Barter Puts the “Byte”

On Oudated Hardware

Chuck Davenport, owner of CD’s PCs, needed to find a new home for a few of his friends without reducing them to a level where he would hurt their feelings. Chuck’s “friends’’ in this case where his second and third- generation computers, which had worn out their welcome at his computer store. Chuck didn’t want to have a year-end sale where he would have to drastically cut prices in order to move his excess inventory. Complicating matters was the fact that Chuck had to act quickly because he was expecting a new shipment of state-of-the-art computers in the next week and he needed the space.

The situation Chuck faced that day would have caused most computer dealers to byte the dust and sell off their excess inventory, only to get little value in return. But Chuck was light years ahead of his competition ever since he logged on as a member of Tradesource, several years prior. Tradesource helps provide Chuck with new customers in a new market place. New customers who have a constant demand for his second and third-generation equipment. The new sales income which Chuck receives from Tradesource allows him the luxury to use barter to purchase many of the day-to-day business products and services he needs.

With a simple call to Tradesource, Chuck was able explain his situation to his trade broker, who in turn found Chuck three takers for most of the in- ventory he was looking to unload. Best of all, Chuck received nearly full value for the computers – in trade.

“The barter customers that Tradesource delivers to me have allowed me to expand my market and increase my revenues and profits while I still maintain my current base of cash customers,” Chuck said. “Best of all, barter helps to cushion my operating budget. I barter for such things as office furniture, printing, advertising, a delivery service . . . even trips for my sales contest winners. These expenses can really add up, but by using barter, I keep the cash I would have spent on these items in my checking account. Barter has really helped to improve my business and my cash flow.”

there are about 400 barter exchanges in North America, with more than 350,000 business members doing in excess of $4 billion annually.

Trade exchanges like Tradesource help cash-strapped entrepreneurs stimulate sales, develop new clients, convert excess capacity or inventory into revenue, and acquire the goods and services they need to conduct business. The most important benefit of barter is that the new business helps to conserve cash. Businesses can trade for things they need and keep their cash for the expenses they may not be able to barter for.

Bartering also can be an ally to small business owners looking to expand. Normally a business owner would have to go to the bank for a loan or save enough from receipts to finance the project. Barter is a way businesses can use the value of their own products and services to fund company growth.

Bartering enabled Phil Murphy, owner of The Computer Place in Buf- falo, to enhance a 5,000-square-foot showroom expansion project. Because of the new customers that Phil’s trade exchange generated for him, he was able to purchase a higher quality of carpeting and flooring, and add a state-of-the-art security system to his show- room and warehouse. Phil also used barter to install a new phone system, and purchased lettering and mainte- nance service for his delivery vehicles.

Computer dealers have discovered a niche marketing avenue to move excess and sometimes outdated hardware inventory — without steep discounting.

Bartering is an idea as old as civilization itself. By strict definition, bartering is the cashless, item-for-item trading of goods and services. Where our ancestors might have been trading chickens for cows, today’s savvy business people are bartering hotel rooms for printing, landscaping for jewelry, or like Chuck, computers for just about anything – all this through the help of a professional barter exchange like Tradesource.

Part accountant, part matchmaker, today’s barter organizations exist to bring their members new business. According to Tom McDowell, Executive Director of the National Association of Trade Exchanges (NATE),

“I probably generate about $25,000 a year in new business through my trade exchange. That’s $25,000 of business that I wouldn’t have had had it not been for my decision to join a barter company.”

“We could never have added some of the extras to the store that we wanted to had it not been for our barter customers,” Phil said. “In addition, the new business we get from barter enhances our operating budget and allows us greater flexibility to do more for our sales staff. Because of barter, we’re able to be more creative with the contests we have for our sales people. We use trade to purchase some terrific vacation packages that we use as incentives for our sales people to hit their numbers.”

One-on-one bartering is common in the computer business, but joining a trade exchange or barter company (a group of businesses who barter among themselves) can give you more flexibility and opportunity. The barter company also provides you with a great record keeping system so you’ll always know where you stand with your barter account. There’s no additional bookkeeping on your part.

“I probably generate about $25,000 a year in new business through my trade exchange,” said Anthony Luccarelli, owner of NetWorks in Lans- ing, Michigan. “That’s $25,000 of business that I wouldn’t have had had it not been for my decision to join a barter company. The best part is, barter doesn’t increase my overhead – but it certainly helps me to increase my revenues and profits. In addition to these new sales helping to move my excess inventory, I pick up many maintenance contracts and peripheral software sales which have further strengthened my business.”

When you join a barter exchange, expect to invest between $300 and $600 in the membership fee. You’ll have about $20 in monthly promo- tional fees and pay 12 to 15 percent commission on your trades. In return, the exchange will provide you with constant promotion of your business, ongoing account maintenance, a monthly statement, membership directory, a personal trade broker who serves as your marketing agent and helps find what you’re looking for, and most importantly, lots of new customers.

Always keep in mind that barter is still a business deal. That means you should use the same good sense in making barter decisions as you would if you were paying cash. Check out the company: How long have they been in business? What do their clients say about them? Do they have a website and a directory? Are they members of the National Association of Trade Exchanges? These are all important things you need to know before joining a barter exchange.

Lastly, remember that both parties are customers in a transaction. You should expect and extend courtesy, high standards, and a commitment to providing a great product or service.

With these guidelines in mind, computer dealers can take an ancient practice like barter and put it to work in the modern world.

Computer dealers enjoy the additional high-profit maintenance and repair service orders from their barter customers.

Business owners who participate in trade networks are the ideal prospect for computer dealers to grow their business.

“I had a real hard time with paying fees to barter when I had been doing it on my own for 15 years,” said Emil Barnes, owner of Compute Your World in Des Moines, Iowa. “But when I sat down and took a serious look at all the accounts I was running a tab on, and how many I never received anything from, I saved a lot of money by paying the barter company. We’ve even moved most of our direct trades into the barter exchange. It just makes sense.”

“Working 60, 70, or even 80 hours a week isn’t uncommon in this business,” says Howard Metzger, owner of PowerUp Computers in Seattle. “That’s a lot of time away from my family. Being in the barter exchange has allowed me the opportunity to take my family on some great vacations, buy my wife some really nice jewelry, and even pay for part of my children’s education. I also trade for landscaping services so that my weekends are free to do the things I want to do. Barter has really helped to enhance my lifestyle.”

“The most important part of barter is getting new business,” says Tom McDowell of NATE. “When someone joins an exchange they’re exposed to hundreds of new potential customers locally and thousands around the country. With competition so stiff today, barter helps drive those customers past your competition and into your door.”

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