INC. Magazine, one of the staples of the entrepreneurial road warriors, has weighed in on barter exchanges. The good news? An interview with Don Mardak of IMS and an IMS member report a good experience:
For instance, John Sarantakis, owner of People’s Choice Family Fun Center, an arcade in Waukegan, Illinois, says his company acquires used DVDs for $1 apiece and is able to refurbish them and resell them for $10. Given the choice, he would rather sell the DVDs for cash, but as business slowed this summer, he turned to bartering more and more.
Sarantakis calculates that on average, the items he sells on IMS cost him about 50 cents per dollar of list price. Therefore, he figures that items he buys with barter dollars come with an automatic 50 percent discount. “I bought 200 disposable cameras for $6.50 each in barter dollars, and we sell them for $6.99,” he says. Because of that 50 percent discount, he figures his real cost for the cameras was $3.25 each, about $1 less than his distributor would have charged him.
Still, using barter credits often requires some creative thinking. Sarantakis used his barter dollars to rent a tent for a sale event, to take his employees horseback riding, and to rent a limousine. He also spent a large chunk of his barter dollars — $12,000 — on an electric three-wheeled car. Another $1,900 in barter dollars went to have the vehicle covered with his company’s logo. Now the car functions as a rolling billboard for People’s Choice, and Sarantakis never misses a chance to drive it through town, where curious crowds snap his photograph. “It’s much more effective than an ad,” he says. “I wish I could afford to hire someone to drive it all the time.”
The bad news? ITEX, mentioned by name, gets a dig for being an exchange with nothing to buy. Of course, INC. interviewed a web designer who joined an unnamed ITEX office, did some work, and then “found nothing to buy”.
Just ask Mike Truese, owner of Mike Truese Creations, a Web design firm based in Jersey City. Several years ago, Truese joined a barter exchange called ITEX. He figured he could save money by trading design services for some printing and promotional items his company needed. After about six months, he had earned about $10,000 in barter credits. He used some of those funds to have some printing done, but he wasn’t very happy with the work. After that, Truese says, he struggled to find anything he wanted to buy on the exchange. At one point, desperate to spend, he bought 25 bars of soap at $4 a pop. Finally, Truese abandoned his remaining barter dollars, tired of paying ITEX’s monthly membership fees. “I designed six websites and wound up with worthless barter bucks — and soap,” he says.
For any of you that have owned an exchange or participated in an exchange for long, this is a familiar story. Those business owners that are less creative may or may not be able to spend their dollars. Those that can get creative, like the first example, the member of IMS, make purchases that may seem counter-intuitive to the ordinary bystander, but end up being magical for the daring business owner who takes the leap.
One of the most magical things about barter is that it removes the constraints buying with cash imposes. Barter opens whole realms of possibility to the person that can take off the blinders of laziness and see the possibilities that exist…
