Connecting – Part III: Trade Exchanges
October 16, 2006 by Lillie
Table of contents for Connecting
- Connecting – Part I: Referrals
- Connecting – Part II: Search Engines
- Connecting – Part III: Trade Exchanges
As mentioned earlier, most of my clients come from referrals. A few come from search engines and expand my circle of connections greatly.
The third way clients connect with me is through barter exchanges. I belong to two such exchanges: Alamo Barter Corporation (ABC) and ITEX.
I originally joined ABC back when I owned my interior landscaping company. I had done some direct trades with clients – an electrician did some work in my office in exchange for plants – but most of the time, direct trades aren’t effective because the two parties don’t need each other’s products or services in the same amount.
Trade (or barter) exchanges serve as a middle man, almost like a bank. When I do work for a client referred by a trade exchange, I don’t get paid in cash. Instead, I get “trade dollars” credited to my account with the exchange. I then use those trade dollars to purchase items from other members.
For example, I’ve done several projects for Sky-View, a company that manufactures, sells, and leases advertising balloons and searchlights. Since I work from a home office and don’t need to attract customers to a physical location, I have no need for Sky-View’s products. But when I write a letter or edit marketing materials for Sky-View, I charge them the same amount in trade dollars as I would in cash. Then I use the trade dollars to pay for dental work, electrical repairs to my home, or other goods and services available from the exchange.
The difference between this method of connecting and referrals and search engines is that the trade exchanges charge fees for their services. However, I have always found that the costs are reasonable for the added business. And trade business can lead to cash business, either through sales to trade customers of items not offered on trade or through referrals.
Successful trading requires planning and management. Each member of the exchange can specify what products and services are available for trade and the maximum amount of trade that will be accepted in a time period.
When I was in the interior landscape business, I sold “used” plants on trade. When we removed plants from a lease account, the plants were often healthy. The plant might have lost lower leaves or be flat on one side from being against a wall, but most homeowners found the plants perfectly acceptable. Customers were thrilled to get a plant that looked fine to them for half the retail price, and my company was able to generate income from assets that had already been expensed when they were leased. The fees I paid to the barter exchange were a bargain compared to the extra income from sales that didn’t cost me anything.
Now in my freelance business, I offer writing and editing services to trade clients under the same terms as cash clients. I watch carefully to be sure I’m not spending too much time on trade business – after all, the utility and phone companies don’t accept trade dollars. And I quit taking trade business if my balance starts to build up or if I have more work than I can handle. But often jobs for trade clients are small projects that I can easily fit into my schedule: a letter, a short article, a simple brochure.
I’ve made some excellent and long-lasting connections through trade. My accountant, Jim Oliver & Associates, is one of the best there is, and I’ve paid him in trade dollars for many years. Of course, income in trade dollars is taxable just as cash, and business expenses paid in trade are deductible. I’m glad to have someone who understands trade doing my taxes.
Dr. J. D. Blackburn of Thousand Oaks Clinic, an outstanding physician, has been my doctor for probably 20 years or more. I pay my deductible and insurance co-payments in trade. And ”Dr. B” has also been a client, both in my interior landscaping business and in my freelance writing business.
If you haven’t ever done trade business, you might want to take a look. You can connect with great clients and vendors/service providers.
hmmm… I have never actually given it a thought but now that you mention it I may as well give it a try. Dont you think it can be more time consuming.
[...] few months ago, I received an e-mail from someone who had read my post Connecting – Part III: Trade Exchanges. He asked several questions that I thought others might find interesting. In this post, I’ll [...]
[...] from a reader: One of the examples that you used [in Trade Exchanges] was that you had some “used plants” that you sold for half price on [...]
[...] My goals are to keep my fees affordable for the client, to deliver more than is expected, and to make my living as a freelancer. I haven’t had to search for work for several years. My clients come to me from referrals, search engines, and trade exchanges. [...]
That’s great, I never thought about Trade Exchanges like that before.
Matthew,
A new perspective is always good. I’m glad you got one here.
This is a jolly good idea and I certainly think that bartering has helped me establish better professional links with people in allied trades!
there has been great mutual benefit
Tony,
Thank you for confirming that bartering helps business.
As a Tucson electrician, I’ve never actually thought about trade, but after reading this post, it makes sense. I love the fact that your accountant participates, that’s got to make it a whole lot easier come tax time!
Rian,
Service businesses especially benefit from trade. Having an accountant who trades is very helpful.
Wow! This is something new to learn about. Although the post is quite old, but it’s still worth the read. From your post I see trade exchange like x-deals in the offline world, as it’s business is centered in bartering. Great post! Learned something new for today.
Andrew,
I’ve written a series on bartering as well, beginning with Barter—Part 1: What Is It?.
The primary advantage of a trade exchange over bartering directly with other companies or individuals is that with a trade exchange (sometimes called a barter club), you don’t have to need the other person’s goods or services. You are paid in credits that are equivalent of cash, and you can use those credits to make purchases from any other member (or combination of members) of the exchange. So if I need my office painted but the painter doesn’t need editing work, we can still barter. I pay him in trade credits, and he uses those credits to go to the dentist and take his family out for dinner.
I just had a question in e-mail about trade exchanges from someone who found this post. Interesting that two people comment (online or in e-mail) within a few days of each other on a post that’s more than a year old. I provided a lot more information in answer to questions in e-mail, and I have planned a series on trade exchange in the next couple of months.
Using a trade exchange isn’t time-consuming as doing direct trades would be. The trade exchange is a third-party “matchmaker” and finds the services/products you want and the customers you need. There is a financial investment; however, I consider it nominal for the service provided.
If you subscribe to this blog or check back often, you can read the series.