Barter—Part 4: How Does It Compare to Cash?

Question from a reader: Would you ever perform a service for “trade dollars” when you can get an equivalent amount of “real dollars”?

Answer: Of course, if there is a choice, cash is usually preferable. However, I have accepted trade dollars when I could have been paid in cash. For example, the writer who was originally referred to me by a trade exchange periodically has trade dollars to spend. I always accept trade at those times because he would not be my client if the trade exchange had not referred him to me. Any time I get business from the trade exchange, I accept trade dollars from that person/company for future business. Also there are times that I am trying to build my trade dollar balance for a specific purchase (such as when I needed extensive and expensive dental work) so I would choose trade dollars over cash dollars.

I first joined a trade exchange more than 20 years. I was quickly hooked on barter and have been happily trading ever since. Just like cash business, sometimes I want more trade business … and sometimes I have more than I handle. A milder version of the notorious feast or famine cycle of freelancing. But, like freelancing, I would never give up bartering.

This whole series resulted from an e-mail exchange with a reader who wanted to know more about barter. If you want to know more, ask your questions in comments so everyone can read the replies. Even if you don’t have questions, read the comments—there are excellent ideas there from readers.

Barter—Part 3: Who Does It?

Question from a reader: What percentage of small business owners would you say uses a trade exchange? And what is the typical small business owner’s perception of the concept? I ask because at first, I really thought it was a stupid idea. I mean, who wants to go through the hassle of bartering (and pay real cash fees too!) when you can get hard cash! But now I see that the system is actually quite slick.
You have people who want to get some ancillary revenues out of their business, at relatively small cost and effort. And once you get the trade dollars, you really want to spend it quickly, because that enhances your cash flow. This dynamic actually greatly enhances the velocity of transactions in this little ecosystem, and creates liquidity!

Answer: I think a lot of businesspeople have the same reaction as you did until they learn more about barter. Although I don’t have any firm idea of the percentage of small businesses that engage in bartering through a trade exchange, my guess is that it is relatively small because most don’t understand its value.

However, I believe a large percentage of small businesses barter directly from time-to-time because they understand the value of trading goods and services rather than spending cash. The problem with this approach, however, it that two businesses needing each other’s goods/services in the exact same amount is rare so businesses who are willing to barter don’t often find a match for their needs. They may be reluctant to pay fees to a trade exchange because they don’t realize the trade exchange will bring them business—they think only in terms of how they’ve done direct trades and don’t understand that the trade exchange is a third party “matchmaker” and banker.

I know that once a company gets involved in bartering, they usually do far more than they originally expected. I belong to two trade exchanges, and there are many businesses that are members of both to get more trade business.

Of course, bartering is generally more advantageous to service businesses because they don’t have to spend money for products to sell (though their time and/or labor costs are certainly expenses). Barter is great for freelancers during those inevitable slow times—and often trade clients are willing to wait longer for a project. Businesses with very small markups usually don’t barter, because it’s not cost-effective for them to pay the trade exchange fees from their small profit margin. I think you will find a much higher percentage of service businesses belong to trade exchanges than the percentage of businesses in general.

And while small businesses certainly predominate in trade exchanges, some large companies, including major corporations, also barter. They may offer specific items—such as overstocked inventory or older models—rather than offering their complete line, but if the trade buyer is not determined to have the latest model, he can get a good deal.

You can learn more at the Web sites of the two trade exchanges I belong to: Alamo Barter Corporation  and ITEX. You can also find a good definition of the barter industry in an article at Barter News; scroll down the left column to the article: Wallach Offers Definition Of Barter Industry.

You can also do an Internet search for “trade exchange,” “barter exchange,” “how barter works,” or similar terms and find lots of explanations at sites of various trade exchanges.

Be sure to read the comments on the posts in this series to find interesting and helpful information.

Welcome back, Joanna!

Joanna Young at Confident Writing first moved her blog from Typepad to WordPress, then she immediately moved her home. She’s been offline for a week during the move, and some of her blogging friends are all saying ”Welcome back!” today.

Joanna’s tagline is “Because our words count,” and her site is

… full of writing tips and virtual coaching from … Joanna Young. It’s a site not just for writers but for anyone who wants or needs to write with confidence.

