Why Barter

The most obvious reason for bartering is to conserve cash, and since cash is the lifeblood of every business, conserving it is usually a good idea.

But there's more to barter than saving cash. "If you boil barter down to its essence, it's a marketing program," notes Lisa Peters, co-owner of Trade Services Interchange, a barter exchange in Rohnert Park, California.  Barter helps market your business in ways not otherwise possible. For example, it attracts certain customers you would never otherwise have obtained. That's because barter-oriented business owners would rather barter than pay cash, and therefore favor fellow barterers.

Barter exchanges - via newsletters, telemarketing and member directories - advertise their members to other members. "This is a great source of advertising for me," claims Kathy Stuart, owner of Port of Subs, a restaurant in Rohnert Park.

The downside, many think, is that barter will turn cash-paying customers into trading customers. Those who barter universally discount
this, saying that virtually all barter business is additional business. "The number of times you convert a cash client to barter is almost nonexistent," asserts Lowell Curtis, president of the National Countertrade Corporation, a barter exchange in Alexandria, Virginia.

"Barter brought us $22,000 to $25,000 in business we wouldn't otherwise have," notes Ken Hodges, president of Gilchrist Flowers and Gifts in Kansas City, Missouri.

Barter can also expand your market area dramatically. Len Gerstel, co-owner of Gerstel Office Furniture in Brentwood, Maryland, explains that he has barter customers from Baltimore and Annapolis "who would not even have thought of coming to us because of our location." They are coming now because he is willing to take their trade dollars, having learned of him through the barter exchange.

Chiropractor Walter C. Towle of Leawood, Kansas, says barter has brought him both barter and cash-paying patients. Like many others who barter, he reports that his barter patients frequently refer their cash-paying friends to him, so barter ends up not only saving Towle from spending his own cash, but brings him additional cash as well.

In addition to its cash and marketing advantages, barter helps boost your bottom line because you pay for goods and services with "dollars" that cost you something less than 100 cents apiece.

Harold Rice heads Kansas City's American Exchange Network, a barter exchange. He got into the bartering business because his wife started bartering during the 1970s, and he saw its potential firsthand. A photographer, she bought a photography studio and immediately benefited from a barter trade. She needed $1,000 worth of printing, and purchased it with $1,000 in trade credits. Since she operated with a 50 percent gross profit margin, she in effect got $1,000 worth of services at a cash cost of $500.