Barter Exchange Boost Business's Bottom Line
When times are tough, and companies filled with overflowing warehouses, a smart executive will try and discover alternative methods of dealing with the problem. One method is to exchange your excess goods for services from other companies. This is the original form of commerce: barter.
It is the oldest means of conducting transactions. No currency changes hands. We each have what the other needs. We trade a horse for a cow. Nowadays, things operate differently. I require a laptop; you require a set of tires for your delivery van. I deal in marketing and you do professional printing. So you can see there is a definite benefit to network bargaining for commercial purposes.
That is why savvy businesses owners join a barter exchange. These are organizations that act as clearing houses for their member businesses. The barter exchange is almost like a bank, keeping a tally of the credits and debits as each member barters with other members. There is usually an initial membership fee and monthly fees. Plus the barter exchange will usually require a small percentage of each transaction as an operating fee.
Your merchandise is for sale through the exchange at full price. The other person does not get a discount and you will receive the right amount of money for whatever the product is worth. This is good for business. The amount of time spent in downtime and unused capacity are decreased and transferred in the exchange and credited to your account.
The other benefit of joining a barter exchange is that your business is marketed to the other members. It is like receiving free advertising or having an extra sales person. Once they find your services or product usefule, members of the exchange will refer your business to their friends and will likely become your cash customers as well.
The business owner should be aware of the tax consequences of barter. Barter income must be reported on the yearly tax return. Although no cash is exchanged, the goods and services exchanged in trade are treated by the IRS as cash transactions through IRS Form 1099B, which is business members received at the conclusion of each fiscal year. The tax, however, is a small price to pay for the additional revenue accrued through the extra business available on barter exchanges.
Joining a barter exchange is a wise choice for the majority of businesses, and is especially beneficial for cash poor startup companies. This service helps to increase your customer base, and help you obtain goods and services while preserving capital. Established businesses can benefit from the exchange as well, through an expanded customer base, increased sales and a decrease in excess inventory.
As the economy slows down and money is tight, a smart business owner will find a way to get rid of extra merchandise that they don't need and acquire merchandise they need. The most productive way to accomplish this is through trading merchandise with other businesses, also known as barter exchange. By bartering for business, you can work with other network members to create a marketplace where you can take what you have and exchange it for something you need. If the business is a newly created venture then it can be extremely profitable both in the ways of cash and other needed goods.
Published July 22nd, 2008
Filed in Marketing