 If you aren’t already a fan, you might enjoy some of my favorite posts from Joanna:

How Purpose Beats the Inner Critic

Ten words to tell it: my best confident writing tip

What I Learned from My Cat about the Writing Life

And if you’re already a fan, join me in saying “Welcome back, Joanna.”

Barter—Part 2: What Is the Benefit?

Question 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 “trade.” However, why couldn’t you just sell them for half price, except get cash? It seems to me that cash is always better than “trade dollars,” because you can use cash anywhere, and it is not restricted to this very specific circle.

So is the benefit of a trade exchange simply a way to tap into a pre-existing pool of relationships in order to source new business (sort of like Facebook pre-internet)? Or is there something more?

Answer: The value of trade exchanges is that they bring new business that you wouldn’t ordinarily get. One of the rules of all trade exchanges I know of is that you cannot convert a cash customer into a trade customer—the point is to find new customers.

On occasion, I tried to sell used plants for cash. However, the time and costs involved in doing so made it far less profitable and far more work than selling them on trade. I had to store the plants until we had enough to have a sale. We did not maintain a retail operation—our business was strictly putting plants into commercial businesses and maintaining them for the clients. We had a relatively small greenhouse, large enough to store inventory to replace plants for our clients promptly but with no extra space to accumulate used plants. Then there was the labor involved in maintaining them, advertising costs to get customers to come out to buy, and staffing to work the sale. We were not set up to sell from our greenhouse—most of our staff worked out in the field caring for plants at client locations. Our office and greenhouse employees weren’t skilled at sales, and waiting on customers took them away from their primary duties.

Selling used plants for cash was not profitable for us, and until we started selling them on trade, we simply threw the plants away. The replacement cost was built into our pricing, and the plants had been already been expensed. However, we found that selling used plants to trade customers for trade dollars gave us additional income that was pure profit. We didn’t have to warehouse the plants for long periods of time—the trade customers understood we weren’t in the retail business and didn’t expect a large inventory of used plants. We kept a small section of the greenhouse for used plants, and our trade broker kept trade exchange members aware of the availability of these plants. Since we had customers buying used plants only occasionally and one at a time, our warehouse or office staff could handle the sales without significant interruption in their normal duties. If we ever had a significant number of used plants, our trade broker would notify trade exchange members, and we could get rid of them quickly. Selling used plants for cash involved more time, effort, and expense than we made; selling used plants for trade dollars gave us income from something that would otherwise have been thrown in the trash.

The trade exchange is a way to tap into a specific group, like your Facebook example. However, more than that, trade brokers are actively promoting trades. If I am looking for something in particular, they will try to make it available on trade, and they actively promote my products and services to other members. Just like my used plants, they help companies move specific merchandise—last year’s model when the new models come out or an item that is overstocked. Trade members always expect to pay full price—no sales or discounts, so it’s better to get the full price in trade dollars than a deeply discounted price in cash. (Selling used plants for half price does not contradict this because they were used and usually sold for less than half the price of a “new” plant.)

The ability to spend trade dollars only with members works to the advantage of members. Once members have accumulated some trade dollars, they want to spend them—building up a large balance in trade dollars is bad for cash flow. So sellers have a market that has money (trade dollars) to spend and an incentive to spend it (because they can’t pay their rent or utilities with that money and don’t want to build up a huge balance they can’t use).

The seller is always in complete control of what and how much they trade. In my plant business, for example, I offered plants and standard containers as well as maintenance service for full trade. Anything that I did not normally maintain in inventory (expensive brass containers, for example) required cash. Trade exchanges want their members to be successful so they continue as actively trading members so merchants set the terms of what they offer on trade. However, the trade exchange does want this spelled out so they can tell members what is and what isn’t available—no surprises for a customer expecting to buy on trade and being told they can’t.

Members can also go on standby and not accept any trade business. If a business makes a very large trade sale, they may go on standby for awhile until they spend down their trade balance. Maintaining a balance of trade and cash business is important. Trade business should never be too large a percentage of business or create cash flow problems. It should be an addition to business and help with cash flow.

Also, for big ticket items (the specific amount varies among exchanges), the seller can accept part trade and part cash.

