Get More Through Trade and Barter

Instead of purchasing advertising, equipment, office products, car repairs, remodeling, furnishings, travel, business meals, printing and scores of other monthly requirements - ITEX member companies trade for them - using their products and services, excess inventory or capacity as payment. It's the only way to make your company more strategic, effective and successful without spending cash.

What about attracting new customers? How do you do it now? Do you run ads? If not, would you like to - if it didn't cost you cash and you could pay for it with excess capacity or idle inventory? Or, do you send out sales letters, brochures, catalogs, and announcement postcards? Would you if you had the marketing budget? Well, ITEX can help get your printing mailing services and graphic design expenses all on trade.

That's just the beginning. Want to take your customers or staff to lunch or dinner meetings? Or hold a big conference? Want to take them out for entertainment purposes? ITEX Members can do it all for you on trade. Just pay for them with trade dollars other ITEX members have used to purchase your various products or services. It's really that easy.

By participating in the ITEX network, you can get your office equipment or get your staff trained - on trade. You can work with top-level consultants on trade. You can send your top employee on vacation as a reward for superior performance on trade. You can get printers, contractors, builders, home or office improvement products and many other valuable products and services with trade dollars. But it's far more advantageous than that.

ITEX specializes in increasing your discretionary spending (the money you spend when you have it) by bringing you new business to increase your purchasing power and get you the things you want and need – and increasing your cash bottom line at the same time.

And you're not limited to using your ITEX membership privileges just for your business. You can use your business-generated trade credits to purchase all kinds of products and services to improve your quality of life - from carpet, drapes, carpet cleaning, furniture, clothing, laundry, dentistry, medical services, haircuts, lawn care, landscaping, roofing, remodeling, kitchen appliances, jewelry, trips, resorts, cars, auto repairs, fencing, art, lighting, brickwork...

Are you starting to see the exciting possibilities?

What is Barter?

Barter, at it’s most basic and enduring level, is the exchange of goods and services between parties without the use of cash. Barter has been around since long before cash. Modern barter is the way entrepreneurial businesspeople get what they need when they need it - even if they don’t have the cash - by trading their spare capacity or inventory (what they have) for what they want and need.

Most businesses operate on the earn-save-spend model for making purchases. They earn the money. They save the money. They spend the money. This model works very well when the business is earning enough money to cover costs plus save a little for growth. But what happens when business isn’t so good or - the inevitable business Catch 22 - you need to grow now to earn more later? What happens for many businesses is barter.

Almost all businesses have excess capacity (office or press hours unused, tables unfilled, hotel rooms unoccupied) or excess inventory (discontinued, slow-moving, or over-produced). When times are slow or you need more resources to grow, the normal pattern is that these unused resources INCREASE while your cash decreases. Barter gives you the opportunity to turn those resources into value and purchasing power when you need it the most by trading your products or services for the things you need - when you need them.

Although bartering on a neighborly basis has long been a part of our everyday lives, the new barter is presenting practical solutions to today’s most sophisticated business problems.

Every day a CEO someplace breaths a sigh of relief because he has found a profitable outlet for his excess inventory through systemized barter.

• A machinist on a lathe may not realize it but his job depends on his management being able to move his product through barter as well as traditional cash sales - keeping him busy and productive.
• A freelance greeting card designer takes her daughter on a long planned trip - something she could never do with cash - because she can pay for the hotel, and food and entertainment with trade dollars.
• A business owner pays for cosmetic surgery after a car accident.

Why Use a Trade Exchange?

Many businesses barter directly on a day-to-day basis, why should you use a trade exchange?

A modern barter network or trade exchange is a system combining computerized information sharing and human intelligence, relationships, and creativity to create opportunities for tens of thousands of members to trade their products and services on a regular basis. Does "barter" really mean that all these people are simply swapping with each other? Technically, yes, but in a barter exchange the need for negotiating a face-to-face trade has been eliminated. Instead of cash the barter exchange uses trade credits to keep track of who owes what to whom. You sell for trade dollars and you buy with trade dollars; it’s that simple. From the members’ point of view it’s difficult to distinguish a barter transaction from a cash transaction except for the "T" by the dollar sign signifying that this is trade dollars, not cash - and the fact that the business cost them much less to bring in the door.

