Tuesday, December 1, 2009

Trade and Barter Kelowna - Barter 2.0: Money Reinvented


Barter 2.0: Money Reinvented

This Practice Gives New Meaning to the Phrase ‘Trade Policy’

By TRISH TRUITT


The term ‘business barter’ may sound like an oxymoron. The ancient form of making exchanges without money in our high-speed world of commerce doesn’t seem to be a natural fit.

That’s because barter in its most basic form relies on two people having equally valued needs that the other can fulfill. Economists call that a dual coincidence of wants, and say that they’re rare — which, in turn, makes barter an impractical and sticky method of transacting business.

However, barter is alive, well, flourishing, and, in one particular form, has transformed itself into an $8 billion industry.

Third-party bartering networks act as a central clearing or brokerage house. They enable parties to split the trade up into two parts, the purchase and the sale. Once a sale is made, an electronic currency is credited to the seller’s account for the corresponding amount. The seller can then use that currency (usually called ‘trade dollars’) to buy anything else for sale in the network. In essence, the barter exchange network acts as a private market brokerage and monetary system. Barter exchange networks make their money off membership and transaction fees.

Driving Factors

Ron Whitney of International Reciprocal Trade Assoc. says the engine that drives barter is the unused capacity that every business has. “Think of a hotel,” he explained. “In good times they have maybe a 90% occupancy rate. In a down economy they drop to a 50% occupancy rate. What they’re bartering is the unsold hotel rooms.”

Excess capacity, whether in the form of empty rooms, seats, space, or open appointments still costs businesses money to maintain. Barter exchange networks enable sellers to turn what could have gone to waste into an asset by giving them a chance to sell and earn trade dollars for them instead. Once earned, those trade dollars can then be used to buy anything anyone else offered for sale in the network. In fact, most barter exchange networks also have reciprocal agreements with other networks that allow them to sell and buy from each other’s networks.

Similarly, James Varano, owner of the barbecue-and-blues eatery Black Eyed Sally’s in Hartford, employs a strategic approach to spending his trade dollars.

“You need to be creative, flexible, and have a plan,” he said. “Some people buy luxury items like vacations and hot tubs. I prefer to apply mine to business purchases. My strategy is to look for cash business expenses and replace them with trade-dollar purchases. They’re still tax-deductible no matter which kind of dollars you buy them with.”

In most cases, the IRS sees both trade dollars and regular dollars as simply income or money (though they only accept U.S. federal dollars for payment of taxes). Therefore, barter has no inherent advantage or disadvantage tax-wise. What that means is that a sale within an exchange network for trade dollars has to be reported the same as a sale made for cash. It also means that a business purchase made with trade dollars can be written off just like one bought with cash

Shopping on Trade

Once they understand how it works, the first question most people ask is, ‘what can I buy?’ Debbie Lombardi of Bristol, Conn.-based Barter Business Unlimited (BBU), says the answer really depends on what you want, and your timeframe.

“Ultimately,” she continued, “it comes down to your network and the expertise of your trade broker.”

Like a good travel agent, trade brokers play a constant game of matchmaker. They help members promote what they have to sell and help them spend their trade dollars by locating items on clients’ wish lists.The range of what can be bought is quite impressive.

Jeffrey Cohen of ImageWorksLLC, a Web and e-commerce design company in Vernon, Conn. uses his trade-dollar currency for clients, networking, and keeping his employees happy. “I do seven business meals a week between clients and other business associates. We’ve had company events catered as well.”

On the entertainment side, vacations, hotel rooms, banquets, catering, music, and sporting events are always popular.

Van Houten of Advanced Air Quality, a commercial air duct and kitchen exhaust cleaning firm in Springfield, offered how he used barter exchange to curb costs. “One special celebration back in October would have cost $7,000 if I had to pay cash, but I just used trade dollars instead.”

There are a lot of surprising trades, too, said Cohen. “My favorite buy on trade dollars was a bright blue 1976 vintage Corvette.”

Varano has even bought love on barter exchange — puppy love, that is. The newest member of his family, a black cocker spaniel named Lucy, was purchased through his network along with her shots and initial vet exam, an invisible fence for the yard, as well as collars, leashes, treats, and toys.

