Don’t Pay for It… Trade for It!

Welcome to our blog… This blog is for anyone interested in learning more about the barter industry, how to get involved in barter and how to succeed in any facet of barter that interests you.

You can trade what you have for what you want. You can start your own local small barter exchange. You can start an exchange for your community or Chamber of Commerce. You can serve your community and start a Complimentary Currency or  Time Dollar exchange. Or, you can start an online barter exchange and provide trading services to business members locally, across the nation or throughout the world.

The possibilities are limitless… It just requires some creative thinking and a paradigm shift to using alternative currency instead of cash.

Introduction to Barter

Retail Barter

Small business owners conduct barter transactions through membership in commercial trade exchanges. Most members do business within a 35-mile radius.  Their business revolves around services – everything from chiropractors, attorneys, graphic designers, and plastic surgeons to mom-and-pop businesses like dry cleaners and shoe repair.

There are 400 commercial barter exchanges in the U.S. and another 200 worldwide.  The number of members per exchange ranges from about 200 to about 10,000, with most under 1,000.  In total, the business-to-business network of barter exchanges represents over 450,000 companies.

Under the Tax Equity & Fiscal Responsibility Act of 1982 (TEFRA), trade exchanges are classified as third-party record-keepers with the same fiduciary responsibilities as bankers and securities brokers.

Corporate Trade

Larger companies trade goods and services through accounts receivable (AR) trading, relying on a corporate barter company to purchase inventory offered for sale with trade credits and subsequently to fulfill the credits by providing goods and services requested by the seller.  The corporate barter company acts as a principal in the barter transaction, buying and selling for its own account and becoming the purchasing agent for clients with regard to the use of their trade dollars.  About seven to ten corporate barter companies do about 95 percent of the corporate trade business.

Corporate barter as it is practiced today originated in the late 1960’s. At that time, corporate barter was primarily a financial tool – a way for companies with excess or obsolete inventories to recover costs and even full wholesale value for their inventories. Today, corporate barter both remains a profitable alternative to markdowns or liquidation and provides a valuable way to expand a company’s advertising and marketing plan using the leverage of a barter transaction. Corporate barter also facilitates foreign trade with countries that have goods and services to exchange but no hard currency.

Examples of corporate trade are numerous: unfilled trucking on return trips, idle plant equipment, excess maintenance inventory, years on a lease when a company moves, and even stock in a firm. Privately held companies sell restricted stock for trade dollars to offset marketing costs that will help build name recognition and market share, to build trade dollar reserves or to purchase hard assets such as real estate.

Why Businesses Barter

The Department of Commerce says that barter in its various forms accounts for about thirty percent of the world’s total business. The International Reciprocal Trade Association (IRTA) recently announced that U.S. barter transacted through commercial barter brokers exceeds $14 billion annually. Over 450,000 U.S. businesses actively use organized barter.

There are many good reasons why more and more businesses worldwide are bartering their products and services, but underlying them all is one fundamental business motivation; businesses profit.

Airlines and restaurants can fill empty seats, hotels and resorts can fill empty rooms, printers can fill press downtime, professionals can fill empty time slots, health care professionals can treat new patients. Business owners and professionals can then take this newfound revenue and reduce cash expenses or expand their operations.

Businesses across America are taking a serious look at barter as a way to build their bottom line, and the rapid growth of the online barter industry can only mean that American business likes what today’s barter industry has to offer.

Benefits of Barter

Businesses large and small choose to barter in order to gain specific benefits

Retail Trade

  • New sales and customers
  • Increased buying power
  • Conservation of cash flow
  • Alternative financing
  • Enhanced quality of life

Corporate Barter

  • Convert slow moving inventory into current receivables
  • Put surplus production or capacity to use
  • Increase market share with low cash investment

International Countertrade

  • hard currency
  • balance of trade
  • new markets
  • manufacturing capabilities
  • prices of export goods
Business bartering survival guide: Lessons from real life

Via IT World

Everyone’s budgets are finite, but our desires aren’t — especially when it comes to updating our business assets or getting expertise that can help a project succeed. Bartering — exchanging goods and services without an exchange of cash — is a good way to accomplish this… when done right. An accountant might do the tax-filing for a company that can redesign its website. Farmers can (and do) exchange tractors for cattle. A landscaping business can work out a maintenance services agreement with the lawyer who’ll do its incorporation papers.

