“I really like your shirt.  Will you trade me for it?”  Trade for it?  What?!  In 1984 I had just moved to remote Jerome, Arizona from Long Island,  New York  and had never heard of such a transaction! My friend Dylan had just gone quartz crystal mining and found some beautiful pieces.  She was a beader and was offering to bead a quartz crystal pendant for me in exchange for the shirt. Wow — they didn’t teach this in college!

Shortly after I first started The Fossil Cartel, I learned about a company called Itex, a barter facilitator based here in Portland (the headquarters has since moved to California). I wound up becoming a member a few years later and it has been one of the best business moves I ever made.

Barter companies work sort of like a bank for barter transactions.  You sell your goods or services to collect barter credits. When you purchase something with your barter money, the company deducts that amount from your account.  You can either write checks or process your transactions online.  You can buy something from anyone in the trade organization and don’t have to trade your stuff directly with that business. The barter company makes money by charging a monthly fee and a small percentage of what you buy and sell.

Now of course this only makes sense if you’ve got one of the following:

• extra time to bill (as in a service industry)
• extra merchandise to sell (as in either distressed merchandise or items that have been in your inventory too long that you need to move)
• extra rooms or tables to fill (as in the hospitality industry)

If you do have one of these, barter can bring you more options, more resources and more customers.  There are many things available in barter organizations that you would normally pay cash for, such as printing, advertising, travel expenses, etc.  Not only will barter bring you more business, you will also save cash on many business expenses.

Here are two things to make your bartering successful should you choose to join:

1. Don’t trade more than 5% of your gross income
2. Be proactive about spending your barter credits

Even though it’s barter, you still have to pay taxes on it as if it were real money.  Plus you have to pay cash on the fees and the more you barter, the more the fees add up. This is why you normally wouldn’t want to barter more than 5% of your gross. However, if you use most of it on business expenses, it qualifies as a write-off which will offset the income.

If you’re not proactive about using your barter money, you might become resentful about paying the monthly fee.  Take the time to think about how you might be able to use your barter money.  Do you need your car repaired? Maybe there is an auto-mechanic available.  Do you need business cards printed?  See if there is a printer accepting trade.  Need a hotel room?  Find the broker nearest your destination and ask them what’s available.

If your barter money is used for personal expenses, you have to declare it as personal income.  It’s worth it to me to me to pay a little extra in taxes to indulge in certain luxuries I might not otherwise, for example a weekend at a hot springs resort — with massages — in the mountains of Colorado.  It feels almost like play money.  I get to sell things that for some reason weren’t selling for cash, and turn it into travel, massages, fancy restaurants, Italian designer clothing, etc.

Aside from business expenses, here are some of the other personal things I’ve used my barter money for:

• Household services:  carpet cleaning, hardwood floor refinishing, painting,  new storm doors including installation, art work
• Personal care:  massages, facials, haircuts and color
• Gifts: clothing, toys, household decor
• Travel: hotels in Oregon, Washington, Arizona and New York; a luxury condominium on the Mediterranean in Spain, a house on the North Shore of Oahu, B&Bs in the Gold Rush country of the Sierra Madres in California.
• Camera equipment
• Automotive:  mechanical repair and auto body repair
• Recreation:  hot air balloon rides, day cruises, whitewater rafting
• Professional services:  attorneys, dentistry

The list goes on and on.  Since I’ve been doing this for about 15 years, I can’t remember everything, but I am constantly amazed at the things I have obtained through barter, the places I’ve gone and the experiences I’ve had that I wouldn’t have had otherwise.

There are many barter companies, but Itex is the biggest, operating throughout the U.S. and in other countries as well.  Their fees are reasonable for the service they provide.  Each member is assigned a broker who can help them buy and sell.  They have a fantastic website that lists other members and items for sale.  There are also broker-managed accounts that aren’t necessarily listed on the website, so it pays to ask your broker or a broker in the city you will be visiting what might be available to fill your needs.

This is an especially good time to look into joining a barter company given the current economic climate.  Many businesses can attract new customers through barter and it does not cost much to join and try it out.  If it doesn’t work for you, it’s easy to opt out.

If you decide to give Itex a try, please let them know that The Fossil Cartel referred you.  I get credit anytime I give a referral! J And if you have any questions, I’d be more than happy to answer them anytime.

Happy bartering,

Susan

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