faster and more convenient just to pay cash. Barter for the most part just happens by accident; two owners meet, they start talking, and decide to swap – much like you might have traded baseball cards in the school yard as a kid. Organized barter companies arose in the mid-50s to address just this problem.
In the early days, the technology to work a little barter company was simple: a phone and a rolodex. As time passed and technology improved, slightly more advanced barter organizations emerged, but merely adapted a similar system of a printed member list and put the bulk of the trading upon the members. By default of this system being cumbersome, organized barter never seemed to get past second base, especially with the advent of payment by charge and credit cards. In America today there are over 1,000 barter companies of varying sizes, from small local collectives of less than 50 members, to national corporations like ITEX and Merchants Barter Exchange (MBE). Non-profit organziations like IRTA (International Reciprocal Trade Association) and NATE (National Association of Trade Exchanges) have attempted to consolidate and uniform bartering via small exchanges, but due to the fact that each barter company does things in slightly different ways with different fees, and most accepting cash as part of the payment it is not a perfect system to manage.
To date, the only national barter company to totally reinvent organized barter is Merchants Barter Exchange. Because they do things so differently to all the other exchanges out there, they do not belong to either IRTA or NATE, as MBE does not allow its members to inflate prices, nor do they allow any part of the exchange to be paid in cash, which makes them the only ‘true’ barter company in the US today. In fact, MBE has made bartering similar to spending cash within a private bank or economy, which accounts for their incredible growth since their inception in 2000.
The downward economy and the improvements in technology have given rise to many ‘me-too’ barter firms that are solely internet-based looking to cash in on this lucrative industry. A quick Google search will bring up a torrent of ‘new age’ online barter clubs. On closer examination, be wary of the jumble in the internet jungle. Start-up costs for an online ‘portal’ – as most of the online-only barter clubs are – are much lower than a bricks-and-mortar barter company and the majority are merely a swap-exchange. A serious business owner needs to look towards a business-focused barter company that has new, rather than used, goods, and services that are suitable to his business.
Other important factors to consider when scouting a good barter company are the membership fees. If a barter exchange does not charge fees, chances are they are not worth joining. Any business service that has benefits to membership should feel totally justified charging a sign-up fee and fees for using the system. Usually it is the brand new start-up exchanges that have to waive initiation fees because they have no members, or the older barter companies that cannot iron out the flaws of inflated pricing and cash-barter blends.
Obviously, back in the 50s when organized bartering began, Uncle Sam wasn’t too concerned with barter, but obviously where there is money to be made, the IRS eventually get interested and wants its share. So too with the barter industry. Back in 1982, Congress passed the barter tax compliance provisions in the Tax Equity and Fiscal Responsibility Act. This landmark legislation acknowledged and equated barter exchanges with banks and credit card companies as “third party record keepers” of the financial records of other taxpayers. The IRS considers all forms of barter – whether direct or via a barter exchange – just the same as cash transactions, and all barter companies have to issue 1099b forms at the end of each tax year to members for accounting purposes.
Like any business decision, choosing the right barter company for you should be made carefully. Most good barter exchanges have active outside sales representatives that are qualified to answer most questions a business owner has. Consider the fees to join, the availability of goods and services, most importantly today, with increased competition and shrinking market share, make sure the exchange does not list you on an open directory so that your existing cash business is protected (there is nothing worse than having your top five cash-paying clients join the same barter group as you because they saw you on the list and then you lose that cash income!) There are pros and cons to privately owned and publicly traded companies too, obviously a privately owned exchange is not effected by the stock market fluctuations and less likely to go under.
Again, these are very tough and challenging times for all of us, business owners and employees alike. Barter as an economic vehicle has most certainly stood the test of time and will be around for many more millennia. Done right, barter can be an incredible boost to any business.
Shawn Cressman owns the Lehigh Valley, PA, license for MBE
Bartering in its simplest definition is the exchange of goods and services for other goods and services without the need for cash. It makes sound economic sense, because a business owner can trade out things at their wholesale (their cost of goods) for things they would have to pay the full cash price for otherwise. If you are a restaurant owner, why wouldn’t you trade $100 worth of gift certificates with the company that does your pest control each month? Or if you own a repair garage, if you can get uniforms for your mechanics and trade out oil changes and services, you’d be daft not to. The benefits are not just improved cash flow and better efficiencies, it’s also a great way to get new customers. Many people are told during their occupational schooling - especially Chiropractors and massage therapists - to barter for many of their start-up needs to conserve their seed capital, because their cost of goods is so much lower than the retail cash price.