When it works well, barter is fantastic. When it doesn’t… you’ll discover a whole new world of hurt.

Here are some of the pitfalls I’ve learned to look for. Perhaps you can learn from them, too.

Note: My examples are mainly from very small businesses, but then I’ve had a solo shop for a long time, and this post is from personal experience — some of which was painfully acquired. Applying these lessons is even more important when you’re on a larger team that has must-not-miss deadlines, because the “oops!” affects more than a few people.

Pay attention to your metrics.

The essence of a happy barter scheme is when both parties feel that they got a fair deal (or maybe just a little better than fair). One easy place to start is with an understanding of what it is you’re trading.

Pragmatically, I’ve found that things work best when both parties typically charge on the same measurement. If you charge hourly, it’s best when you can work with someone else who also charges hourly. The accountant might charge $150 per hour and the website designer $75 per hour; both can figure out how many hours they “owe” each other. That applies to bartering things, too: my old delivery truck for your extra inventory of quilting fabric.

While neither of us felt taken advantage of (we did deliver what we promised to one another, with no sniveling), I never felt really good about that deal. In retrospect, the real problem was that I “bought” something with barter that I’d never have bought with cash.

But if the other person typically works on a project basis and you charge hourly, figuring out what’s fair is more difficult. If the accountant charges $150 per hour, ordinarily, and the typical project cost for the website designer is $1,500, everything is hunky-dory, right up until it isn’t. Plenty of projects encounter scope creep and other reasons for delay or (ordinarily) cost extensions. In a cash transaction the designer would say, “It’ll cost you $500 more to add that feature,” but somehow it’s difficult to have that conversation in a barter transaction — particularly when the accountant already finished doing the taxes, and the website isn’t done.

Even worse: The balance can go out of whack if one party has to lay out cash and the other does not. I learned this lesson when I owned a retail store in a small town in Maine. I worked out a barter deal for three months of advertising in the regional newspaper in exchange for hardware that would have cost the newspaper editor $1,800 if he’d written a check. Except the transaction cost him a few quarter-page ads (which were not free, per se, but they didn’t cost anything out-of-pocket), and the hardware cost me $1,200 at wholesale.

While neither of us felt taken advantage of (we did deliver what we promised to one another, with no sniveling), I never felt really good about that deal. In retrospect, the real problem was that I “bought” something with barter that I’d never have bought with cash. I didn’t need three months of quarter-page ads; I’m quite sure that it didn’t generate me a single sale. Good branding, yes, but it cost me $1,200 in real money for something I didn’t need.

Yet when you do have a balance of the cost-of-the-sale, barter can work wonderfully. When I owned that retail store, I lived close to a craft school that drew artsy people from all across the country. Since I had a spare room, I worked out a barter deal with a local masseuse: Charlotte could use my space without charge to conveniently deliver massages. In exchange, we got four massages per month. Both Charlotte and I saved cash we didn’t have, and we had equal inconveniences (someone playing Enya in my basement at all hours, versus four hours of her time). Also, she gave great massages, and I like Enya’s music.

Make sure you’re on the same urgency scale.

My barter experiences have worked best when both parties expect deliverables on similar timeframes. For example, in most cases a shop owner bartering with someone to paint her window is happy to have the work done “sometime soon.” If the painter lollygags a bit it isn’t a problem… unless it seems that the promised task is being postponed so often that it should be called “ignored.”

But what happens when the time scales are different? If your project has a hard-stop “must be done by October 1″ deadline, your barter partner has to be onboard to deliver on that date. And given the relaxed nature of many barter deals, that can be a critical issue.

