A company which rents out industrial equipment decides to expand its facility, so it can offer more equipment. Of course, building is a big capital expense, and the company has to go loan hunting. Or maybe not.
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What if the company could take an asset it's not using to full potential... such as equipment which only goes out on weekends, and turn it into that warehouse... or part of that warehouse anyway. Hocus pocus?
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It's called barter.
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When you join a barter network, you exchange goods or services for barter dollars from members of the network. Then you use those to purchase from other members. The accounting's simple, and it's easy to market your services to other members.
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Barter has three big benefits. It allows you to turn downtime into goods and services. It's great for employee incentives. And it can help generate real -- that is, cash -- business.
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Here's how the rental company can turn it's downtime into a warehouse.
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Barter's great if you can use an underutilized resource. The equipment that's sitting idle has a new market. The members of the network will be more apt to come to the rental company, because they'll save cash. The barter dollars the rental company receives can be put toward the expansion in building supplies and contractors.
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Presto. Rental equipment into warehouse space.
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You can also use barter to save on employee benefits. By using barter dollars as hiring incentives, raises, bonuses, or as medical benefits -- since many medical services can be bartered -- you can provide valuable rewards for less. You can also look at sending employees to special events or on training using the barter network.
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Barter can help you get new clients and generate business.
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Say you're bidding on a big contract from a hotel customer. You can consider taking partial payment in cash and the rest in hotel rooms (since hotels always have empty rooms.) By being creative and flexible in your terms, you can win bids.
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As well, once you introduce your service to new customers in the network, you can expect to get real cash business from many of them down the road.
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Next time, we'll show you how to get customers to invest in your business.
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How to find the right barter exchange
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Barter exchanges abound. Make sure that barter is right for you, and the exchange you choose is right for you, too.
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1. Check on its history. A well established exchange is a good bet for service, variety of products and services available and confidence it's going to be around.
2. But get references, too. Talk to some of the people on the exchange and find out how they've found service and availability in the past. Ask specifics about how they've used it to make sure their comments are relevant to you.
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3. Make a list of products and services you require and check to see that the exchange offers these on a regular, ongoing basis.
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4. Find our whether the exchange is regional, national or global. While you might buy office supplies from a company 1000 miles away, you're not going to be able to take advantage of the automotive oil change offered in that city.
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5. Check out the fees. These usually include monthly membership, plus a percentage on purchases and sales.
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6. Make sure you can sell, but also that your income won't exceed your ability to purchase. While you can put a hold on your service -- go on standby -- you continue to pay monthly fees.
Read more: FINANCING 101: LESSON 5 A MAGIC TRICK WITH BARTER
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