A barter exchange is an organization that serves as an arbiter among members and clients that conduct business with each other to exchange goods and services. It allows companies access to more goods and available services. It operates as a broker and a bank. Each participating member maintains an account where debits and credits are recorded during purchases and sales. When you trade with other members within the organization you will receive trade dollars which are deposited into your account and available for use within the exchange when you wish to buy products and services.
As the economy tightens, bartering is becoming a viable solution to cash flow problems. It can help increase your customer base as well as help you move inventory. Before you sign up for membership with a barter exchange company, you have to understand what and how the system works and what benefits you will get through membership.
- First you need to prepare a list of your goods and services. Next, you should list down the goods and services that you need that will be reciprocal and beneficial to your business.
- Search for a barter exchange company operating in your locality. Almost all major cities have some. Check the suitability of the exchange company to your line of business. Make a thorough background research on the company. You can check the company’s rating with the Better Business Bureau. See if the company is a member of a trade exchange industry association like the International Reciprocal Trade Association (IRTA) or National Association of Trade Exchanges (NATE). Make personal calls to each exchange company operating in your area and find out their roster of members as well as the services and goods that these members trade.
- Do you need global reach or you just want to trade locally. You need to decide whether you are ready for the global market as this will affect your profitability. Remember that the trade is about exchanging goods and services for equal or about the same value.
- Try to read reviews of potential exchange companies that you have chosen. See if they have a strong presence in the World Wide Web. If possible seek out and talk to other businesses who are members of your target exchange companies. Make several comparisons before you make your final choice. Check their credit report from Dun and Bradstreet.
- Consider the fees that the exchange company charges, but do not make this your defining reason for choosing one over the other. An expensive one may offer better service and a more varied list of members. Barter exchange companies charge an annual membership from $200 to $700. There is also a monthly account maintenance fee from $10 to $20 aside from the commission (from 10% to 15%) they get from individual sales (split in half between seller and buyer). Trade dollars, just like actual money are taxable.
- Check the geographic locations of other members within the exchange. It can be a major consideration when you start exchanging goods.
- Study the frequency of which the members trade as well as the size of trade they make. Consider other miscellaneous services that are being offered.
Make sure that you sign a membership contract and that you have fully read and understood its content. Do not miss reading the fine print. Do an in-depth research before signing up for membership to ensure that you will meet you business goals.