Barter, Trade, Exchange

By definition, barter is the when parties swap services or resources. But in business terms, it’s an exchange that ends usually with everyone a winner. All parties involved in bartering hold onto their cold hard cash and don’t lose a cent. There’s no worries about getting ripped off as a buyer or seller, so it’s an exchange that’s high on trust, low on tension. And finally, the government doesn’t get its hands on any of the proceeds. Bartering is such a great system, it’s no wonder it’s been around nearly forever.

Historians and archeologists reckon that bartering is a human business practice for the ages. It goes back as far as written history, and perhaps even further into mankind’s (and womankind’s) history of business practices.

Between humans, the actual business practice of money came long before money was invented. In written history, as far back as 9,000 BC, shepherds used cattle as a means of exchange–from sheep to cows, camels to goats. Then when farmers came along during the course of the next couple thousands of years, grains and plants became the hot commodity in the world of bartering.

Bartering may have dissipated over the years, but it by no means went away. That’s the amazing thing about bartering. It still is, to this day, the ideal method of business exchange for some business folk, including companies with millions in assets. But it’s especially helpful for small businesses looking to get a leg up on their competition.

Listen to people talking in today’s business world, and you’ll hear stories such as the programmer who helped to code an interactive Web page for a startup graphic-design company, in exchange for a logo design for his own startup surf-board design shop. Then there’s the story of the new Internet advertising firm rolling out an ad campaign for a restaurant. Later that year, the restaurant hosted a “free” party and dinner for that ad firm’s clients.

Examples in today’s business world abound for bartering. The reason is that bartering still has many advantages to it in this modern business world.

For instance, for companies that are just starting to build up their assets, bartering is an opportunity to save their hard-earned cash. Even established companies love the chance to keep their money in the bank. With bartering, a company can get what it needs, while providing a service that the other company needs.

And because there is no money passed between pockets, the taxman does not even need to know about it. That saves you, and your accountant, the trouble of figuring out one more piece of business income or expense.

Lastly, deals involving money may whip up the old Scrooge mentality–a combination of greed and mistrust. With money deals, you may always be left wondering if you got the short end of the stick. Not so with bartering. With bartering, you get exactly what you need. And in return, you give a fair share of goods or services.

There’s no need to be a Scrooge here. Instead, the whole transaction is one of trust and understanding. Generally speaking, bartering for goods and services feels more worthwhile than paying money, whether you’re bartering for a dinner party for your clients, Internet advertising space, or whatever it is that you and your bartering partner agree to. Perhaps it’s because you can actually feel the value of your own goods and services. Or it may be just because you don’t have to open your wallet.

There’s one business organization busier now than at this time last year and, believe it or not, it’s because of the credit crunch. Their member businesses know that if they can’t get credit at the bank, they have an alternative payment system represented by the leader in business to business barter services, International Monetary Systems, Ltd. (OTCBB:INLM).

“The fundamentals of barter state that in a slow economy, business owners look to alternative means to stabilize cash flow and to keep new business coming in,” says Don Mardak, CEO of IMS. “So, the increase in our membership was anticipated. However, we didn’t anticipate the increase in requests for credit.”

In the last 20 days, IMS has processed and issued $2.7 million dollars in IMS trade credit to their nationwide network of 18,000 businesses. And they are not at all concerned about adding this to their already existing $55 million dollars in established credit lines. How is a barter organization able to do this when major banks around the country have ceased lending? “Because we base our credit on the products and services that the member businesses have to offer, not on their cash accounts, such as receivables or how they look on paper,” says Mardak. “So, while the bank might not be able to issue credit, our alternative currency system enables us to go about it differently and, some say, more accurately and responsibly.”

In Switzerland, the WIR barter network is a similar alternative currency system. Started in 1934, WIR has 85,000 clients in Switzerland, or 20% of all Swiss businesses. The WIR system is recognized as an important stabilizing force for the entire Swiss economy.

Mardak continues, “If we as a country have learned anything from this current economic crisis, it is that any currency system must be operated prudently and responsibly, especially when issuing credit. IMS has a 23-year history of managing a healthy barter network. The opportunity to issue credit where credit is due is what we’re all about.”