The key to successful trading is to join an exchange that has members offering products and services that the individual or company wants or needs. Services are usually more readily available than products because a professional who has any open space in their calendar can generate income from time that would otherwise be lost as far as income is concerned while merchants have to spend cash for product inventory. My doctor, dentist, and CPA are trade exchange members, and I have used the doctor and CPA for more than twenty years—all on trade. However, my husband has a favorite mechanic and won’t let anyone else work on our cars, so we don’t use any of the mechanics available on trade.

Most trade exchanges have lots of advertising available because once the minute is gone, the radio station has lost its income potential. Once the newspaper is published with no advertising on a page, there will never be another opportunity to sell advertising in that issue. So advertisers are motivated to accept trade dollars for unused time/space (and they almost always have some time/space that is unused). Spending trade dollars on advertising to generate cash business is a wise investment.
Trade business can also lead to cash business in other ways. One of my current clients was referred by a trade exchange for book editing. I edited the first few chapters on trade, then he ran out of trade dollars. I have since done tens of thousands of dollars of business with him in cash. I have also had trade clients refer cash clients.

The contracts state that members should do their own due diligence, take bids if appropriate, and choose products and services on trade in the same way they would cash. However, on the rare occasions (maybe two or three in close to 30 years) when I have had a dispute with a supplier on trade, the trade exchange has mediated and resolved the problem.

Note added 8/25: Be sure to read the comments in this series—Rita shares how individuals as well as businesses can barter effectively as well as creative ideas for folks who think they don’t have anything to trade.

Barter—Part 1: What Is It?

A 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 discuss what barter/trade exchanges are, then in subsequent posts, I’ll answer the questions.

Just about everyone has heard about the ancient practice of bartering. The farmer would pay the doctor with a chicken or the carpenter would repair the lawyer’s house in exchange for legal work. However, it’s not often that two businesses need each other’s goods or services in the same amount. Trade exchanges, also known as barter clubs, make bartering possible for almost everyone. The trade exchange acts both as a matchmaker and a banker—finding goods and services for members and maintaining records of the “trade dollars” or “barter units” members spend and receive. The exchange charges a transaction fee (in cash) for providing the service; most exchanges charge a one-time, annual, or monthly membership fee as well.

Often businesspeople find bartering attractive because they think they don’t have to pay taxes on trade income. Unfortunately, that is a misconception. Trade income is taxable exactly the same way cash income is. However, if you spend trade dollars for business expenses, the expenses are deductible just as if you had paid cash.

In the next installment, we’ll talk about the value of being a member of a trade exchange.

Name This Meme

Helen Ginger at Straight from Hel tagged me for a meme that’s just for fun, a good way to start the week on a light note.

1. Your real name: Lillie

2. Your Gangsta name:(first 3 letters of real name plus izzle) Lilizzle

3. Your Detective name:(fave color and fave animal) Yellow Cat [That doesn't sound like any detective I know ... actually I don't know any detectives, but it doesn't sound like any detectives I've heard of.]

4. Your Soap Opera name:(your middle name and street you live on) Ann Mauze [Pronounced Maw-zay—sounds exotic, doesn't it?] 

5. Your Star Wars name:(the first 3 letters of your last name, first 2 letters of your first name) Ammli

6. Your Superhero name:(your 2ND favorite color, and favorite drink) Green Tea [Hey, that's healthy.]

7. Your Iraqi name:(2ND letter of your first name, 3rd letter of your last name, 1st letter of your middle name, 2ND letter of your moms maiden name, 3rd letter of your dads middle name, 1st letter of a siblings first name, and last letter of your moms middle name) Imaaana [Can't get away from As, Ms, and Ns—like my last name: Ammann]

8. Your Witness Protection name:(parents middle names) Laura Franklin [Too pretty a name for the witness protection program]

9. Your Goth name:(black, and the name of one of your pets) Black Kitty

I’m tagging bloggers I think might play along, but if you prefer not to, I won’t be offended. And if I don’t tag you and you’d like to join the fun, consider yourself tagged.

Cath Lawson at Cath Lawson

Monika Mundell at The Writer’s Manifesto

Jeanne Dininni at Writer’s Notes

Laura Spencer at Writing Thoughts

A Milestone: Post 400

A milestone: This is post #400 since I started this blog on June 11, 2006. I hope you’ve enjoyed reading them as much as I’ve enjoyed writing them. I’m planning to write many more!

