By International Monetary Systems
Savvy plumbing entrepreneurs are discovering that bartering is a great vehicle for using downtime, attracting new customers and generating barter dollars that can be used for advertising and other business expenses.
In its simplest form, bartering involves an equal trade. One business swaps a good or service for another. Through professional barter exchanges - where members pay a commission fee for goods or services traded - more complex trades are possible.
How does it work? A business lists a good or service for trade through the barter exchange. In return, the business receives a trade credit based on the dollar value of the good or service offered. It can then use those trade credits to “purchase” goods or services offered by other members. As a result, that business is hooked up with a rich, varied network of actively bartering businesses.
Janet Wingler of 2 Guys & a Gal Plumbing of Fox Lake, Ill., is a huge fan of barter. She has been a member of IMS (www.imsbarter.com) for more than four years. Janet, her husband Tony and the “other guy,” Rick Palmer, trade their plumbing work for a myriad of products and services.
They have bartered for repair work on their trucks, office products and colorful post card mailers. They’ve also rewarded loyal employees with “barter bucks” as holiday gifts. The bucks can be used in a variety of ways, but especially for restaurant dining or salon services. The company even bought a monthly full page ad in a local magazine for a year on trade. The Winglers also enjoyed a relaxing trip without spending any cash because many hotels and resorts trade, too.
Bartering can also provide a new vehicle for marketing your business. Barter exchanges bring new buyers and sellers together, potentially creating a new customer base. And barter can positively impact your bottom line. Companies that actively barter may do as much as 5 percent to 10 percent of their business annually through trades.
How Barter Exchanges FunctionBarter exchanges typically charge a one-time membership fee. They offer the advantage that they don’t require an even trade. You can use credits accumulated for one item to trade for several different items that together add up to your total credits.
“Be aware that barter and cash transactions are the same in the eyes of the Internal Revenue Service,” says Don Mardak, CEO of International Monetary Systems. “Both are taxed equally. In fact, bartering exchanges must report goods and services sold through barter to the IRS.”
Like sales, bartering offers no guarantees. Some trades happen quickly, others take some time. Also, the amount of certain goods and services available may fluctuate during the year.
You must weigh the disadvantages against the advantages for your business. Bartering can turn your downtime or excess inventory into valuable commodities. It can increase sales while enabling you to purchase the goods or services you need without dipping into your cash.
And you don’t have to limit bartering to business. Bartering can be a great way to finance a vacation!
Don Mardak is CEO of International Monetary Systems, one of the largest barter organizations in the United States. He can be reached at 800/559-8515, www.imsbarter.com.