In its simplest form, bartering involves an equal trade. One Business swaps a good or service for another. A lawyer, for example, may swap a few hours of legal assistance for a stay at an out-of-town hotel.
Through professional barter exchanges, where members pay a commission for goods or services traded, more complicated trades are possible. Here's how it works: A business lists a good or service for trade through the exchange. In return, the business receives a trade credit based on the dollar value of the good or service offered. The business can then use its trade credits to "purchase" goods or services offered by other members. The result is that the Business is hooked up with a network of actively bartering Businesses.
Bartering enables Businesses to trade excess time or inventory for the products and services they need. Trading excess inventory can be a great way for companies to supplement their advertising budgets. For example, if a company has merchandise in excess inventory, it can liquidate those products. Or, it can trade the products through an exchange where it often will receive trade credits for the full wholesale value of those products. The company can then use those trade credits to purchase advertising. So, by bartering, the company is gaining on two fronts: it's receiving top dollar for excess inventory and it's able to do more advertising that it would otherwise be able to do.
Take a radio station that wants an economical way to entertain its top advertising clients. The station may offer advertising time and trade its barter credits in for meals at a local restaurant. The restaurant might trade its credits in for computer equipment. And the computer company might trade its credits in for radio ads. Three separate Businesses have taken part in a buy and sell transaction without ever exchanging a dime.
The network of goods and services available through barter is growing. Today's barter exchange may have as many as a few thousand members nationwide. As bartering becomes more popular, some barter exchanges are starting to trade with each other, further expanding the bartering opportunities available to their members.
By bartering, businesses can acquire the goods or services they need without tapping into their cash flow. Bartering also bolsters the bottom line by enabling Businesses to trade away excess inventory or resources. A hotel, for example, can fill empty rooms during its off season, a print shop can run jobs during what would normally be a slow time or a newspaper can fill up its advertising space.
Bartering also provides another way of advertising your business. By bringing together buyers and sellers who may not have used each other's services before, bartering can introduce your company to new customers. These may be one-time customers or people who come back to purchase goods or services once they've become acquainted with the Business.
Companies that actively barter may do as much as 5 to 10 percent of their Business annually through trades. That adds up. The National Trade Association, based in Niles, Illinois, is one of the nation's largest barter exchanges. And the ability to barter is not limited by size. The corporate giant all the way down to the one-person, at-Home business--and everyone in
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