Bartering
Its a booming business.

By Wanda Chow
 
BURNABY, BRITISH COLUMBIA — If there’s a wheeler-dealer in the local world of bartering, it might be New Westminster’s John Klockow. In 2005, when he had to sell his Richmond condo, Klockow skipped the traditional step of calling a realtor. Instead, he turned to Trade Exchange Canada (TEC) where he’d been a client for years.

The company found him a buyer through its membership. The condo sold for $250,000, of which $40,000 was paid in TEC “barter dollars” or credits. Klockow then used those barter dollars to buy plumbing services, new uniforms and furniture from TEC members for the renovations he was completing at The Pen Cafe, which he owns in the Fraserview neighbourhood. On top of that, he saved about $10,000 in cash for realtors’ commissions.

He’s also used barter dollars to pay for dry-cleaning of restaurant linens, computer services, flowers for the cafe patio and alarm monitoring. The cafe’s food supplier accepts barter dollars for 25 per cent of the payment.

Klockow earns his barter dollars by selling gift certificates to his restaurant. The beauty of it is his overhead for staff, heat and power is the same whatever form of payment people use. So all the gift certificates really cost him is the price of the food itself - about 26 per cent of the bill. “I know right away if I were to stop using barter, right away my food costs would go up two to three per cent,” Klockow said, of having to pay his suppliers all in cash. With $500,000 in sales a year, that would add $10,000 to his business expenses - no small sum.

But using the trade service doesn’t just save him money, he stressed. It creates a revenue source, and is a great way of marketing to customers, particularly as his restaurant is tucked away on the former B.C. Penitentiary site. “It helps increase your cash flow. It brings people into my restaurant that probably wouldn’t come in but because of the gift certificates, they’re specifically coming to MY restaurant.” And he’s gained a number of repeat customers as a result.

Many businesses are looking for a boost to keep their heads above water during the current economic downturn. Some are turning to Burnaby-based Trade Exchange Canada and other bartering services. In the first five months of 2009, TEC saw a 40 per cent increase in transactions over the same period last year. It’s also seen almost twice as many new clients join up in that period as in 2008, said Scott Berg, TEC managing partner.

Berg and fellow managing partner Wayne Edgar started TEC in 2002 after years in the barter services business with other companies. It now has 1,200 members in B.C. and handles $10 million to $12 million a year in transactions, for which it charges a six per cent cash transaction fee (for the barter portion) to both the buyer and seller. It essentially matches up buyers and sellers and maintains accounts for clients.


John Klockow, owner of The Pen Cafe in New Westminster,
sits in his restaurant Thursday afternoon where he has used
bartering to renovate in exchange for gift certificates to his restaurant.

He stressed that barter makes a whole lot of sense when it’s used for “filler sales” and especially when most products or services are charged at the regular retail price. For instance, selling perishable assets like stays in hotel rooms, a hotel can bring in revenue for a room that would otherwise sit empty, at the cost of nothing more than cleaning services.

TEC recently helped sell $400,000 worth of clothing at the full wholesale price when the most a liquidator offered for the lot was $50,000 or 12 cents on the dollar, Berg said. As for the economy, he said, “I’m seeing companies cutting back in areas they shouldn’t be, like marketing.” He suggests companies that have excess capacity or inventory trade it in exchange for advertising or marketing services. “Trading in a bartering system like TEC is a great way to network,” he said.

That’s something that appeals to Bill Byrd, owner of AALL Tech Transmission in Burnaby. “A bartering service like TEC is all above board, while providing a version of “if you help me, I’ll help you,” Byrd said.

He gets about one transmission job a month from TEC clients, bringing in $1,000-plus in additional business he otherwise wouldn’t have received. He’s seen those clients come to his Brentwood-area shop from as far as North Vancouver and Delta. He knows that if his shop does a good job for them, they’ll recommend him to their friends.

And in these tough economic times, what’s appealing to businesses, Byrd said, is that “dealing in barter dollars allows you to NOT spend cash.” He’s spent the barter credits he’s earned on a number of services for his shop: signage, printing, advertising, decals and detailing services for his courtesy cars, and even the company website which alone was valued at several thousand dollars.

Bartering is nothing new. It’s been around as long as there have been businesses. But as Byrd said, “It’s becoming in-style again.”