Guest Post: Your Competition Stinks – Isn’t it Great!

When I wrote a guest post at Poewar: Writer’s Resource Center, John Hewitt promised to reciprocate. John’s site is a great place for writers of all kinds—I’ve been a subscriber and a fan for a long time, and I’m delighted to host John’s guest post. I hope you like the post as much as I do and that you will show John your appreciation in comments.
_____________________________
There are a lot of people out there competing for freelance jobs. A freelance posting on a popular job site such as jobs.problogger.net or freelancewritinggigs.com can easily generate 400 responses. Numbers like that can be intimidating. You may wonder why you should bother applying if you have to compete against that many people. How can you possibly win?

I’m here to tell you it is easier than you think. The truth is that your competition stinks. They’re terrible. They’re awful. They don’t know how to apply for a position. They don’t know how to write a decent e-mail query. Many of them can’t write their way out of a wet paper sack. Just reading their e-mails is painful. Ninety percent of the people applying for these freelance positions can be eliminated within a sentence or two — a paragraph at the most. That is because their writing is terrible and it shows. The first 90% can be eliminated immediately because they have made one (or more) of six mistakes:

• They use informal language
• They make an obvious grammar or usage error
• They talk about their personal problems
• They don’t know what they are applying for
• They don’t give their qualifications
• They don’t send samples or links to samples

These very basic mistakes take that 400 person applicant pool down to a manageable 40 people. That is still more competition than you would like, but even at this point, many of the applicants aren’t serious competition. They have their own series of mistakes that they make. These mistakes are less obvious and less deadly, but they still keep most of these candidates from moving forward.

• They fail to cite relevant experience
• Their samples are not appropriate (or they point you to their web site instead of specific pieces)
• They don’t provide full contact information
• They don’t discuss why they are the best writer for the job

Once you eliminate the people who make those mistakes, you would be surprised how dramatically the pool of applicants shrinks. In the end, out of 400 applicants, there are perhaps 10 that can withstand even this level of scrutiny. That doesn’t mean there are 10 great applicants, just that there are ten who didn’t already blow their chances because of an easily correctable mistake. Competing against 400 people is daunting, but competing against 10 is a reasonable challenge, especially if you think you are the right person for the job. Just follow these eight simple steps and you will get yourself into the top ten most of the time:

• Write in a professional style
• Check and recheck your query to be sure that the language is correct
• Discuss your qualifications, not your needs
• Know exactly what you are applying for
• Discuss your relevant qualifications and experience
• Provide relevant, specific samples
• Provide full contact information, including your phone number
• Give at least one reason why you are the best applicant for the job

That’s it. Those eight things will rocket you to the top of the pile. There are plenty of ways to improve your chances even further, but these eight will keep you from being lumped in with the idiots.

Good luck.
_____________________________
John Hewitt is the publisher of the writing site, poewar.com. If you like this article you may also enjoy reading, How to Write a Query Letter and 10 Ways to Make Editors Hate You Before They Even Know You. He also knows all about Writing Your Way Out of a Wet Paper Sack.

My Olympic (Festival) Experience

With the Olympics dominating TV, “proud sponsor …” and “official sponsor …” ads abound. Every time I hear those words, I’m reminded of my own experience as a  “proud sponsor of the Olympic Festival.” I have a framed photo and a framed poster hanging on my office wall as souvenirs.

If you’ve read this blog for even a short while, you probably know I’m not a sports fan. You’re likely surprised that I would have any Olympic experience and may not even know what Olympic Festival was.

I had never heard of Olympic Festival until one day in 1991 when a representative of the Olympic Festival ‘93 called on me to ask my interior landscape company to be a sponsor. For several years ending in 1995, the Olympic Festival was held between Olympics, a sort of mini-Olympics for US athletes competing to be on the US Olympic team. 

We were asked to provide plants to decorate the festival venues. Business was good, I liked to support the community, and we had two years to prepare. So I said “yes” and became an “Official Sponsor of the Olympic Festival”—based on the value of our contribution, LIllie’s Plantscapes was a “Key Supplier.”

