— In these
cash-strapped times, more small businesses are turning to an ancient
system to get products and services without spending a dime. Bartering,
which dates to at least 9000 B.C., is flourishing.
NFi Studios, a 15-employee Orlando Web-design firm, has traded its services for a catered holiday party, a phone system, a bar tab at an Irish pub and even haircuts for employees. Sterling Raphael, the company's president and CEO, said he likes bartering with local businesses because it allows him to support the local economy and offer perks for employees that may not have been possible if he had to pay cash. "Overall, it's worth it to both sides because our costs are less than the full cash value, but you are still getting the full value," Raphael said.
For Lizzy McCormack's Irish Pub on Orlando's Orange Avenue, paying for its Web site with a $7,500 bar tab cost at least 50 percent less than if it had paid NFi in cash, said general manager Brian Hanson, because of drink markups. And the exchange continued to pay off for the pub: After the tab was used up, NFi's employees continued to frequent Lizzy McCormack's and recommend it to friends and family.
The pub also gets occasional offers for in-kind trades from its customers, some of which are more urgent than others, Hanson said. When the bathroom plumbing was acting up, the pub staff turned to some regular customers who are plumbers. "They said, 'Hey, if you give us X amount of money for our bar tab, we will fix it for you right now,' " Hanson said. "They had their trucks downtown with the parts in them, so they went out to their trucks, came back and got it all fixed."
Of course, not every business is clamoring for a trade, particularly companies that sell items with a low profit margin, such as electronics, or a lot of fixed costs such as hardware supplies. "OUC doesn't want a case of Jack Daniel's to pay for our utility bill at the end of the month," Hanson said. But though the utility company probably wouldn't be willing to partner, hundreds of other businesses are using a service that lets them provide their service to one company and then redeem it with another.
based in Winter Park, has connected more than 1,500 businesses with a
service or product to trade. Membership has jumped 40 percent during the
past six months, President Scott Whitmer said. "It makes good business
sense," Whitmer said. "If cash flow is tight, bartering allows them
to pay for things that they need with their product or service."
Members pay a $150 joiner's fee. Then instead of paying and receiving cash, they use a currency called "trade dollars" when doing business with other Florida Barter members. For example, if a barter member owns a carpet-cleaning service and is hired by another member who has a printing shop, the printer pays the carpet cleaner with trade dollars and pays him the state sales tax in cash.
The carpet cleaner can then spend those trade dollars with the printer or another company in the network. The company gets a 12 percent commission when trade dollars are spent.
Richard Schwartz, co-owner of Mercury Media Group in Orlando, has used the service to barter for air conditioning, truck repair, restaurant gift certificates, flowers and gift baskets. "Every business owner I know is desperately trying to reserve cash and stem the flow of it going out," said Schwartz, who had to lay off eight employees from his printing company this year because of the economy. "And bartering is one way that is helping."
The services most in demand are advertising, marketing, employee perks, travel and entertainment - things the companies might forgo if they had to pay cash, Whitmer said. A lot of members have been spending trade dollars on catered holiday parties and restaurant gift certificates or cakes for their employees.
The recession also has prompted people to barter for things they never would have considered in a better economic climate, such as real estate. Whitmer said one of his members is trying to sell a $250,000 house in Deltona and is willing to accept $50,000 in trade dollars as a down payment. Another member has lots in Tennessee that he wants to sell for 100 percent trade in exchange for marketing and advertising to help him sell the remaining lots.