Recession Means Business For Bartering

By Janaya Fuller-Evans
 
VANCOUVER, BRITISH COLUMBIA — A local restaurant paid for $50,000 in renovation construction with gift cards. A Kitsilano winemaking business had its floors cleaned and paid with batches of wine.

A North Vancouver dry-cleaning company barters nearly $50,000 in services per year to get staff incentives such as gift certificates and even dining room sets for employees. Small and medium-sized businesses are cashing in at Vancouver's barter exchanges, and business is booming in the barter industry.

Trade Exchange Canada, a bartering consultant firm that pairs businesses wanting to exchange services and charges a monthly fee to join, has doubled membership in the past six months.

"In 14 years [in the industry] I don't know if I've ever been this busy," said Scott Berg, a managing partner at Trade Exchange Canada. "We've become very relevant." Businesses want to reduce spending during the recession, and trading services is one way to do that.

For many companies, such as restaurants bartering with gift certificates, the cost is much less than the cash worth of the trade, according to Berg. "The biggest benefit is that you're paying with wholesale costs rather than cash costs," Berg said. "Their cost is 30 cents on the dollar [for food], so they're saving 70 per cent."

Another local barter company, First Canadian Barter Exchange, has also seen an increase in membership and attention. "Between January and now, we've been getting busier every month," said Amber Noakes, sales and marketing manager for the exchange. "People are looking for options to spending cash."

Cheryl Neufeld-Gravkin owns Wine Kitz in Kitsilano and is a member of First Canadian. She said the best thing about bartering is the exposure. "I think it's a great way to promote business," Neufeld-Gravkin said. By trading 20 batches of wine for services from another company that gave the wine to clients, Neufeld-Gravkin expanded her marketing. "Everyone's going to be tasting it, sharing it, and the bottle has the website on it," Neufeld-Gravkin said.

She now gets business from people in Surrey, Langley and New Westminster. "It gets people shopping with you who normally wouldn't," Neufeld-Gravkin said. Another aspect of bartering includes the networking. Companies such as First Canadian also hold raffles, buffets, and trade shows. "They do a really good job in promoting you," Neufeld-Gravkin said. "It's like a support group." While her wine kit business is doing well during the economic downturn because it provides an alternative to liquor store prices, Neufeld-Gravkin said the barter system is ideal during difficult times.


Cheryl Neufeld-Gravkin markets her wine kit business by bartering.

"I think it helps with coping with the recession," Neufeld-Gravkin said. "You need as much as you can get as a small business." She also suggests businesses work together to promote each other instead of focusing on individual marketing and advertising, which can be much more expensive.

"People that are having a problem during the recession can pair up with businesses that are recession-proof," Neufeld-Gravkin said. "If you make a batch of wine [you could] get a gift certificate for the cheese shop."

An expert in creative marketing at Simon Fraser University agrees. "Collaboration is huge," said Ginger Grant, a business professor who teaches creativity in business at SFU. "Any way businesses can cross-promote." She suggests businesses use the Internet for free marketing by creating videos for YouTube, and joining social networking sites like Facebook, MySpace, LinkedIn and Second Life. "Anyone with a $1,500 computer can cut a video or make a PowerPoint presentation," Grant said. "We want to encourage business people to get very creative about what they're doing."