“The girls wanted a puppy for Christmas, but I knew it could all add up pretty quickly. I just told my trade broker, and they set it all up. It doesn’t matter if Lucy was bought for cash or trade; my daughters love her just the same.”

Todd Demers, owner of Family Wireless cell phone retailers in Wilbraham, says he’s bought everything from bottles of wine to carpeting, mountain bikes, dental work, and even fine teak wood furniture. His most prized trade, however, took 10 year to find: a brand-new Fender 52 Telecaster Hot Rod electric guitar. “I wasn’t going to pay cash or full price for it. The retail was $2,800. I got it for $2,300 and paid in trade dollars.”

And growth is certainly happening. Although the last official industry study in 2007 showed a steady 10% growth pattern, IRTA reports barter exchange networks are seeing record growth in the last year with some networks doubling their trading levels and new members at previously unheard of percentages.

Barter exchange networks also claim another surprising benefit — more cash-paying customers from their trade-dollar customers.

Cohen says his Web design firm leverages its exchange network clients in multiple ways. “There are two ways that barter pays off in cash terms,” he said. “One is that we only do design work on trade. If a customer likes us and adds on more services that we don’t trade, like hosting, they become cash customers, too. Also, our barter exchange customers give us cash referrals on a pretty consistent basis.

read more at: http://www.businesswest.com/details.asp?id=2197

Posted by:

David Melse
Trade Exchange Canada,
748 Bernard Avenue, Kelowna BC V1Y 6P5
Office: (250) 717-0026 Mobile: (250) 864-0529
Website: http://www.tectrade.ca/

Thursday, September 17, 2009

BARTERING It's a booming business in Kelowna and BC

BARTERING: It's a booming business

John Klockow, owner of The Pen Cafe in New West, sits in his restaurant Thursday afternoon where he has used bartering to renovate in exchange for gift certificates to his restaurant.
Colleen Flanagan/NewsLeader

By Wanda Chow - Burnaby NewsLeader
Published: June 06, 2009 9:00 AM
Updated: June 06, 2009 10:46 PM


If there’s a wheeler-dealer in the local world of bartering, it might be New Westminster’s John Klockow.

In 2005, when he had to sell his Richmond condo, Klockow skipped the traditional step of calling a realtor. Instead, he turned to Trade Exchange Canada (TEC) where he’d been a client for years.

The company found him a buyer through its membership. The condo sold for $250,000, of which $40,000 was paid in TEC “barter dollars” or credits.

Klockow then used those barter dollars to buy plumbing services, new uniforms and furniture from TEC members for the renovations he was completing at The Pen Cafe, which he owns in the Fraserview neighbourhood.

On top of that, he saved about $10,000 in realtors’ commissions.

He’s also used barter dollars to pay for dry-cleaning of restaurant linens, computer services, flowers for the cafe patio and alarm monitoring. The cafe’s food supplier accepts barter dollars for 25 per cent of the payment.

Klockow earns his barter dollars by selling gift certificates to his restaurant. The beauty of it is his overhead for staff, heat and power is the same whatever form of payment people use. So all the gift certificates really cost him is the price of the food itself—about 26 per cent of the bill.

“I know right away if I were to stop using barter, right away my food costs would go up two to three per cent,” Klockow said, of having to pay his suppliers all in cash.

With $500,000 in sales a year, that would add $10,000 to his business expenses, no small sum.

But using the trade service doesn’t just save him money, he stressed. It creates a revenue source, and is a great way of marketing to customers, particularly as his restaurant is tucked away on the former B.C. Penitentiary site.

“It helps increase your cash flow. It brings people into my restaurant that probably wouldn’t come in but because of the gift certificates, they’re specifically coming to my restaurant.”

And he’s gained a number of repeat customers as a result.


A way to network, too


Many businesses are looking for a boost to keep their heads above water during the current economic downturn. Some are turning to Burnaby-based Trade Exchange Canada and other bartering services.