There are three main reasons to use a trade exchange: security, diversity, and ease of use.

Security: How often have you been involved in a direct trade with another business only to end up getting less than you gave? Holding inventory or certificates you couldn’t use? Spending time and money to sell what you ended up with for pennies on the dollar? These are fairly common occurrences with direct trade deals (those deals made between individuals outside of a trade exchange environment) because there is no oversight. Trade exchanges create a common currency or medium of exchange that everyone can use to establish an objective value for their goods and services. In addition, trade exchanges monitor their members and enforce fair trading rules to make sure that all transactions benefit both parties.

Diversity: If you need your house painted and want to trade for it but can't find a painter who needs your services, what can you do? By working through a trade exchange you have more resources from which to buy and they don’t have to need your specific product or service. You can sell your product to a printer then use the trade dollars you earned on that transaction to get your painting project done.

The larger the exchange, the more resources you have. Not only does the size and diversity of the membership benefit you when you are looking to spend your trade dollars but it also helps you get trade dollars when you have excess capacity or product. The trade exchange acts as a marketplace and trade directors act as a national sales force, marketing your products to businesses that you could not have reached through your normal advertising efforts. The larger the exchange, the larger this new marketplace is.

Ease of Use: Trade exchanges simplify the barter transactions most business people already conduct by providing a group of eager traders, resources for publicizing wants and needs, and a method of tracking transactions. When setting up a trade, much time is often spent trying to find another party who wants to trade. By being a members of a trade exchange, you have access to a large group of people who want to trade. In addition, you have access to technology and staff that is designed to facilitate transactions within this network: technology if you want to search for opportunities on your own and a national sales force and "personal shopper" to help navigate the system and locate opportunities for trade when you’re not online.

Having a method for tracking transactions is a main benefit of joining a trade exchange. Instead of having to maintain records yourself of what you owe and who owes you, trade exchanges act like another bank account. All transactions flow through an account similar to a checking account - allowing you to monitor your balance and transactions at a glance and keep records for your business.

How can I Increase Sales Through Barter?

By introducing your business to an environment of sophisticated traders, you are availing yourself of an opportunity to sell your products to a market that otherwise would have been closed to you.

• You are generating business from people that would have gone to your competition. They will now buy from you because they can pay with trade dollars instead of cash
• You are generating new sales from people who would not have heard of you because they are outside the range of your marketing (other geographic areas or target markets)
• You are generating new sales from people you would have marketed to if only you had the budget.

Barter members always look for ways to purchase on trade before going out to spend cash - as you will. By being listed in the directory and in other ITEX publications you will expand awareness of your business and company name to tens of thousands of existing members who will do business with you because you belong to the network.

Because barter is such a powerful tool to develop purchasing power (see "How Can Barter Increase my Purchasing Power?") members will be willing to go outside their normal routine to spend trade dollars. If you owned a dry cleaner, there are probably certain sections of town that you can not draw business from no matter how good your advertising. But if you accept a currency that people want to spend and your competition does not, people will drive past your competition to give you their business.

And barter business is easier and cheaper to get than cash business! No coupons, no advertising, no freebies and give-aways... just more business.

How can Barter Reduce My CASH Expenditures?

While barter can replace imperative spending (bills you must incur and pay as part of business, like rent, it excels at discretionary spending – spending you can manipulate according to your income.

We have already talked about how barter can increase your discretionary income by bringing you more business, but what can you do with that extra income?

A few ideas from ITEX members include:

Replacing current or imperative expenditures:

• Bookkeeping and accounting
• Legal costs
• Printing and stationery
• Janitorial and trash disposal
• Network or computer maintenance
• Vehicle maintenance and repair

One-time expenditures for capitol improvement or asset acquisition:

• Building improvement
• Building or land purchase
• Purchase of machinery

Growing your business:

• Start-up expenses for expansion (signs, stationery, and construction)
• Advertising

Improving your business operations:

• Employee incentives
• Sales contest prizes
• Consulting services

Improving your quality of life:

• Eating out
• Hiring a limousine to view Christmas lights with your kids or take you to the airport
• Taking vacations or better vacations
• Taking your kids to an amusement park
• Sending flowers or balloons
• Holiday shopping
• Buying art or custom furniture
• Home remodeling and improvement

How can Barter Increase My CASH Bottom Line?