But how do you find other business owners to barter with you, or what if you want their stuff and they don’t want yours? Even though bartering makes perfect sense to any business, the simple fact is that most owners don’t have the time or resources to call twenty or more companies to find a partner to trade with, and when profits are up, it’s faster and more convenient just to pay cash. Barter for the most part just happens by accident; two owners meet, they start talking, and decide to swap – much like you might have traded baseball cards in the school yard as a kid. Organized barter companies arose in the mid-50s to address just this problem.
In the early days, the technology to work a little barter company was simple: a phone and a rolodex. As time passed and technology improved, slightly more advanced barter organizations emerged, but merely adapted a similar system of a printed member list and put the bulk of the trading upon the members. By default of this system being cumbersome, organized barter never seemed to get past second base, especially with the advent of payment by charge and credit cards. In America today there are over 1,000 barter companies of varying sizes, from small local collectives of less than 50 members, to national corporations like ITEX and Merchants Barter Exchange (MBE). Non-profit organziations like IRTA (International Reciprocal Trade Association) and NATE (National Association of Trade Exchanges) have attempted to consolidate and uniform bartering via small exchanges, but due to the fact that each barter company does things in slightly different ways with different fees, and most accepting cash as part of the payment it is not a perfect system to manage.
To date, the only national barter company to totally reinvent organized barter is Merchants Barter Exchange. Because they do things so differently to all the other exchanges out there, they do not belong to either IRTA or NATE, as MBE does not allow its members to inflate prices, nor do they allow any part of the exchange to be paid in cash, which makes them the only ‘true’ barter company in the US today. In fact, MBE has made bartering similar to spending cash within a private bank or economy, which accounts for their incredible growth since their inception in 2000.
The downward economy and the improvements in technology have given rise to many ‘me-too’ barter firms that are solely internet-based looking to cash in on this lucrative industry. A quick Google search will bring up a torrent of ‘new age’ online barter clubs. On closer examination, be wary of the jumble in the internet jungle. Start-up costs for an online ‘portal’ – as most of the online-only barter clubs are – are much lower than a bricks-and-mortar barter company and the majority are merely a swap-exchange. A serious business owner needs to look towards a business-focused barter company that has new, rather than used, goods, and services that are suitable to his business.
Other important factors to consider when scouting a good barter company are the membership fees. If a barter exchange does not charge fees, chances are they are not worth joining. Any business service that has benefits to membership should feel totally justified charging a sign-up fee and fees for using the system. Usually it is the brand new start-up exchanges that have to waive initiation fees because they have no members, or the older barter companies that cannot iron out the flaws of inflated pricing and cash-barter blends.
Obviously, back in the 50s when organized bartering began, Uncle Sam wasn’t too concerned with barter, but obviously where there is money to be made, the IRS eventually get interested and wants its share. So too with the barter industry. Back in 1982, Congress passed the barter tax compliance provisions in the Tax Equity and Fiscal Responsibility Act. This landmark legislation acknowledged and equated barter exchanges with banks and credit card companies as “third party record keepers” of the financial records of other taxpayers. The IRS considers all forms of barter – whether direct or via a barter exchange – just the same as cash transactions, and all barter companies have to issue 1099b forms at the end of each tax year to members for accounting purposes.
Like any business decision, choosing the right barter company for you should be made carefully. Most good barter exchanges have active outside sales representatives that are qualified to answer most questions a business owner has. Consider the fees to join, the availability of goods and services, most importantly today, with increased competition and shrinking market share, make sure the exchange does not list you on an open directory so that your existing cash business is protected (there is nothing worse than having your top five cash-paying clients join the same barter group as you because they saw you on the list and then you lose that cash income!) There are pros and cons to privately owned and publicly traded companies too, obviously a privately owned exchange is not effected by the stock market fluctuations and less likely to go under.
Again, these are very tough and challenging times for all of us, business owners and employees alike. Barter as an economic vehicle has most certainly stood the test of time and will be around for many more millennia. Done right, barter can be an incredible boost to any business.
Shawn Cressman owns the Lehigh Valley, PA, license for MBE
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