Say the word “barter” and most people envision dickering with a milk-glass seller at the flea market. But bartering is a viable alternative to spending and earning cash – and a $4 billion business in the U.S., according to the National Association of Trade Exchanges. What does this mean to you? It means that you may not have to part with money at all to get what you want – just be willing to trade something you own or a skill you possess. But what if you’ve got plenty of money – isn’t this just too much work? The benefits go far beyond saving money – they include social interaction, staying active, sharing knowledge, even making a contribution to the community. Sound too good to be true? Read on.
Bartering has a long history, beginning long before money existed. In the United States, bartering goes back to colonial times. During the 17th and 18th centuries, money was scarce, so the colonists relied primarily on bartering, with commodities such as beaver pelts, corn, musket balls, nails, tobacco, and deer skins (from which we get our modern slang, "buck," meaning "dollar"). Colonists also used the money of other cultures -- the Native Americans' wampum, (which consisted of beads made from shells), and the coins of foreign countries. In the1930s, money, like most other things, was scarce. People established barter groups like The Unemployed Citizens League of Denver (with 34,000 members) and the National Development Association.
The 1980s saw a long recession, during which bartering regained popularity. Many books and magazine articles outlined the benefits of bartering. Hundreds of barter clubs were created throughout the nation. More companies learned about the advertising industry's "trade-outs," and international commerce's "countertrade," and the other possibilities for bartering in business.
In major metropolitan areas, there are barter exchanges, organizations that facilitate the bartering process. They work like this: Members pay a one-time fee to set up an account and list their names in the membership directory. When bartering begins, each member fills out a voucher, which transfers "barter dollars" from the buyer's account to the seller's account. The buyer, seller, or sometimes both (depending upon the company's policies) pays a commission to the barter company.
Members use trade credits to make transactions. For instance, a member might “charge” another member $15 for a piano lesson. The piano teacher member receives 15 trade credits which are deposited in her account. She can then use those credits to obtain a good or service available on the exchange. She may spend those credits whenever she wants to, or save them for big-ticket items like vacations or electronic equipment.
In the past decade, small-business owners in particular have started to use bartering as a means to cut down on costs. There are some 600 barter exchange clubs operating nationwide, according to the International Reciprocal Trade Association. As barter networks begin to take advantage of the internet, that number should increase exponentially.
Just like buying stocks, making barter transactions online is less expensive because the middleman is eliminated. Consumers can save an estimated 60 percent by doing the legwork themselves, as opposed to calling a broker to track down needed goods and services.
How do you choose a barter network? Do your homework before joining. Some questions to ask include:
How large is the membership network? The wider the reach of the membership network, the broader your trade options are.
What service categories are routinely available? Remember, you must spend the trade credits you accumulate within the exchange.
How long has the exchange been operating? To avoid the worst-case scenario of losing trade credit when an exchange goes bankrupt, join a reputable club that's been in business for at least five years. What do members think? Ask for references. Talk to a handful of members to get the real scoop.
To find out more about barter clubs, check out the following Web sites:
· The National Association of Trade Exchanges -- a nonprofit organization that serves barter clubs and their members.
· I-Barter -- moderated discussion groups for professionals who want to trade ideas on getting more business through barter.
· Barter Buys Online -- online classified barter ads, as well information about how to barter, and links to other barter exchange clubs and resources.
· UBarter -- IBC's online barter network.
Or send a self-addressed, stamped envelope to the International Reciprocal Trade Association. They will run a background check on any exchange. IRTA, 6305 Hawaii Court, Alexandria, Va. 22312.