Imagine you have a stack of "green" dollars that represents revenue. From that stack you have to pay all of your business expenses. Now picture adding a stack of "blue" ITEX trade dollars on top of that. The lights are already on in your office; the rent and the employees are getting paid. Overhead didn't go up, but your resources to pay it did! Pay for everything you can out of that stack of blue dollars that you didn't have before. Then pay the rest with the green dollars. The stack of green dollars, your profit, is taller than it ever has been, you have new customers and new cash business, and you have options that you've never had before.

The cash costs of barter are:

• Cost of goods sold
• Fees
• Taxes

All in all, barter isn’t the simple, cashless transaction that many people think it is. However, it is a transaction that needs a lot less cash.

How barter affects your bottom line.

Let’s take a simple scenario to look at how using barter can increase cash profits. This doesn’t include benefits that come by increasing your overall sales volume like increased volume discounts and economies of scale.

Without Barter			With 10% Barter
Cash Sales	$ 500,000		Cash Sales	$ 500,000
			Trade Sales	$ 50,000
Total Sales	$ 500,000		Total Sales	$ 550,000
Cost of Goods	($ 250,000)		Cost of Goods	($ 275,000)
Gross Profit	$ 250,000		Gross Profit	$ 275,000
Expenses:
Fixed (includes wages, taxes, insurance, utilities, rent)	($ 125,000)		Fixed	($ 125,000)
Variable (includes advertising, accounting, legal, travel)	($ 100,000)		Variable-Cash	($ 50,000)
			Variable-Trade	($ 50,000)
			Trade Fees (10%)	($ 5,000)
Total Expenses	($ 225,000)		Total Expenses	($ 230,000)
Net Profit	$ 25,000		Net Profit	$ 45,000

How can Barter Increase My Purchasing Power?

Barter exchange members see their needs in terms of what they can offer, not what they can afford. In many cases what we want is not cash but purchasing power. Businesses who insist on going through the sell-save-spend cycle discount their other purchasing power: skills, service, or product.

By figuring out the cash cost of obtaining trade dollars you can figure out the leverage or purchasing power of trade for your business. The cash cost of each trade dollar is the cash you directly have to spend to generate that dollar. It is a combination of your cost of goods sold and the trade fees that dollar costs you to get and spend. If your cost of goods sold is 50% then every dollar of trade you bring in costs you $0.60 ($0.50 for product and $0.10 for trade fees). Overhead costs like rent, lighting, and labor don’t count into the equation because you would have to pay them whether you had trade income or not.

With the previous equation in mind, how much more purchasing power do you have when you are shopping with trade dollars? By leveraging your new source of income you are essentially buying everything you get on trade at a 40% discount.

How Can Barter Increase My Cash Business?

Every businessperson knows that business brings business. Many companies, large and small, have built themselves on word-of-mouth advertising only and will tell you that every customer you serve well will refer an average of 2 new customers. Trade customers do the same thing. In fact, the average referral from trade customers is 2.5 new customers. This is one of the ways in which trade businesses can build your cash business.

Advertising is one of the most popular uses of trade dollars because it builds cash business without spending cash. Advertising purchased with trade dollars is just as effective as advertising paid for with cash - it just costs less. And by using the leverage of the trade dollar discussed in "How Can Barter Increase My Purchasing Power?" you can get much more for your advertising dollar than by paying cash.

The ITEX co-op program is another way to increase the reach of your trade dollar advertising. ITEX will pay up to one half of an ad that is purchased with trade dollars, up to $1,250 every four weeks, just for including the ITEX co-op logo. This can expand your advertising budget by up to $16,250 a year - or keep that $16,250 in your pocket.