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A Savior When Cash Is Tight

Cash is tight, but small businesses still need goods and services. That's why more have been turning to bartering--trading what they have for something they need. The International Reciprocal Trade Association estimated that 400,000 companies around the world did $12 billion worth of transactions last year, up 10% from 2007, with American companies accounting for the bulk.

A barter deal can be a one-off transaction between two parties--say, an exchange of $5,000 in dental work for $5,000 in landscaping. It can also take place through a formal exchange. These clearing houses facilitate trade by equating each product and service to a certain amount of "trade dollars," thus ensuring both sides get something of equal value in return.

Ted Klinger, vice president of Pappy’s Place, a diner in Portage, Mich., is a believer in bartering. He has been trading on the Midwest Business Exchange for more than two decades. “Most members of our exchange are family-owned businesses,” he says, so it almost feels like a team effort.

In exchange for meals at Pappy’s Place, Klinger has received everything from advertising to snow plowing. Barter deals now total $100,000 annually, or 10% of Pappy’s budget, and they’re worth every trade penny, he says. “If three guys come in for lunch and one pays with trade dollars, we’re still better off because the exchange member brought us two cash-paying customers.”

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