That timeline is also important when, by the nature of the tasks or services, one side delivers before the other is done. Let’s say a marketing coach agrees to train your fashion design company’s sales staff in exchange for some new clothes. Aside from needing to set expectations about the value of those clothes (should you say, “…in exchange for $500 worth according to the sales tag”? probably), one party is bound to deliver before the other. You don’t want the marketing coach to acquire the clothes until the training is delivered; the coach probably wants a clear sign-off before saying, “Okay, now show me those gorgeous new dresses.”

Choose the provider using the same criteria as if you were paying cash.

Don’t think of the barter as something you’re getting “free,” or you may pick the wrong person for the job. That means you need some awareness of the skill set you’re hiring. (Not “hiring” in quotes, since the only difference is in how the value is delivered.)

It’s especially important given that, in my experience, most barter deals are between people who already know one another and don’t want to create awkward situations. For example, if your brother-in-law says, “I’d be happy to build that new lunchroom for your office! Why should you give money to strangers when I’m a contractor?” In addition to whatever goods or services you offer in exchange, this might give him an opportunity to extend his skill set (e.g., he never built that kind of structure before) and thus have more bragging rights for his own marketing. Gosh, sounds like a great deal. And maybe it is.

Or maybe it isn’t. Because if you had asked several contractors for blind bids for that lunchroom construction project, you wouldn’t have hired him. He just doesn’t have the right background. Then, if the project stalls or fails or takes longer… now you have a dispute with your brother-in-law. That won’t end well. [Note: No actual brothers-in-law were harmed in this anecdote.]

One important component of working out a barter deal is to document everything — just as if you were going to pay cash for it. The difference is that instead of the specifications saying, “Company will pay contractor $X” the agreement says, “Company will provide OtherCompany X; OtherCompany will provide Company with Y.” Be far more explicit than you think you should. You’ll thank me later.

The casual handshake nature of most barters opens up the chance of every project-gone-bad story occurring in your business, such as finger-pointing about product specs, timetables, etc. As with any contract, if you can point to the agreement (which can be as simple as “here’s an email message to record what we agreed upon today; let me know if you see anything untoward”), both sides know what’s expected.

Because… what if you’re unhappy with the service? In a barter, what if you already consummated your part of the process (you did the tax return) but the other party was substandard (you hated the photographer’s images). If you were paying cash, you’d withhold payment or otherwise ask for the other party to fix the problem. With a barter… it’s sticky. It shouldn’t be, but it is. Particularly when the nature of the delivery is “…when the customer is happy.” (Imagine the storyline that begins, “Dammit those photos were just what he asked for!”)

Don’t let yourself think of it as unpaid work.

For some reason, when you have a barter agreement, it’s too easy to talk yourself into dropping the barter project when “paying work” comes along. It feels like volunteer contributions, except it’s not. Someone is counting on you.

One part of the “it isn’t free” mindset is in your own attitude. You can’t think that you’re giving away your work. You’re swapping one valuable thing for another: time, skills, goods. If you’re uncertain about the value of what you (literally!) bring to the table, you may have emotional difficulty with the process. (“Oh, you’re so good… and my skills aren’t nearly as valuable.”) That’s especially so when this is essentially a freelance gig for you, and you’re uncomfortably new to giving dollar estimates.

Your value is judged in the eyes of the person you’re trading with — not what it cost you. If your lawyer wants to give you $750 of incorporation-paper-filing in exchange for two hours of your (in your eyes) $50/hour time — is that fair? It might be, if she thinks she couldn’t or wouldn’t get your attention otherwise. For example, the boss might not let her spend money on that critical expense… but if it doesn’t appear on the books, everybody’s happy. Or someone might be thrilled to take your old, worn out laser printer off your hands in exchange for a brand new sewing machine; you’ll think, “The printer’s not worth that much!” but perhaps it is… to him.

