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January 2, 2001

Move Into 2001
With Barter In Your Planning Efforts

What will it take for today's smaller companies to be tomorrow's stars? Excellent new products and services, of course. But also strong-willed founders who in the true entrepreneurial sense will refuse to take no for an answer. Ones who will sacrifice time and energy for their company's success.

Equally important, it will take outstanding management along with the implementation of a series of cost controls to stabilize a company's finances as it fulfills its potential. It also calls for creativity and the embracement of new, proven concepts.

Those who have been keeping up with business news, know that some of the most esteemed names in the corporate community have learned the hard way that maintaining a sharp focus on the bottomline is of critical importance.

Smart Management

As a small business, your affairs may not have made headlines, but that doesn't mean you don't have to be any less zealous in your pursuit of continuing management excellence.

The fact is, management excellence should never be viewed as the exclusive domain of large corporations. All businesses can be the beneficiary of solid management coupled with information. Keeping this in mind, consider these strategies.

Start Your Budget At Zero

In most companies, budgets get built year by year, with managers asking themselves, "How much should I add to the budget this year or next? Five percent? Ten percent? Or, if the forecast is gloomy, should I subtract that 5% or 10%?

A more effective approach is called zero-based budgeting. It is markedly different in that it requires managers to start their budget at zero and justify every line, every component for inclusion in one's budget. This way, instead of building on pockets of inefficiency, waste can be identified and rooted out annually.

A zero-based budget is compatible for any size business. When small businesses engage in zero-based analysis, many are surprised at how much dead-wood they are carrying.

Positions that were created and people who were hired at different times to meet different needs, but have since lost their relevancy, are still on the books. And they may be draining the bottomline.

Downsizing

It is difficult to eliminate positions or people who have been with your company for years. But as a business owner, you must make these decisions based on performance--rather than on sentimental reasons alone.

Remember, when you're trying to downsize your business, the overall productivity improves, helping to ensure long-term viability. More productivity at a reduced cost translates into improvements in your competitiveness and profit margin.

Trading

Another engine for increased growth and productivity is barter. Used in a systematic, organized, and prudent manner the purchase of needed goods and services at your marginal cost-of-doing business will result in incremental sales that are dramatically profitable.

One other important consideration to remember is this: regardless of how astute your management efforts are, you are always faced with three possible alternatives in your forecasting efforts.

1. You are right on...you hit your forecasts.
2. You are overly optimistic and over-produce.
3. You are too conservative and under-produce...so you can't fulfill all the orders, losing valuable cash sales.

In two out of the three cases you're off the mark, and it will cost you. If, however, you're aware enough to realize that barter is a safety valve, you can cover the two misses, which is why smart management will include barter in their planning efforts.


Divestiture of BXI Dents ITEX Earnings

ITEX Corporation, a barter company founded in 1982 and traded over the pink sheets (ITEX), announced a first quarter loss of $547,000, or 3-cents a share for fiscal year 2001. (Compared to a profit of $688,000 last year.) ITEX expects to become profitable by the end of the third quarter, 2001.

Revenues decreased from $4.2 million in the first quarter 2000 to $2.3 million in the first quarter fiscal 2001, representing the results of the divestiture of its BXI subsidiary last year.

Collins Christensen, President of ITEX, explained, "The loss, although expected, was greater than anticipated because of costs associated with the development of the new media and corporate trade divisions, as well as costs associated with establishing a new sales force. Plus the revenue streams from foreign operations have taken longer to realize than we had planned."


Here And There. . .

  • Creditors of South Korea's Samsung Motors have been offered a barter proposal, in lieu of cash, for penalty interest payments due them. The barter offer is 500,000 shares in Samsung Life, another company of the Samsung Group.

  • A sign of the times... Slower holiday sales resulted in Amazon.com opening a new Amazon Outlet store (on their web site) where close-outs and overstocked items from the web site will be discounted up to 50% off standard prices.

  • Exchangemall.com provided four L.A.-based charities with a $20,000 trade dollar donation this past holiday season. Their site provides the ability for any person or company to donate to charities (on the site) year around.

  • Advise4Stock.com is a web-based provider of equity-based advisory services. Located in Phoenix, the company offers the marketplace an alternative to VC and angel financing for under-financed start-ups. A4S's goal is to connect start-ups with a global pool of independent financial analysts, web developers, marketing manager, and IPO project teams. A4S's advisors are willing to work for equity.

  • CreditTrade, www.credittrade.com, is the world's first credit trading exchange through which wholesale counterparties can trade non-commoditized credit products. (Credit products traded on the exchange include credit derivatives, loans, and asset swaps.)

  • Follow-up on "Global Sources B2B Marketplace" (see December 12th issue)... The global merchandise trade enabler has launched its 13th geographic portal, India Sources, www.indiasources.com. It is a local web site designed for attracting importers worldwide to access India's export products and suppliers.

    The new portal joins Global Sources network of geographic portals that currently comprise Asia, Hong Kong, China, Taiwan, Korea, Thailand, Indonesia, Australia, South Africa, Mexico, Singapore, and Turkey in a single database.

  • Online advertising spending has flattened during what has been expected to be a strong season for web ads. The current softness is mostly due to the whole dot-com shakeout, as dot-coms have been the biggest advertisers online. Companies that track online ad spending are lowering their expectations for the year 2001 as a result.

  • MrSwap.com, founded in 1999, allows consumers to buy, sell and barter music, movies and games. Members can barter their pre-owned CDs, VHS tapes, DVDs, and games via their SwapPoint barter system. MrSwap contends they are the web's most reliable consumer swap and sales site, due to their person-to-person fulfillment processes.

    Fulfillment is automatic in that pre-addressed and postage-paid mailers pick up and deliver all swaps...making it the easiest system to use. (MrSwap guarantees all barter deliveries and provides complete customer support through the entire barter cycle.)

  • Ron Perelman, Revlon's chairman, is proposing a barter deal with large institutions that hold $140 million in bonds for his company. He proposes to swap them for new bonds that will pay 12% interest. The new bonds will be issued by Rev Holdings, a closely held Perelman holding-company, whose major asset is 83% of the publicly traded shares of Revlon Inc.

 



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