Should You Join A Barter Exchange? For many businesses barter can vastly improve your bottom line.

Should You Join A Barter Exchange?

Understanding if barter can help your business.

Most businesses informally barter. Your buddy does this, you do that, and from time to time you swap services. But there are also companies whose sole purpose is to effect barter transactions between unaffiliated businesses. In the industry, they are usually called barter exchanges. There are estimated to be 500+ barter companies nationwide, with an estimated 450,000 business members.

Let's say you own a motel or campground. Midweek and shoulder seasons you're rarely full. You can offer unsold rooms or campsites on barter. The barter exchange advertises your availability to the other exchange members and you receive bookings paid in barter dollars. You then spend your barter dollars with other exchange members for their goods or services. The exchange collects cash transaction fees on each trade, typically between 5-10% of the sale, as its cut. Everybody wins.

Is it good for every business? No, but properly utilized, it's good for most businesses. Barter may be a very good idea for your business.

Barter may be a very good idea for your business.

It's most beneficial to service companies who have unused capacity: lawyers, accountants, consultants, hospitality, sub-contractors, mechanics, photographers, florists, graphic artists, etc. It can also be very useful to any business whose out-of-pocket costs are small relative to the retail costs they charge. It works less well for retailers who market hard goods (appliances, furniture, etc.) but may also be useful for them if controlled well.

The key to your success is working with a skilled barter broker. Think of him or her as your account executive. Help him thoroughly understand your business and he'll have recommendations and a solution for any concerns. If you are an auto mechanic, you might only barter labor, not parts. Your campground can restrict barter to midweek bookings. Your floral shop will only barter local deliveries, not wire transactions. Your cake shop will only barter the first $250 on any wedding cake, etc. Only want to do $300/month in barter? The broker will sell $300 monthly in gift certificates for you, with any conditions/restrictions printed thereon that you request. The only hard and fast rule in the barter world, is that your barter customers pay the same price as cash customers - other than that, you can structure barter transactions pretty much however you like. The key is to help your barter broker understand how to best serve your needs.

What can you spend your barter dollars on? Practically anything, over time. I have occasionally seen boats, airplanes, homes, cars, and log cabin kits offered via barter. What I have personally used barter for mostly, is advertising, printing, travel, legal services, restaurants, and gifts. When my eldest daughter got married I booked the DJ, emcee, photographer, videographer, florist and limousine via barter. And if she hadn't spontaneously booked a venue, I would have been able to do something there as well.

What is the biggest benefit? Having a barter broker. He only earns money when you sell or buy something. If you are flexible and patient, he can find you almost anything. Not only does he have his exchange members to offer, most brokers have reciprocal relationships with other exchanges. In the mean time, he'll be advertising your business all over the place: catalogs, brochures, newsletters, email, personally by phone, etc.

Some barter exchanges to consider:

Active International
IMS Barter
IRTA
ITEX
New England Trade

Final thoughts. Income taken in barter transactions is taxable, and barter fees are deductible. In most cases, barter exchanges require an up-front or annual membership fee. While barter is good for most businesses, it is a little more work. But if you are patient, and have excess inventory or capacity, it will put you in front of people you would never otherwise reach and can be a significant contributor for your bottom line.

About the Author

George C. Jobel does business coaching, web development and SEO consulting and has been helping clients develop successful online & multimedia marketing since 1995. The author of numerous articles, George taught web development and marketing classes for over a dozen years. You can reach him at his web site, or 603.491.4340.