By 1993, circumstances had changed. I still wanted to support the community, but business had suffered from my absence while recovering from a stroke. We were short on preparation time since planning for this event had dropped to the bottom of the priority list when my staff focused on business survival during my absence. I was still in a wheelchair and easily fatigued, making it more difficult to manage large projects. Then we discovered that not only did the Festival organizers want green plants (which we could use later) for decorations, they wanted hundreds of blooming plants (which would have to be discarded after the event), increasing our out-of-pocket costs tremendously.

Nevertheless, we had made a commitment and were determined to honor it. The Olympic Festival treated it sponsors very well. We were given a great deal of publicity, invited to breakfasts and other events where we were given gifts (such a leather-bound diary/calendar featuring all the Festival events), and given private tours of the venues. That VIP treatment made participating in the Festival fun and exciting, but it didn’t alleviate the financial and labor strains we incurred.

Fortunately, I had a wonderful workforce. Often we had to break down one venue at midnight, move the plants to another location across town, and set up by 6:00 AM. We were given several VIP passes—identification as a Key Supplier that hung from a chain and allowed us anywhere in the venues. Workers could deliver the plants to a venue, wander around behind the scenes and see the athletes preparing to compete, watch the event, then go back to work.

We created a schedule that covered all the indoor events—the outdoor events used nature rather than our plants for decoration—and asked staff to volunteer for specific venues so they would have a chance to see their favorite sports. We even allowed office personnel to work as laborers so they could participate in the Festival as well. Although some events were more popular than others, we managed to schedule all the workers for events they wanted to see and cover all the events. Sometimes we had crews setting up plants in a number of venues around town at the same time … and we were still taking care of hundreds of clients’ plants on a regular schedule.

Everyone in the company spent an intense, stressful ten days ensuring that plants were in place to decorate the venues on time—even when events ran late and caused a rush to get the plants to the next venue. Every staff member was proud of the company and thrilled to participate in the Olympic Festival, which was a huge event for San Antonio. The thousands of dollars and hundreds of manhours of labor it cost us were well-spent.

Even though I’m not a sports fan, I couldn’t miss this opportunity to see performances by athletes who might become Olympic champions so I attended some of the gymnastics events. I found this video on YouTube of some of these events. Shannon Miller, performing here, went on to win a number of gold medals in the next Olympics and is the most decorated American gymnast in history.

You can even see some of our plants in the background early in the video!

Right Brain/Left Brain

I saw a link on Robin Lee Hatcher’s Write Thinking to this test to determine whether you use your left brain or your right brain most.

The right brain relates to creativity, the left brain to logic and organization. Writing requires right brain usage; editing requires left brain usage. I enjoyed taking the test and found the results interesting. You may want to check it out for yourself.

Here is the summary of my results:

Lillie, you are somewhat left-hemisphere dominant with a balanced preference for auditory and visual inputs. Because of your “centrist” tendencies, the distinctions between various types of brain usage are somewhat blurred.

Your tendency to be organized and logical and attend to details is reasonably well-established which should afford you success regardless of your chosen field of endeavor, unless it requires total spontaneity and ability to improvise, your weaker traits. However, you are far from rigid or overcontrolled. You possess a degree of individuality, perceptiveness, and trust in your intuition to function at much more sophisticated levels than most.

Having given sufficient attention to detail, you can readily perceive the larger aspects and implications of a situation or of learning. You are functional and practical, but can blend abstraction and theory into your framework readily.

The equivalence of your auditory and visual learning orientation gives you two equally effective sensory input systems, each with distinctive features. You can process both unidimensionally and multidimen- sionally with equal facility. When needed, you sequence material while at other times you “intake it all” and store it for processing later.

Your natural ability to use your senses is also synthesized in your way of learning. You can be reflective in your approach, absorbing material in a non-aggressive manner, and at other times voracious in seeking out stimulation and experience.

Overall you tend to be somewhat more critical of yourself than is necessary and avoid enjoying life too much because of a sense of duty. You feel somewhat constrained and tend to sometimes restrict your expressiveness. In any given situation, you will opt for the rational, and learning of almost any type should be easy for you. You might need certain ideas explained to you in order to fit them into your scheme of things, but you’re at least open to that!

This pretty well describes me. Let us know in comments if your results describe you well.

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