The Economic Crunch: Short On Money? Why Not Barter?

By Don Wade
 
MEMPHIS, TENNESSEE — Know that old saying "a penny saved is a penny earned? It has a close cousin; "a dollar traded is a dollar saved." This is the language of the barter industry, which according to Barter News publisher Bob Meyer, has some 450,000 companies doing business through bartering's 400-plus networks of services, retailers and manufacturers.

"We're all bartering in a way," said Meyer, who started Barter News 30 years ago and is based in Mission Viejo, California. "We're bartering our products and services for the U.S. dollar. And the dollar came into existence because it was difficult to swap a pig for sheep."

In fact, Mark Caldwell, owner of the Memphis Tradebank franchise (a trade exchange), says the industry's popularity in this part of the country is due to more than increased demand during a down economy.

Transactions in Memphis have increased 30 percent over last year, he says. But he also cites the region's past as having an influence.

"Barter goes back to agriculture times here," Caldwell said. "In Memphis, people say, 'Oh, you mean swapping? I'd love to trade.' "

Tradebank operates in three countries besides the U.S.: Canada, the Czech Republic and Slovakia. It's in 12 states.

Caldwell says he has 85 members - almost all of them small businesses - in Memphis. He averages $40,000 per month in transactions for the Memphis franchise, he says, but his Nashville franchise is closer to $250,000.

Cheryl Goodman, 56, operates her business, My Candy Baskets, out of her Cordova home. She joined Tradebank about five years ago. "I got business right away," she said. "I've been able to sell baskets outside of Memphis to people who normally wouldn't know anything about me. And I use it for a lot of personal things: the spa, my chiropractor, office supplies, printer's ink, flowers for my yard. If I sell a $50 basket that I actually have $20 invested in, and then I go spend $50 someplace else (on Tradebank), I basically only spent $20."


Cheryl Goodman, owner of My Candy Baskets in Cordova,
started bartering through the Memphis Tradebank,
"I got business right away." she said.

Meyer calls trade dollars a "secondary currency" and a great way to avoid debt. Blair Graber, owner of Chandler Investments in Memphis, leases office space to Caldwell, who pays him in trade dollars.

"It's worked out well," Graber said. "I've used it on plumbers, photography, a tile guy. It's real money, but you don't feel as bad spending it."

The biggest players, Meyer says, are the ITEX Corporation near Seattle and International Monetary Systems (IMS). Both are publicly traded.

Krista Vardabash, director of marketing for IMS, says the company, with offices in 44 U.S. cities, handled $114 million in transactions in 2007. "When the economy is down, business owners are just more open to finding alternative ways of getting things done," she said. IMS has 18,000 members.

Tradebank allows members to conduct business with members in other cities and Graber even used it to order heart worm medicine from Wichita, Kansas., for his dogs.

Meyer points out that "75 percent of the business within a network will occur within 25 miles of where the exchange is located."

In other words, before joining any exchange, "you've got to do a little research," Meyer said.