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A Barter Exchange
or service is a vehicle where an operator provides a medium for
people to exchange goods, or services with others in the exchange.
The method used for the transactions is usually in the form of checks
or a credit card that the exchange issues. Every time a member of the
exchange purchases goods or services from you, you are paid with
credits which are deposited into your account with the barter
exchange. The exchange takes a surcharge on all such transactions.
You are free to purchase goods or services from the other members of
the exchange with the credits that you have accumulated. You are
required to declare these transactions on your tax filings and the
exchange reports to the taxing authorities. This tactic is a cost
effective marketing strategy, not a tax strategy.
The barter
exchange puts you in contact with a number of small businesses and
retailers in your area that are aggressively seeking ways to expand
their business. The exchange concept works best for those supplying
costly services, or goods, that allow for a generous profit margin.
It wouldn't work well for a gas station that doesn't offer repairs.
In these exchanges you can expect to find a wide selection of
restaurants, gardeners, caterers, all sorts of retail stores, travel
agencies, auto repair establishments, trades craftsmen, and numerous
others. The odds are you are buying these same goods and services
now. This is a way for you to expand your business, getting new
people whom under normal circumstances wouldn't come to you. So, you
get barter credits instead of money. No problem. You use these
credits in place of money to buy goods and services that you already
buy on a regular basis.
Sounds good,
what's wrong? Maybe nothing, maybe plenty. First, talk to all the
barter exchanges in your area. Go to the Yellow Pages to source them.
Call them all expressing an interest in becoming a member. Some will
have a sales person that will call on you. Others will simply mail
you information. Try to go only with those that have been around for
a while. What you're afraid of is getting into a situation where you
are deluged with exchange members paying you with exchange credits,
and at the same time the exchange members refuse to accept these same
credits as payment from you. The agreements usually call for the
members to be penalized if they refuse to accept credits. The
penalties usually lead to expulsion from the system. Hopefully, there
are businesses in the exchange that you can talk to about the
exchange. You want to find out how much business they get from the
exchange and if they have any trouble using the credits. There are
numerous good exchanges out there. You just don't hear too much about
them. It's also a good idea to see if the Better Business Bureau has
any complaints on file for the exchange. Most of these exchanges have
a newsletter that will announce new members. You can also advertise
in this newsletter. Barter exchanges (you could join more than one)
can be a good tactic with minimal risk and investment, and the return
can be greater than you think. |
