Imagine this Scenario:
A restaurant wishes to trade for $5,000 worth of printing using meals and drinks for payment.
No printer would ever want $5,000 in meals from one restaurant, however by selecting a printer that is in the same Trade Exchange, the restaurateur pays the printer with T$5,000 (Trade Dollars). The printer’s account is "credited" and the restaurateur’s account "debited", so the restaurant now owes T$5,000 in meals to the Trade Exchange network, NOT the printer. This is repaid as various Trade Exchange members come to the restaurant (new business) over the following months. The restaurant has paid for its’ printing with meals, using an online trade dollars that you have earned selling products or services.
The printer can now use the Trade Dollars earned to buy office furniture, advertising, car repairs, carpet cleaning, plastic surgery, dentistry, accounting and legal services- even a family vacation. These are goods & services for which the printer would normally pay cash. By using their Trade Dollars, the printer conserves his cash and benefits from the extra business.
Is your business a member of a Trade Exchange?
If No- Why not?
If Yes- Are you fully taking advantage of the many benefits of a professional Trade Exchange?
Uncle Sam actually helps you for a change, and the Federal Government is not typically known for making things easier for small businesses.
Businesses got a huge benefit when President Reagan signed the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). Among other things TEFRA, legitimized the Trade Exchange industry, making your local Trade Exchange a 3rd Party Record Keeper, just like your bank or stockbroker.
Trade Exchanges are required by law to report all sales of Trade Exchanges members on IRS Form 1099B annually and signed W-9’s must be on file for all members.
Barter is taxable, there is no tax benefit to joining a Trade Exchange, however there are many economic benefits to membership in a Trade Exchange. Official IRS recognition was the birth of the modern Professional Trade Exchange Industry.
The Industry Watch Dog, the International Reciprocal Trade Association says that last year, IRTA Member Companies using the “Modern Trade and Barter” process, made it possible for over 400,000 companies World Wide to utilize their Excess Business Capacities and underperforming assets, to earn an estimated $12 Billion dollars in previously lost and wasted revenues.
Talk about sustainability!
What would it mean to your company and your family if you could “cash in” on your excess (waste) capacity?
Wasted Capacity- what does that mean?
Excess or wasted capacity is simply the difference between what your business has available for selling and what you are actually selling. It may be goods gathering dust in your warehouse (excess inventory), your production line running at less than full capacity, empty hotel rooms, empty garage bays, dental chairs, empty restaurant seats or a professional billing less time than they have available.
If you have no excess capacity- Congratulations! If you are like the other 99% of business- don’t worry- but realize that when you gain additional sales (filling the extra capacity) these sales are usually the most profitable sales you have since you have already covered your overhead costs. Now you may already be “Direct Trading”. A direct trade is when a restaurant gives a free meal to the person who washes their windows. A direct trade relies on a “Coincident of Need”, that is both parties have to need what each other has.
A Trade Exchange solves this problem!!!
A Trade Exchange allows the restaurant to get their windows cleaned, but the window cleaner is not stuck eating tacos for the 3 months. With a Trade Exchange the seller can use trade dollars earned and spend them with any member of the Exchange, and even better the Trade Exchange keeps detailed records and enforces the behavior of members, ensuring fair play.
The mission of a Trade Exchange is to take the limited possibilities of a 1-to-1 trade and transforming it to a 1-to-many trade.
A typical business works hard and spends money on advertising so customers come through their door. A business in a Trade Exchange has a big leg-up!!! Trade Exchange members seek out fellow members to do business with, what a refreshing change!!!
That’s the power of a Trade Exchange- people are magnetically attracted to your business because you accept their trade dollars.
What are the advantages of Trade Exchange membership?
Quite a few: new customers, cash conservation, marketing and more.
One of the best advantages of Trade Exchange membership is intangible but priceless: the opportunity to network with fellow business owners.
In a nutshell- this is how a Trade Exchange gives your business a huge advantage: Members eager to conserve cash seek out fellow members who also accept trade dollars. In doing so buyers keep cash in their pocket and sellers get valuable new customers. It really is simple and this powerful.
Are trade dollars as good as cash?
The IRS recognizes trade dollars as being equal to the US Dollar in value. In a practical sense Trade Dollars are almost as good as real money.
The savvy trader gets it.
Every time a member spends money they conserves cash and at the same time they virtually guarantees herself a new customer from the Trade Exchange. You see, fellow members have to spend the trade dollars they earn back with fellow members. It is a closed loop system. Like a boomerang or homing pigeon- the money has to come back since it has nowhere else to go.
Too many Americans these days run from anything that looks like a little work.
Membership in a Trade Exchange does require a little effort, but your rewards far out weigh your effort expended. A rule of thumb is to never “sit” on your trade dollars. You should always be looking for ways to spend your trade dollars. Most members take in trade income in smaller increments- and that is how trade dollars should be spent. Some members might not be ready to accept a large trade transaction. Exchange members that keep their spending pace in line with their income pace report the highest satisfaction with their membership.
Be Patient. Don’t get stuck on a certain item!!!
