Faced with economic challenges and shrinking budgets, many small businesses are turning to bartering as a way to obtain needed supplies and services.
Bartering may date back to ancient times, but these days it has a high-tech spin.
Bartering networks like IMS Barter (Stock Quote: ITNM), which calls itself the largest full-service, membership-based trading network in the U.S., can save you time and money. Members list their products or services in an online database, and business deals are conducted electronically.
The technology helps link barterers who previously relied on lucky timing.
“It’s not like the old traditional idea of bartering, which usually involved a direct trade,” says Krista Vardabash, director of marketing and public relations for IMS Barter. “In a traditional barter situation, I had something you wanted, and I traded it to you for something you had that I wanted. It required luck and good timing, in that each party needed to have something the other one wanted at the same time. That’s what we call an ‘incidence of coincidence’ and it doesn’t happen very often.”
IMS works with credits to increase the liquidity of their network.
How it works
Upon joining IMS, you are assigned a broker who helps you sell your products and services and assists you in finding and attracting new business.
When you provide a product or service, you receive payment in trade credits. You agree to accept these trade credits instead of cash. You can then use these trade credits to buy something from another member (or several members). You can “bank” the trade dollars you’ve earned until you are ready to make a purchase. IMS takes a fee of 7.5% on each transaction, plus a small monthly fee.
A bartering boom
IMS has seen a big upswing in membership and transactions since the economic crisis began. “When times get tough, people get creative and try to figure out how to keep more cash in their pocket,” says Vardabash. “Our traffic has gone through the roof. But I think members will realize it’s not just for tough times, and the activity won’t stop once the economy picks up.”
So what can you barter? Just about anything imaginable. IMS members include daycare centers, florists, auto body shops and home improvement contractors, among others. The owner of a family fun center in Illinois recently got an electric car worth $15,000 and then had it transported from California and wrapped with an ad promoting his business - all paid for with trade dollars.
Another member used trade dollars to hire a production company to create a television commercial for his business, and then used more trade dollars to place the ad on a local NBC affiliate. A Chicago area restaurant owner used barter dollars to buy a fireplace, flooring, rugs and other furnishings for his eatery.
“Stories like those illustrate our national network,” says Vardabash. “We have 18,000 members across the country, in all types of businesses.”
For tax purposes, barter dollars are treated just like cash. Members receive a 1099 form at the end of the year, and must report that income on their taxes.
For more information, visit IMS Barter.
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