Monday, April 26, 2010

Businesses keep cash in their pockets

The following article outlines how members of a similar exchange to Trade Exchange Canada have utilized their membership to leverage their business, reduce some of their current expenses, attract new customers and grow their businesses.

 Nick Petrow

Trades for heating and air-conditioning service, and for lawn care at his restaurant.

Philip Rich

Has bartered for oil changes, haircuts and vacation rental houses.

Jim Nelson

Found a business in another state to make a transaction.

Restaurant owner Nick Petrow first used bartering 16 years ago when he needed tile work done at his business.

The person who sold the tile ate free at Petrow's Restaurant for the next 1 1/2 years as payment. After that, Petrow said, he was sold on the idea of trading meals for services.

"It was great for business.''

Petrow said the arrangement also created a loyal customer who continued to eat at the restaurant once the debt was paid off.

But trading tile for food could only take Petrow so far.

Today he uses Tradebank, a business bartering service, to trade goods and services with other local businesses. He trades for heating and air-conditioning service and for lawn care at the restaurant. The money Petrow used to spend on those services he now keeps in his pocket.

"It reduces cost and guarantees business,'' he said.

Tradebank, a national organization, was founded in 1987 in Lawrenceville, Ga. Aubyn Fowler opened the Omaha franchise in 2005.

Businesses in Nebraska and Iowa pay a fee to join the network, which allows them to trade services with one another. Members receive a card that they use for goods and services.

About 80 businesses belong to the Omaha Tradebank network, but members can trade with any of the 10,500 Tradebank member businesses in the United States, Canada and parts of Europe, Fowler said.

Fowler said local members include restaurants, heating and air conditioning companies, lawn care providers, auto mechanics, medical professionals and even a tae kwon do instructor.

Omaha dentist Philip Rich has owned his practice for more than 30 years, but he has owned several other businesses as well.

Rich said he has bartered in all his businesses at some point.

Bartering is an effective way for an entrepreneur to network and to advertise his name to potential clients, which is crucial for a small business, he said.

Rich said bartering has attracted people who might not otherwise have used his services, including individuals without health insurance. And eventually that person could become a paying customer, he said.

Rich said he primarily uses bartering to obtain goods or services he might not regularly use or to get a better rate on services he needs. He has bartered for oil changes, haircuts and vacation rental houses.

Bartering allows businesses to operate more efficiently during slow periods, like now, because they can trade services instead of paying cash.

Petrow agreed.

Bartering partners fill empty seats, he said.

"It drives business without advertising and creates an extremely loyal customer base.''

Besides, Petrow said, if someone pays with a check or credit card there's no guarantee it will be good. That's something businesses are especially conscious of during a recession.

Inflation doesn't factor in to bartering, Petrow said.

Jim Nelson, owner of Jim Nelson Media Services, started bartering through Tradebank two years ago and found it confusing at first.

It helped that Tradebank handles the paperwork and accounting for the transactions -- businesses still are required to pay sales tax on what they get, he said.

Nelson said he recently needed something for his business that he couldn't find locally. Fowler was able to help him find a business in another state to barter with, which helped him to gain exposure on a national level, Nelson said.

Nelson said bartering might not work for every business, but it is especially helpful for business-to-business transactions. It's ideal for companies with extra capacity that aren't operating on narrow profit margins, he said.

"It wouldn't make sense for Nebraska Furniture Mart,'' Petrow said. "But it might make sense for the single guy making furniture.''

The business owners agreed that bartering was a good way to stimulate the economy during a recession: It guarantees customers, reduces costs and promotes the business.
 For the full article please click here

David Melse
Trade Consultant,
Trade Exchange Canada,
748 Bernard Avenue, Kelowna BC V1Y 6P5
Office: (250) 717-0026 Mobile: (250) 864-0529

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