Posts Tagged ‘Conserve Cash’
Turn Trade Dollars into Cash

Virtually every trade exchange member regularly pays cash for something that could be bought on trade, which can then be resold for cash. If you can’t find it yourself, your trade broker should be happy to assist you.

For example, one of our clients is a magazine. One of its major expenses is color separations. We found another business that does separations and signed them up specifically for the magazine client.

The pre-press company does the separations and film on trade, and the magazine charges cash to its advertisers. With the help of a creative broker, the magazine now turns its Trade Dollars directly into cash.

The separations were an established part of the magazine’s fixed cost, so it was fairly simple to recognize the barter opportunity. Creative traders can also develop new product lines or new ways of doing business that turn Trade Dollars into cash dollars.

For example, a parking garage teamed up with an oil change and auto detailing company. Parking customers find it convenient to drop their cars off and not waste time on minor maintenance. The parking garage pays for the work in trade, then charges cash to its customers.

With the help of creative trading, the garage owner found a way to offer a new service and generate a new source of cash flow funded completely on barter.

There are numerous examples of how businesses can turn trade dollars earned from new sales to new customers into cash sales to customers that aren’t members of the barter exchange. A lawn maintenance company can use trade dollars to purchase plant material and sod on trade. An auto repair company can use trade dollars to buy auto parts on trade that can be sold for cash.

With just a little creative thinking, the possibilities of using barter to expand a business and improve the bottom line are endless.

Earn Cash While Selling on Trade

Many businesses can also generate cash as a by-product of earning Trade Dollars. Hotels and resorts are a good example of this process.

The mortgage, insurance and utilities on a hotel are fixed, whether the hotel is fully occupied or nearly empty. The incremental cost of filling an unused room is minimal. To pay for the extra house cleaning, laundry, and complimentary items such as soaps and shampoos, it costs about $20 per room night.

But just think about how much cash revenue that twenty dollars can generate. The people staying in that room order room service, buy sodas from the machine, magazines and gifts from the gift shop and eat in the restaurant. It’s even more lucrative if it is a resort. When a destination resort offers sports, tours and entertainment, visitors spend a lot of money on peripherals.

The hotel has generated cash it would not have had while producing full value for the room in Trade Dollars. In addition to the new cash flow, the hotel can use the Trade Dollars it earned from selling excess unsold inventory to offset cash expenses.

There are many other types of companies that can also generate new cash sales from participating in a barter exchange. These include, auto repair facilities that also sell vehicles, computer repair companies that sell computers and HVAC service companies that sell equipment. The companies can offer their repair and maintenance services on trade and also market vehicles, computers and equipment to these new customers to generate new cash sales.

Why Barter?

Bartering should accomplish one of three things:

Filling downtime with customers that might not normally spend cash on your service.  Or selling stock at regular retail for barter instead of marking it down for a sale for cash.

Conserve cash by buying things you need (or want) with barter dollars instead of cash.  Use the cash to reinvest in your business.  You can also give employees bonuses in barter dollars.  That can start a new incentive program or even give you the ability to give some sort of bonus in a year that might not have seen any bonus otherwise.

Improve your lifestyle.  Often when a business is new or in a down time, owners cut back on personal indulgences to put money into the company.  Barter dollars can be used to dine out, for vacations, for gift giving, anything that would be considered an indulgence if you paid cash.