Is Barter Better?

Is Barter Better?
Goods-for-goods is winning out over goods-for-money in the cash-strapped '90s

by Melanie Franner
(original article location:
http://canjewel.polygon.net/docs/august97/barter.html)

Canadian jewellers looking for new ways to augment their businesses may not have to look any further than a new-old way of doing business: barter. Although it's been around since the beginning of time, barter is catching on in the '90s as businesses look for new ways to keep hard-earned cash in their pockets.

The sophisticated barter exchanges of today combine the age-old practice of swapping goods for goods with a user-friendly, value-rich environment that encourages business growth. It means, simply, that you can sell your jewellery to another barter member, who will then pay you with barter dollars. You, in turn, are free to spend those barter dollars with any other members of the exchange - it could be landscapers, printers, restaurants or hotels. The larger the exchange, the larger your range of choices. Almost half of the 24 independent Canadian barter exchanges are located in the Toronto area. Within Canada, barter represents over $50-million annually. In the U.S., that number is well into the billions of dollars.

During the last decade, the Canadian barter industry has undergone a growth cycle. The reasons for this are many. First, some of the large professional exchanges have cracked down on unethical business practices, which has increased the industry's overall credibility. Secondly, small- and medium-sized businesses, the mainstay of the Canadian economy, are perfectly suited to the barter system. Plus, new businesses are cropping up all over Canada. And finally, tough economic times are forcing many businesses to look at other financial alternatives. "The last few years have seen a real upturn in the use of barter," says Michael Caron, president of BarterPlus Systems, the largest barter exchange in Canada, with over 2,500 members in Ontario, Alberta and B.C. "It's a constructive way of growing a business because it opens up new market opportunities. That's an important consideration in these tough economic times."

One such company, Quick-Silver Jewellery, a Toronto wholesaler, has been using barter for the 10 years since its inception.

According to Quick-Silver president, Glenn Schwendinger, barter is the perfect fix for any excess capacity. Over the years, he has managed to use it for several constructive services - including lawyers, accountants, couriers, hotels, staff and client incentives, renovations, doctors and even dentists.

"It's company policy that before spending any money, barter availability must be checked first," says Schwendinger, who adds that the number-one benefit of using a barter exchange is that it attracts new clientele. "Essentially, it takes away some cash expenses."

Trish Rogers, a fashion-jewellery manufacturer that sells to Holt Renfrew and Nordstrom's, initially got involved with barter as a way to offset some renovation costs. Since then, she has used the non-cash system for plane tickets, hotel rooms throughout the U.S., shipping supplies, cleaning services, staff meals, car rentals, electrical wiring and even the office water cooler.

"At the moment, barter represents approximately 20% of our total business," says Rogers. "With the larger exchanges like BarterPlus, we have no problem spending the barter dollars. And as a manufacturer, I have a lot of excess stock that would otherwise be useless to me. With barter, I'm now able to turn that into viable currency."