The value proposition is also affected by emotional relationships. For instance, I offered to do something purely as a favor (e.g. I edited someone’s book chapter). When she offered to credit my account for my editing services I said no, because I had made the offer without thought of recompense. Accepting services would feel like it was… cheapening the gift? Some emotion like that.

Sometimes, it’s easier to sidestep a direct barter.

How do you work out a fair trade when your rates are very different? For instance, someone who charges $20 per hour but wants $750 of accounting services probably has to put in far more time than does the accountant. Sometimes you can manage this by talking things through — I think of my hair stylist working out “two haircuts” with his dentist-uncle for every tooth cleaning — but the rules need to be clear.

One option, rather than swapping time or products, is simply to give each other credit on account, at “retail prices.” That is, instead of specific services, consider “dollar vouchers” that the other person can trade in — rather like no-cash gift certificates. It’s much easier for someone to understand, “I spent two hours on this today at $75 per hour, so you have $150 of credit to spend at my store” and it can lead to fewer moments of crankiness.

I don’t want you to get the idea that barter is a bad idea for businesses. It’s worked very well for me over the years, and I’ve seen it work really well for others. Like any business process, though, it’s important to go into it with your eyes open.

3 Ways to Lead the Way in Your Industry

Via Ilya Pozin @

No business can afford to blindly follow the crowd. Your company needs to be driving innovation, not sitting in the passenger seat. You need to be ahead of the trends.

I recently talked to RED Interactive Agency‘s CEO, Brian Lovell, and president, Donny Makower, about leading the way. RED Interactive Agency is a full-service digital agency that works with big clients, from Disney and ESPN to MasterCard and Guggenheim Partners.

“A lot of people in our business are driven to either change audience behavior or follow it,” Makower said on the topic of staying ahead of trends, “and the truth is, you have to be ready to do a little of both.”

Leading the way isn’t easy in any industry, but here are three lessons the team at RED learned about staying ahead of the pack:

Get Clients Involved

Whether your company is focused on clients or catering to customers, far too many organizations encourage an approach that is too hands-off. The best work happens when everyone is working to accomplish the same goals.

“Our mission is to always be learning as much as we can about our client’s business, and to work closely and collaboratively to reach the goals we set together,” Lovell said. “We try to push the limits strategically, creatively, and technically to achieve success.”

For RED, this means building tools and technologies to get clients involved in the process. A collaboration with Lionsgate and Microsoft’s Internet Explorer group centered on the new Hunger Games film, created the Hunger Games Explorer website, which logged nearly one billion Twitter impressions in the first 24 hours of launch, and has over 15 million pageviews to date.

By fostering a collaborative environment with your clients and customers, you can use those relationships to provide greater quality. Enmesh yourself in your client’s world or your target customer’s way of thinking. By looking outside your company to deliver the best results, you’ll be learning what your company needs to do to cater to your target demographic.

Encourage Teamwork and Collaboration

Teamwork with your clients is important, but teamwork within your organization is essential. You need your best people working together, sharing ideas, and not being afraid to fall down in the pursuit of something new. This means creating a culture of innovation and collaboration.

According to Lovell, the key to great teamwork is threefold: people, culture, and workspace. The agency goes out of its way to recruit the best people, whether they’re local or a plane ride away. These candidates go through a lengthy interview process, complete with assessments, to ensure they have the right skills and are a cultural fit.

“We believe great ideas can come from everyone at the company,” Lovell said. “We empower our employees to think beyond their job description and encourage them to have a voice in the creative process.”

The company organizes informal brainstorming sessions called “concept-a-thons” in which employees from every department come together to work on a new project or toss around ideas. These brainstorming sessions let employees get out of their boxes, foster new skills, and stretch their creative muscles. It also provides projects and existing teams with fresh ideas and innovative concepts to explore.

Finally, the workspace at RED is built with collaboration and teamwork in mind. The office has lots of open space and communal areas for brainstorming and collaborative work, while also featuring work pods for when employees really need to hunker down with their project and get things done.

