THE NEW (OLD) COIN OF THE REALM: BARTER

According to Wikipedia:

"Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money.[1] It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a very limited extent. Barter usually replaces money as the method of exchange in times of monetary crisis, when the currency is unstable and devalued by hyperinflation."

My experience with barter goes back 10 years to when I first moved to Phoenix and partnered with a businessman who taught me the ropes. Brian had a party bus limousine business and he often traded his services through one or more of the established barter companies in the area. Next, he moved into the magazine business and traded ads for barter currency, which he used for restaurant scrip, printing and other services for himself and his business. I moved on to other enterprises and found a use for barter in literally every field.

I was involved in the first Destination Club in the country, Private Retreats, and I actually figured out how to barter memberships (at $100k apiece) and use the barter dollars to both furnish the multimillion dollar residences as well as help the company purchase full page ads in such high profile and glossy national magazines as "The Dupont Registry" and "Ritz" magazine. The results of my introduction to barter and it's adaptation to as-of-yet untested uses like private club members were $900,000 in barter sales!

So, like a duck to water, I learned the "ins and outs" of bartering. This lasted the three years I was partnered up with Brian and then I was involved in other businesses, which didn't lend themselves as readily to barter. That all changed this past year, when I introduced barter to our ever-expanding group at Club Entrepreneur. First, I tested the waters by joining one barter company after another. It took four tries because the first barter groups I tried were so incompetent and/or crooked, that only the most optimistic (or gullible) of souls would ever have remained committed to barter. Finally, I landed in an organization whose integrity and longevity were a testament to what a barter company should really be about.

Tradesource run by the mother and daughter team of Sylvia and Mary Ellen Rosinski has been operating their 1100 member trade company for 24 years. In a barter organization, the members buy and sell their products or services to each other at retail prices, accepting barter currency for their sales to each other. The barter company, Tradesource in this case, acts as the "bank" and makes it's revenue through the 12% transaction charge, which it assesses each member monthly and in cash, for those barter sales.

The "trick" in any barter company is to maintain the quality of service between the members and to balance the books by keeping the value of its currency intact. Hypervigilance is essential, so that "inflation" or "devaluation" of its barter currency does not occur and remains solid. In all candor, the Tradsource dollar is much stronger than our own American "greenbacks" because it really is perfectly balanced.

Having my own organization of literally thousands of Club E members (4500 at last count), I proposed a partnership of sorts with Tradesource. First, I established my own "private label" barter organization that I named the Club E Exchange . Next, I negotiated for a split of the transaction fees for Club E members that I brought into Tradesource. I also negotiated a release from both the membership fee of $695 (cash) and monthly maintenance fees of $20 (cash) for the first six months, for all new members coming from Club E. Tradesource would act as the bookkeeper and "bank" to make certain that everything ran smoothly. It seemed a perfect fit for both organizations.

In the meantime, Sylvia approached me with the possibility of locating one of our CEOs (Club E Office) into one of the new commercial properties that were offered through a new account of Tradesource. These landlords, suffering from commercial vacancies on an unprecedented scale had decided that they'd rather take barter dollars than no dollars for some of their properties. My crew and I staked out a facility and the rest, they say is history.

Club Entrepreneur is now heavily ensconced in a beautiful 8,000 sq. ft. facility in downtown Phoenix, with plenty of parking and a multitude of private offices and open space. We bartered for this "all inclusive" space at less than market rate and for all barter, which includes both the utilities and daily janitorial service. In exchange, we offer the offices and other parts of the space to our Club E members at retail rates - but in barter dollars by signing them up on Tradesource through our own Club E Exchange. Our Club E Office keeps the spread of barter dollars as our profit and spends those barter dollars to maintain operations. For instance, we bartered for the handyman services to assemble the furnishings, which we also purchased with our barter dollars. We used a bartered mover to transport our equipment and furniture to the new facility. We even use a bartered catering service to provide our event attendees with delicious food and beverages at our weekly and monthly events.

Recently, I chanced upon a rather unique application of barter - the retention of skilled services needed by companies who haven't the cash to retain the needed employees. I establish these companies as trade exchange members that then use their excess products or services to generate barter dollars. In turn, the skilled worker incorporates himself and establishes a barter account of his own to offer its services to the company for a 1099 barter exchange. A thorough discussion of this can be read by accessing my blog entry.

In short, there is no limit on how you can make barter work for you, especially in these turbulent times of limited cash and uncertainty. Sign up to an established and reputable barter company, using your excess products and services to generate your barter dollars. Then offset many of your cash expenses for bartered products and services and you will benefit greatly. My own experience proves this out.

Posted on September 5, 2014 and filed under Entrepreneurs, Personal History.