Bartering yields additional benefits. It allows companies to move excess inventory more profitably than liquidation, receiving up to full wholesale value. It allows them to purchase virtually any business necessity, even advertising space. It’s also a powerful marketing vehicle that brings buyers and sellers together. Some actively bartering companies conduct 5 to 10 percent of their business through trades.

It’s estimated that the industry generates nearly $3-4 billion in annual sales. There are about 250 barter exchanges in the U.S. and another 150 abroad.

The Department of Commerce estimates that 20 percent of world trade is accomplished through bartering…yet there is enormous growth potential in the U.S., where only one percent of total commerce is conducted through barter. Cash is king, but not for long.

In North and South Carolina Barter Brokers International, (barterbrokers.com) is one of the fastest growing barter exchanges and has been helping all types of businesses capitalize on their excess capacity to buy the things they need.

Naturally, women are shopping freaks. A report was given out before saying that women have contributed a lot in the survival of the economy because they are the ones who are into buying anything that they might need. Whether it’s for the house, the kids, the closet, herself! The list is never ending.

In bazaars and malls, it is a woman’s ability to have a rapid eye assessment on items that are on display. Most often, women are impulsive buyers and would do anything to purchase the item that she fell for. And women will always turn to their men to get all puppy-eyed and make him buy it for her.

Be straightforward on the things that you need and want

It is a pleasure for a man to satisfy her materialistic cravings. This is where women often have a mistake because they pretend that it’s okay not to have that item but men can’t read women’s mind so telling him exactly what you wanted will get him to buy it for you.

Show that you are very interested

Telling him about it, the advantages of having the item and its features will make him buy the product for you.

Compromise

Give him flexible options to choose from if he can’t afford to buy what you wanted at the moment. You can do bargaining or allow him to barter something from you for him to agree on buying you anything that you desired.

Be patient even when everything’s complex

If a guy is not capable of buying it at the moment, then don’t wallow in self pity. Men work hard to provide women their needs and want so wait because men also have an inkling of the things that you want.

Stay kind -hearted

Provide as much care and love. It doesn’t mean that doing this comes with a price but remember what BF Skinner’s theory of operant conditioning is all about, positive reinforcement. Rewarding every good deed that one does.

Be sensitive on the budget

If you want to buy more, you should know how to maximize his finances. Men are not that stupid to spend thousands for just a meager meal or whatever.

Do not ask things from him all the time

He is not your automated teller machine to which you can withdraw money anytime. Show him that you have your share as well. This makes him a little conscientious and will eventually make it up with you.

Bartering can be a great business asset, if used correctly. If not, you could end up with the short end of the stick, and a bad taste for barter. Learning how to barter successfully can make a big difference.

First assess your business for what you can barter with.

What items do you have a larger margin on? Would these be items you would be willing to trade? The larger the margin you have the better leverage you create when you turn those items into trade dollars, therefore the better rate you will be getting when purchasing items using those trade dollars.

Be clear in what items you are willing to barter, and which ones you are not willing to barter. Make a list and stick to it. Some things will make sense to trade for, others where you have a very small margin, do not make sense to barter with.

Looking to do direct trades? Here’s a few more tips to help you trade successfully.

Only barter if both of you need each others services immediately. Having something usable down the road is great, but you come into the risk of the other party not fulfilling their part of the agreement.

Get specific. Don’t generalize when discussing your trade agreement. You want to ensure that all cards are on the table and both parties understand exactly what they are trading and exactly what they will be receiving in return.

As is good in any business transaction, keep communication open. If you close off the lines of communication, the trade could go sideways and you could end up with a bad deal. If you do not feel their side was adequately met, make sure you let them know and they can help resolve the situation, instead of anyone walking away with sour grapes over the deal.

Maintain records of all trade deals completed. Barter and trade is often taxable in the same way as cash transactions, so it is important to keep track of all barter deals for tax season.

With a little business savvy and common sense, barter can be a successful experience for all parties involved. Direct trade can be risky, whereas barter and trade exchanges offer you more protection against trades going bad, so as always proceed at your own risk and do your homework first and your first trade and all that follow can be best for your business.

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