Barter Business Flourishes In A Slowdown
Cash-strapped vendors find new ways to save money and lure customers.

By Lisa Schmidt
 
CALGARY, ALBERTA — When Charlie See was starting his catering business a few years ago, cash was pretty tight. The former executive chef didn't have the money to shell out for extras like advertising or even business cards, even though his new venture, new A Gourmet Affair, needed all the exposure it could get.

Instead, See signed up for a barter network with other Calgary business owners where he has parlayed his buffets into everything from marketing and website design to cellular phones and even tune-ups for his delivery vehicles. "I try to spend it like it's cash and make important purchases with it and milk it for every dollar that I can," says See, who runs his business with his brother Brian. "I think it is a very good tool in today's market, especially if you're starting a business."

Trading business services isn't a new idea, but barter is gaining traction in the economic downturn as companies look for ways to save money and get more business. Calgary's barter brokers report more sign-ups and a greater number of trades over the past few months as businesses look for ways for to move excess inventory in exchange for goods and services.

And the types of businesses now willing to barter are also changing: tradespeople such as plumbers and electricians and even home builders willing to take a down payment on trade. More barter and trade offers are showing up on websites like Craigslist. like In the past two months, listings on the Calgary site included a painter looking to trade his skills for a camper, a bookkeeper wanting to trade accounting work for rent and someone willing to clean houses for old aquariums.

In a barter network, the trades aren't usually direct - most businesses receive a barter credit for their goods or services used by another member, which they then apply to another transaction. Members also usually pay a sign-up fee, then transaction fees, usually a percentage of the value of the deal.

Businesses are becoming more receptive to the idea of barter, says Nelson Liem, founder of eXmerce, a Calgary-based business trade network mostly made up of small companies with less than $1 million in sales. "The slowing economy has certainly helped grow the barter exchange," he says. "we're seeing significant increases in just new membership new signage as well as trade volume." Trading activity has almost doubled since last year, mostly in the past few months. "A lot of business owners are looking for different ways on how they can save cash, as well as continuing to market to new customers," he says.

SabreTEC, Calgary's oldest and largest barter exchange with about 500 members, has also noted growth in both sales and transactions over the past few months. The company, which started trading in 1997, conducts about $10 million worth of trades annually. President Barb Stevens says clients are looking for ways to drum up work during downtime, like one client who does barter work to smooth out the troughs in his painting business. "A lot of people have staff that aren't working, so they give us a call," she says.

Another area of growth has been business trades for personal use, Stevens said. While a business owner may not want to spend money on a vacation this year, they may trade in credits for a weekend in the mountains. And for the self-employed, barter can serve as different kind of health plan that can help pay for services such as dental or massage therapy.

At Calgary Dollars, a barter program that combines alternative currency and trade, organizers are signing up 30 new members a week - up from about 30 a month last year at this time. Melissa Centofanti, a co-ordinator with the program, says she noticed an uptick since February, especially in skilled tradespeople. "When people are laid off they may have more time to dedicate to using alternative currency," she says. "A year or two ago we were struggling to find skilled trades that would actually do the work for Calgary Dollars." But Centofanti also expects that those tradespeople may drop out once the economy picks up again.

Small companies may derive other benefits from barter, including exposure. For See, one barter job can spark many referrals and ultimately more catering business. "The word of mouth that it's generated from going and doing those functions, even though it doesn't put cash in my pocket . . . I find that has been a pretty good way to get exposure that you wouldn't get in the normal marketplace," he says.

These days, with his business more established, See says he uses his barter account more like a "luxury fund" to buy Christmas presents and reward staff with a paintball party. "You can't do everything on barter," he says. "In these times, cash flow is more important than ever, but at the same time, the barter network is a powerful tool."