People, culture, and workspace all set the tone for your company culture and feed into each other. If you’re ignoring any part of this three-tiered approach, your company and your best people are suffering.

Be Mindful of Trends–But Don’t Stop Forging Your Own Path

Forecasting trends isn’t easy; if it was, we would all be ahead of the pack. Though you need to get off the beaten path and make your own way to be successful, it’s downright foolhardy to ignore what’s happening in your industry. You need to strike a balance between being trendy and being forward thinking.

“An overwhelming part is simply listening to people,” Makower said. “After all, trends are just expressions of human behavior, so it’s imperative to listen to what people want and where they want to go.”

Thank goodness, this should be easy if your team and your clients are collaborating seamlessly. Encouraging a collaborative culture is really the best way to stay ahead of the trends, forecast the Next Big Thing, and pivot before you end up in the lurch. When many voices are part of the conversation, you can truly listen to everything your team and clients have to say.

“You want to consider the trends, but you don’t want to be handcuffed to them,” Makower said. “It’s about doing what’s right, not only what’s popular.”


8 Ways to Be Constantly Improving

Via Lee Colan,

Building your competence boosts your confidence…and confidence is a close friend to high achievers. Building your competence is like cleaning your house. If you stop cleaning, dust collects. The need to clean never ends. To achieve the success you deserve, you need to find ways to be constantly improving. The task of building competence never ends.

Competence includes anything that improves your ability to perform–your knowledge, skills, relationships, resourcefulness, processes, systems, and information. Olympic athletes are not only testaments to the human spirit, they are also living examples of competence. Only when we hear their backstories do we fully appreciate all it takes to build Olympic-level competence. We learn about gut-wrenching daily training regimens, strict nutritional standards, rigorous mental discipline, top-notch training equipment, reams of collected data, various supporting relationships, and even past adversities that motivate the Olympian. It is an intentionally developed set of systems and processes designed to produce a golden victory.

So, here are eight proven ways to help you build Olympic-level competence:

1. Seek feedback on your performance. Building competence requires courage–courage to face the facts. Be ready for what you might hear and be prepared to make changes. It might feel uncomfortable, but it will build your competence.

2. Take baby steps. Rome wasn’t built in a day and neither is our competence. Start with just one new skill, one tool, or one new area of knowledge. Use it until it becomes a habit. First you form your habits and then your habits form you.

3. Listen more than you talk. Remember what Mark Twain said, “If we were supposed to talk more than we listen, we would have two mouths and one ear.” When you listen, you learn and also prevent “blind spots”–weaknesses that are apparent to others but not to you. The higher you rise in an organization, the more you must listen.

4. Build your BEST team–Buddies who Ensure Success and Truth. Choose your team wisely. Ensure each member offers the energy, truth, and positive perspective you need to succeed. Connect with your BEST team, individually or as a group, on a consistent basis. Learn from them and help them–it goes both ways.

5. Create it once, use it many times. If you know you will be performing a task more than once, create a checklist, form, or template to save time and improve your consistency over the long haul. No need to reinvent the wheel every time you conduct or coordinate an off-site meeting, prepare a proposal, send out a mailing, plan a new project timeline, etc.

6. Learn along the way. After you complete each task, ask yourself, “What should I Stop, Start, and Keep?” Identify those things that did not go so well (Stop), those you did not do that would have helped (Start), and those that went well (Keep). Continually improving your performance is a powerful way to build competence–it turns good into great!

7. Ask the right questions. The fastest way to change the answers you receive–from yourself and others–is to change the questions you ask. Asking the right questions will get you better answers whether you’re asking them of yourself or of others. The questions you ask will either limit or expand the possible responses.

8. Be decisive! Get 80 percent of the information you need, then make the best decision you can. Don’t let the fear of being less than perfect stop you. Remember, good judgment comes from experience, and a lot of that comes from bad judgment.

So, start today and go for your gold!