In the first five months of 2009, TEC saw a 40 per cent increase in transactions over the same period last year. It’s also seen almost twice as many new clients join up in that period as in 2008, said Scott Berg, TEC managing partner.

Berg and fellow managing partner Wayne Edgar started TEC in 2002 after years in the barter services business with other companies. It now has 1,200 members in B.C. and handles $10 million to $12 million a year in transactions, for which it charges a six per cent cash transaction fee (for the barter portion) to both the buyer and seller. It essentially matches up buyers and sellers and maintains accounts for clients.

He stressed that barter makes a whole lot of sense when it’s used for .......Ckick here for the full article

David Melse
Trade Exchange Canada,
748 Bernard Avenue, Kelowna BC V1Y 6P5
Office: (250) 717-0026 Mobile: (250) 864-0529
Email: David
Website: http://www.tectrade.ca/

Sunday, September 6, 2009

Tricks of the Trade - Kelowna Trade Exchange

These are tough times to drum up new business, especially when your bank account is looking a little lean and it's increasingly tough to get credit. So, you might want to look into trade as an option.

David Melse
Trade Exchange Canada,
748 Bernard Avenue, Kelowna BC V1Y 6P5
Office: (250) 717-0026 Mobile: (250) 864-0529
Website: http://www.tectrade.ca/

Wednesday, August 26, 2009

Using Barter Can Boost Your Profits & Cut Costs in Kelowna



Companies of every size and description, from the entrepreneurial startups to multi-national giants, are now acquiring needed goods and services through barter, corporate barter and countertrade. Here's how companies of any size can start to save money by looking for bartering opportunities with their suppliers...

Barter Rule #1:

Virtually anything your company pays cash for is a prime candidate for utilizing barter. Start by evaluating every product or service your company buys from the point of view of a barter opportunity.
Could you consider exchanging your company's product or service as payment, or partial payment, to a supplier/vendor? This is direct barter, and involves an agreement between a buyer and seller that all or part of a bill will be paid through trade-in-kind rather than cash.
If you cannot come up with a good fit for direct barter, then explore indirect barter. It's done through an entity called a trade exchange or barter company, where different businesses (usually locally) who are members of the barter company, will buy and sell to one another using a trade dollar. One way to determine what goods and services are available is to look a trade exchange's directory.
Barter Rule #2:
Be sure you fully understand the economics of your own business, and that of suppliers who are potential barter candidates. Unless you do, you could wind up negotiating barter deals that waste company assets. Or, you might turn down a barter endeavor that could be valuable in the mistaken belief that the terms are unfair.
Understanding a supplier's cost breakdown can also help in negotiating a direct partial barter deal. For example, a print shop buys paper and ink for cash, but rarely operates at 100% capacity. This down-time makes no contribution to the printer's fixed costs. Therefore, a new customer could negotiate to cover the fixed cost of paper and ink with a cash payment, while the rest of the job would be payable in barter.
Barter Rule #3:
Negotiate only with the company owner or sales manager. A supplier's salesperson is not the person to talk to when desiring a barter arrangement, for two reasons. First, they are not able to make the decision, and second, it would be counterproductive cutting into his/her commission. However, the firm's owner or sales manager can understand the value of conserving cash and establishing a long-term relationship based on using barter in the mix.
Then if it makes economic sense, offer a supplier preferred status for agreeing to take partial payment in trade. The strategy for success is to undertake a small transaction first, thus allowing participants to become familiar with how barter can work for them. And then build on that success.
Barter Rule #4:
Keep exact records of barter arrangements on your company books. Make sure at least one person in the accounting department understands exactly how these agreements are to be accounted for, and give that person responsibility—and the necessary tool—for booking them properly.
When you follow these 4 rules you will find that barter can boost your profits and cut costs.
About the Author:

Barter expert Bob Meyer is the author of the easy-to-understand 24-page valuable report, The World's Best-Kept Secret. To learn how you can benefit from this free in-depth report go to http://www.barternews.com/faststartnew.htm
Article Source: ArticlesBase.com - Using Barter Can Boost Your Profits & Cut Costs
Posted by:
David Melse
Trade Exchange Canada,
748 Bernard Avenue, Kelowna BC V1Y 6P5
Office: (250) 717-0026 Mobile: (250) 864-0529
Website: http://www.tectrade.ca/

Frequently Asked Questions about Bartering and Trade Exchange in Kelowna

Are there any tax advantages to bartering? Barter income is treated the same as cash income. There are no tax advantages or disadvantages to bartering. Trading should be considered a marketing tool, not a tax tool. Cash purchases that are normally tax deductible as business expenses are also tax deductible when purchased on trade.