There are always products available through a trade exchange that can help your company, family, employees and marketing efforts. Don’t get stuck on obtaining one certain item and don’t hoard your trade dollars
Saving trade dollars in order to purchase a specific high demand item can lead to frustration. If the item you are looking for is hard to get- consider converting other personal and business purchases to trade, and use the cash you save on those items to obtain the hard to find trade item- the savings really add up if you get a little creative. Call your trade broker and brainstorm for ways to get what you need, a professional trade exchange is a powerful business tool.
Establish good trading relationships to ensure that you will always be able to receive the product and service when you need it the most. In time, you'll learn what kind of trade works best for you and your business. Be sure to let your broker know of your specific needs as well as your general needs. Don't wait until the last minute to arrange a trade purchase.
Many businesses only trade at certain times or quantity, or if the cash business is overwhelming, trade business will be put on hold. Members are more willing to do barter business during their slow times. Plan ahead or you may be disappointed.
Get ready to make the switch!!!
When you earn trade dollars, you’ll find the fun part is getting to spend your trade dollars. Keep this in mind: fellow members switched to you from their previous cash vendor because you accept trade dollars (and you have a great product).
That means that you will have to switch some vendors to spend your trade dollars. Odds are you will find a great trade Vet, Dentist, Mechanic, Exterminator etc. Look through your Trade Exchange Member Directory and imagine the world of possibilities. (Spending trade dollars can get pretty exciting when you add up all the cash you are saving!)
What is the best way to spend my trade dollars?
Make a list of your needs. List everything you normally spend cash on. Do not limit yourself to one or two time item purchases. Use your checkbook and debit/credit card statements as a memory tool. Also, think of your personal needs. If you regularly take cash out of the business for personal living expenses or home improvements -- you should use your trade dollars for these purchases and save your cash for goods and services the barter network cannot easily acquire. Calling or emailing Barter Buff regularly lets your broker know what you need, as your needs can change over time.
I already trade on my own; why should I join Barter Buff?
You already know the advantages of trade. You should expand the advantages that trade offers. One-to-one trading limits you to spend with only one business.
With Barter Buff, you are able to spend your trade with any other trading member of Barter Buff, not just the one you sold to! Barter Buff also helps you account for trade with our monthly detailed statements. We make it easy for you to see where you stand at all times.
What does the Trade Exchange actually do?
Plenty. There are 3 critical jobs for the staff at a professional Trade Exchange.
One is to grow the exchange; to sell memberships, second is to “stir the pot”, to broker deals and get people buying and selling. The third is to keep detailed records of all trading activity and stay in compliance with tax laws. Sounds simple but these are complex duties that are interdependent and essential for the success of the Trade Exchange.
Make sure you keep current on your fees, a good relationship is a two way street and delinquent members never hear of the good stuff (limited availability items) offered for trade.
Don’t Cheat The System!!!
Members of Trade Exchanges always must trade within the system with fellow Trade Exchange members. The quickest way to be kicked out is to trade directly with other members. This cheats the exchange of funds and commissions rightfully earned and will cause the exchange to quit promoting suspect businesses. Members that are approached about trading directly with a rogue member risk losing their membership. Don’t take the risk! Play fair and reap the benefits.
Is trade only good for the acquisition of services and not for goods?
Trade is obviously ideal regarding higher-margin situations in the marketplace.
However, trade can also be used to acquire goods at regular prices if margins are adequate, if your gross margin is in excess of 20%, trade may work for you.
Keep in Mind:
Every new customer you service after you have met your fixed expenses (payroll, rent, utilities, etc.) is very profitable. Providing your products and services for even a few new customers after basic expenses are met can make a big difference to your bottom line.
Trade is simply a mode of payment, just like Visa®, MasterCard®, or cash, but with many more advantages.
Members see the benefit of using trade first, purchasing by cash or credit card as a distant second choice. Using trade dollars, they are continually expanding their clientele and receiving new leads and referrals, as well as new cash-paying customers. Trade is also a simple way to obtain important assets or just plain old-fashioned perks for personal use, staff or clients that are not budgeted.
How much should I trade?
Experts recommend that no more than 10-15% of your total sales volume be in trade. (Some industries may be able to absorb more, please consult with your CPA) Trade dollars will not pay your payroll or usually buy your inventory for you.
It will allow you to convert unused capacity to trade dollars that you can spend for your business and personal use.
Remember that “Cash is King and Trade is Queen”.
Trade is great- but cash is better, period. The ethical Trade Exchange recognizes this fact. Sell for cash whenever possible and remember to spend trade dollars instead of cash whenever possible. Conserving cash is as important as ever in these uncertain times.
Authorization. Get approved & play by the rules.
Trade dollars are valuable; treat them just like US Dollars. When you are the seller, make sure that the Trade Exchange authorizes the transaction. Trade Exchanges set credit limits for all members and it is important that you make sure that a purchaser has the funds available for a transaction. A top notch Trade Exchange will have a toll free number and a mobile phone option to facilitate and approve transactions. Make a quick phone call to avoid heartache and disappointment.
What does it cost to join Barter Buff Trade Bank?
To join new members are given the option of paying $100 cash or provide 2 referrals to Barter Buff Trade Banc in lou of the $100.
What do I get when I join?
Members gain access to a network of other member businesses. Each member is issued an account number, a membership card, trade checks, an interest free line of credit and access to Barter Buff printed and online business directory.
Barter Buff Trade Banc
Call 801-410-0335
© Barter Buff, LLC ALL RIGHTS RESERVED
|