The weekly newsletter for everyone interested in barter--the world's most versatile business tool!
March 14, 2000
In this week's report. . .
How To Use Barter To Leverage Your Cash Flow
Every month someone or something tugs at your sleeve for a hefty cash handout: suppliers, landlords, tax collectors, employees, loan officers. The stark fact is that if you don't have cash at a crucial point in the chain of demands, you're finished.
Therefore, your company's cash flow is vital. It represents the everyday reality of your business, the movement of money in and out of your company. Cash flow is your company's most valuable asset, because without it you're out of business.
The goal of good cash flow management ought to be obvious...to have enough cash on hand when you need it. It's a simple concept, yet in practice it really isn't. The problem in analyzing your cash flow is that it involves tomorrow, which is uncertain.
That's why it is so important to learn how to leverage cash flow, deftly playing one element against another, harnessing other people's capital whenever possible.
The fundamental cash flow leverage rule is get your vendors to let you take your time paying them (preferably within several months.) The premise is that every dollar collected in receivables this morning that isn't needed for payable until tonight is yours to multiply all day. Such added sales, by making every day count is certainly one important path to follow.
That's why it's imperative today to work the other side of the ledger. Give more attention and serious focus to saving dollars by getting control of your company's many costs. Because that's where the really big payoff is. Every time your company "saves" (avoids spending) a dollar it goes directly to your bottom line.
Ways To Save Money
1) Do more business through your trade exchange. Every barter purchase, replacing a cash purchase, saves you money.
2) Begin negotiating better with your cash vendors. Ask a simple question: What else can you do for me?
3) Focus on performing to the utmost for existing clients. Remember, it costs 1/5 as much to keep them happy and satisfied as to find and secure new clients.
4) Introduce incentive programs for greater productivity, then make them pay off daily, or weekly. Create a mission, a sense of urgency. And use barter whenever possible to fund the incentive programs.
5) Install an idea box for your employees. Reward them for the best money saving idea. Tie in the reward to the annual savings, from dinner for two to a week-end getaway with all expenses paid. Be sure to check with your trade exchange to see what's available for rewards...no sense in using up the cash savings by spending that cash!
Micahel Dell Barters His Own Stock For Outside Investments
Computer magnate Michael Dell, founder of Dell Computer while still in high school, recently traded 4.6 million ($200 million) Dell shares for stakes in a unique investment fund.
The fund is one in which other wealthy executives like Dell band together to essentially create their own mutual fund. It's done by pooling their shares, which they claim, reduces their individual investment risks among each other.
American Airline's Rearrangement of Seats Addresses Capacity Glut
The growing plight of the major airline carriers, where excess capacity is growing faster than seats can be filled, is being answered by the removal of seats from each plane. (The alternative, according to AA would have been to put 50 planes in storage.)
That wasn't an option, however, because flying fewer planes would provide greater opportunities for other carriers...especially the low-cost ones, for picking up the business by adding flights.
The new plan is based on the hope that the extra room will offset the higher fares AA plans to charge passengers. Prediction: Within a year AA, and others, will see the merits of bartering their seats through the expanding commercial barter industry.
Vogue Magazine Reports On The Glamour-Barter Economy
In the March issue of Vogue, a two-page story shows the enormous barter network within the fashion and beauty world. Outlined, in detail, is the cashless traffic in luxury goods and services, and where it flourishes...which is wherever the style-conscious meet!
Who trades? They all do...from designers to hairdressers, stylists, trainers, masseurs and models.
The owner of Decades, the Hollywood boutique where Cameron Diaz and Rose McGowan get their glamour gowns for movie premieres, says, "barter is clean and immediate, unaffected by the credit and debt issues of the money system. It builds trust and family, it's the way, ideally, society should work."
Here & There. . .
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