How will my business profit from barter? Barter produces new business - allowing you to expand your market and maintain your cash-paying customers. Barter conserves cash. For example, if you owned a motel that had ten vacant rooms at $100/night and you need a new copy machine priced at $1,000. Barter provides a way in which you can buy your copier, fill your rooms (at your cost on the rooms) and maintain your cash. The same is true for filling empty tables for a restaurant, moving inventory for retailers and manufacturers or increasing billable hours for service business. Barter provides a competitive edge. Barter clients are new clients that bypass competing businesses to do business at your establishment while you are maintaining your existing cash clients.

How does Barter work with a trade exchange? A trade exchange eliminates the restrictions of one-on-one trading where each business must want what the other has to offer. A Trade Consultant works with you to bring your company new sales, increased market share and to minimize cash outlay for everyday business expenses. Clients of an exchange use trade dollars, instead of cash, to handle their transactions.
An exchange acts as a third party record keeper, providing monthly statements to clients, which reflects all trade purchases, sales, and a current trade dollar balance.

What companies are involved in barter? Globally, over 470,000 businesses are involved in Barter. It is estimated that 65% of Fortune 500 companies engage in barter to one degree or another.

What does it cost to get started? There is a one-time membership investment to establish your business account. Transaction and modest monthly fees cover accounting, marketing, promotions and member services.

What if everyone wants my products and services and I can't find enough to buy?
Every member business is assigned a Trade Consultant in our office. They do a complete spending analysis with you on your current purchasing as well as projections for your business in the future. You can spend your trade in many of the same ways you spend your cash. If your products or services are in high demand, we are happy to call you first and tell you who is looking to purchase from you and what their needs are. This way you can decide if you can handle more business and know ahead of time what the job entails.

What if I need to make a purchase before I've earned trade dollars in the system?
Just like a bank or a credit union, we encourage businesses to apply for a barter line of credit. If you qualify, you can begin purchasing immediately.

How should I price my products and services? Prices quoted to barter clients are the same as prices quoted to cash paying customers. Business owners are educated shoppers. Barter is simply a mode of payment - just like a credit card or cash.


David Melse
Trade Exchange Canada,

748 Bernard Avenue, Kelowna BC V1Y 6P5
Office: (250) 717-0026 Mobile: (250) 864-0529
Website: www.tectrade.ca

Top Reasons To Work With David Melse of Trade Exchange Canada

Benefits of Trade Exchange Canada
1. Partnering with Trade Exchange Canada gives you access to our extensive membership based business network,
2. You will enjoy an exceptional edge over your competitors by taking advantage of Trade Exchange Canada's experience and knowledge of trade,
3. Our professional and dedicated sales force will increase your sales by promoting your product or service,
4. Trade Exchange Canada introduces you to new customers and opportunities as you watch your client base grow,
5. We give you the ability to source out products while our staff acts as purchasing agents on your behalf,
6. Trade Exchange Canada allows you to facilitate the exchange of goods and services between your company and other member companies,
7. Trade Exchange Canada's monthly newsletters allow you to advertise your product or service to other members,
8. Trade Exchange Canada can help you reduce your borrowing costs with our interest free loans,
9. Your profits and potential growth increases with Trade Exchange Canada's access to international markets,
10. Trade Exchange Canada allows you to defray your employee compensation expense with our Employee Accounts.

David Melse
Trade Exchange Canada,

748 Bernard Avenue, Kelowna BC V1Y 6P5
Office: (250) 717-0026 Mobile: (250) 864-0529
Website: www.tectrade.ca