A better barter: How businesses can get what they need and save cash

September 14, 4:31 PMPhoenix Small Business ExaminerWendy Kenney

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Guest post by Rob Miller, President of the Arizona Trade Exchange.

The concept of barter is a centuries-old practice of commerce that is once again gaining popularity. In many countries around the world, barter was actually used as the primary form on commerce before money was introduced. This is for good reason. Bartering, especially in the business world, allows you to obtain the products or services that you need without having to spend cash. By trading services for services, business owners keep more cash in their pockets. When done correctly, bartering has the potential to save small business owners bundles of cash, increase business and ultimately, remain profitable.

Nationally, barter has emerged, once again, as a prevailing tool for small businesses to stay in business and grow in tough economic times and the Valley is no exception. I once had a member tell me, “When the economy was good, I felt I could afford to trade. Now that the economy is bad, I feel I have to trade.”

I experienced the benefits of barter firsthand when I owned and operated a sports bar in Tempe more than 10 years ago. After constantly spending my cash on printing new menus, I made a trade with my preferred printer: instead of paying him in cash for my menus, I would pay him in cheeseburgers and chicken wings. The agreement worked out smoothly because I was only paying the hard food costs out of pocket while all of my printing needs were being met. This cash-saving strategy led me to establish other trade relationships with my vendors, and eventually I joined an organized trade organization. But I recognized flaws within the group that I joined and decided that I could do trade better.

 Ten years ago, I founded Arizona Trade Exchange and today have grown the organization to more than 550 business members in the Valley. Just this year, more than 100 members have signed on, putting us on pace to make 2009 one of the largest years in terms of growth for our organization. We have just about every business type in our network, including printers, landscapers, travel agents, dentists, graphic designers, restaurants, championship golf courses, CPAs and general contractors, to name a few.

For small businesses looking to barter, the best option is to look into joining a trade exchange. Many businesses trade on a one-on-one basis, but this will limit the potential to maximize the many benefits of trade. For example, a watch repair company that trades directly with a landscaper may never be able to repair enough watches to pay for the services he needs for landscape maintenance. Belonging to a trade exchange allows hundreds of members to utilize the watch repairer’s services, making it possible for him to accumulate enough trade dollars for landscaping or any other services he may need. Our members have reported increased revenue, new customers, new work for idled staff members and new business partnerships as a result of belonging to Arizona Trade Exchange.

Finding the right trade exchange – the US counts more than 500 organized exchanges -- can sometimes be difficult, but new members should keep the following in mind before officially joining:

·         Ask for a list of members.  Before joining, a small business owner should make sure the other members in the network are providing services they need or want. Established organizations should have at least 300 members.

·         Understand the fee structures. Most trade exchanges charge a one-time fee upon sign up, a small monthly charge and transaction fees.

·         Check the Better Business Bureau. As with any long-term relationships, checking the BBB for more information about a trade exchange is always wise.

·         Ask if the organization has relationships with other trade groups. Reputable and stable trade organizations are usually members of national groups like the International Reciprocal Trade Association (IRTA) or the National Association of Trade Exchanges (NATE).

Barter is a great solution for any small business with a steady flow of cash business looking to maximize profits, generate new business, move unsold inventory and grow in these economic times. It is estimated that more than 65 percent of Fortune 500 company barter goods and services. For small businesses, the benefits of barter have the potential to be even larger because small business owners have more flexibility than their corporate counterparts. Arizona Trade Exchange members have used trade to take cruises with their families, rent office space, pay for special events and entertain clients. We recently had one member completely pay for his daughter’s wedding -- everything from rings, flowers, catering and transportation – all with trade dollars.

For more information about Arizona Trade Exchange, please visit our website at www.arizonatradeexchange.com.

Rob Miller is president of Arizona Trade Exchange, the Valley’s leading business-to-business barter group.