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| LONG ISLAND, NEW
YORK — Modern entrepreneurs wouldn't necessarily look to cavemen for sound
business advice, but in these tough economic times that may not be such a
bad idea. That's of course if you're talking about bartering. Back then, man traded animal skins and weapons for food and other necessities. Today, businesses barter for just about everything, from building supplies to car parts, in an effort to move excess inventory, garner new clients and conserve cash, say experts. "Virtually every small business is undercapitalized, almost half of them are using high-interest credit cards to sustain their operations, and many have debt problems," says Bob Meyer, a Mission Viejo, California-based barter consultant and founder and publisher of BarterNews, an online journal. "Every time they barter they are saving cash, which then can be used to reduce their debts." That's because when you barter, instead of exchanging cash, you're trading goods and services, which makes it an attractive option in this down economy, say experts. "We're seeing barter transactions up about 25 percent overall," says Ron Whitney, executive director of the International Reciprocal Trade Association in Portsmouth, Va., which represents about 85 barter exchanges worldwide. Barter exchanges provide a forum where businesses can trade with each other in a structured environment. When a business renders a service or provides a product to another member within the exchange, they accrue trade credits that can then be used at a later date to purchase other goods and services from any other exchange member. Generally, a trade credit is worth a dollar. |
Typically, an
exchange will charge a sign-up fee, some form of a monthly or quarterly
fee, and possibly a yearly renewal fee. There's also generally a cash
transaction fee of 10 percent to 15 percent either on the buy side, the
sell side or a combination of both, depending upon the exchange, says
Whitney. But that doesn't bother Frank Mascaro of Advantage Technology Systems Inc. in Huntington, which provides information technology services. Mascaro, a member of Capitol Barter Exchange in Bay Shore, says the fees are a small price to pay. For instance, he's used his accrued credits over the past four years to send his daughter to a summer day camp. It would have cost around $10,000 for those four years, he estimates, but he used his barter credits and only paid about $1,000 in commission to the exchange. Similarly, Lew Levine, president of A-1 Direct Mail, who recently opened a West Babylon personal training center, says he couldn't have launched the venture without barter. He used about 26,000 credits he accrued at the American Barter Exchange in Melville and National Commerce Exchange in Jericho, to launch the Personal Training Center. The credits went toward purchases like carpeting, locksmith services, and fitness equipment. "It wouldn't have happened most likely if I didn't have all those barter credits saved up," says Levine. "We normally tell members they shouldn't expect discounts on barter," says Cheryl Mera of American Barter Exchange in Melville, which has more than 400 members. "They should expect a fair retail price." |
