The weekly newsletter for everyone interested in barter--the world's most versatile business tool!

August 6, 2002

Written by Bob Meyer, Editor of BarterNews

Strategic Finance Magazine Reports On Barter

The official publication of the Institute of Management Accountants, Strategic Finance, published an article titled, "The World of Barter," in their July issue. The author of the article was Don Mardak, CEO of International Monetary Systems (www.internationalmonetary.com). Mardak is an industry veteran, former two-term President of NATE, and has just taken his company public. (OTCBB:INLM)

The article was generic in nature and acquainted the readers, CFOs and CEOs, with an overview on the benefits of barter.

Jack Schacht's response to comments of July 16. . .

"Though I gave up arguing with my fellow trade exchange owners a long time ago, I feel compelled to respond to Don Loughnane's comments in your recent July 16 Tuesday Report. Don's comments unfortunately represent a common misconception still held by many exchange owners.

"First of all, an exchange cannot control barter pricing through the enforcement of trade rules and regulations. It is the marketplace, not the exchange, that determines what a client charges. No trade rules will have a significant effect on our highly entrepreneurial marketplace.

"It is under the exchanges control, however, to properly develop its marketplace which in turn will help control pricing and keep it competitive. For example, an exchange with only one computer vendor in its marketplace will find that computers are sold for a much higher price than an exchange which has several computer vendors. In the barter market, as well as the cash market, prices are always effected by supply and demand.

"A second way to develop the marketplace in order to keep pricing competitive is to see that key clients have products and services readily available to them. A computer dealer who knows he can immediately use his credit for things he needs at competitive prices can obviously be encouraged to do a more competitive deal. This is readily demonstrated with clients who trade with more than one exchange and offer the same item at different price points within the different exchanges. The value of a trade dollar is simply not the same from exchange to exchange. No trade rules can change that reality.

"It should be pointed out that even in the strongest, largest, most developed barter companies, the trade dollar is not on par with a cash dollar. Since we need to interface with and work with the industry as a whole, it is important that we take our cue from the barter main stream. This will avoid the need to arbitrarily raise or lower our own client's prices when working with other barter companies.

"It is high time that retail (trade) exchange owners got real and started appreciating the great opportunity we have for highly entrepreneurial business owners. We must stop catering to those unimaginative business owners who will probably never fully appreciate what barter can do for their business and their personal lifestyle. Barter is really not for them and we can never build highly profitable businesses if we cater to them.

"Finally, the very best that we can do is educate our marketplace, not legislate it into some petty bureaucracy where we delude ourselves into thinking that clients will somehow serve our interest as opposed to their own!"

Jack E. Schacht, Founder
Illinois Trade Association
Niles, Illinois
www.illinoistrade.com

Land is still one of the ultimate commodities. Do you know the seven advantages to acquiring and owning raw land? Do you know the five precautions you should observe prior closing your barter deal? This valuable information is found on page 62 and 63 of the FastStart Program I.

Retailers Moving Toward Self-Checkouts

The retail self-checkout market is poised to surpass $1 billion in annual revenue (shipments and installed hardware/software maintenance) by 2003.

Self-checkout reached critical mass in 2002 with Kroger and Kmart installing several thousand units each, and 25% of grocery retailers now have self-checkout installed, according to IHL Consulting of Franklin (TN), an independent business consulting firm that provides analysis and business planning services for the retail industry.

Valuable Contacts For You. . .541 Barter Company Listings

Now available, listings of every barter company in the USA...manufacturers, wholesalers, retailers, travel & media companies move your products and services through these 541 barter companies. Listings include addresses plus phone, fax, e-mail and URL as available. Click here.

• On June 11th we noted that fellow barter professional, Winnipeg's Kurt Refvik, had undergone some misfortune: his 33-year-old wife Kathy had passed away suddenly due to complications from surgery, leaving two small sons age 2 and 4. It was suggested here that it would be a kind gesture to forgo a meal and instead send a check to Refvik to assist the kids' future with a monetary donation...

  Kurt Refvik contacted us last week saying, "I have been overwhelmed by the support of many people, and it has made the tragedy a little easier to handle. I recently started my little guys in day-care and have just gotten back to thinking about work."

• Annette Riggs' comments in last week's Tuesday Report on a standardized trade currency generated a great deal of interest. Riggs reported to us on Wednesday, (the day after the published comments), "I've had a lot of responses already...there is obviously a great deal of interest in this topic."

• Subleased space now represents 29% of the 498 million square feet of vacant space on the market. Typically, sublease space is less than 10% of total vacancies. Real estate's dramatic watershed change that occurred about a decade ago was reported, along with barter's role, in BarterNews issue #29. It looks again like history may be repeating itself.

  Also, the Federal Deposit Insurance Corp. is concerned about the growing concentration of commercial real estate in bank loan portfolios. The FDIC reports 31.6% of FDIC-insured banks have "moderate to high" exposures to development and commercial real estate loans, which is higher than at any point in the last 17 years. (A bank has moderate exposure when its real estate portfolio is double the size of its equity capital.)

• The National Association of Trade Exchanges (NATE) reports that their intercity trading system, known as the BANC, did $464,096 in sales for July. Last year July totals were $192,302. The BANC--Barter Association National Currency--is the standard monetary exchange unit for more than 75 trade exchanges.

• Have you signed up to receive a summary via e-mail of the Tuesday Report every week? If not, go to the top of our Home Page (right hand corner) to sign up!

• New advertising venue...your local ATM. Bank of America is moving in that direction. They operate more ATM's than any other bank, over 14,000, and they're adding more. It will happen over time, as upgrading them to handle advertising (ads will last 5 to 7 seconds), or allowing a customer to pick up concert tickets while checking a bank balance, ranges from $6,000 to $12,000 a machine.

• One of the most desired clients within a trade exchange is a restaurant. The September issue of The Competitive Edge newsletter shows why restaurateurs in your community need the services of a trade exchange.

  The article includes pie charts showing costs for full service and limited service restaurants...powerful material for your sales efforts. So, check out the hottest marketing tool in the industry...click here!

• The country's interest in punishing the culprits, i.e. Enron's, Adelphia's, and WorldCom's CEOs of these errant corporations, actually shows the strength of the American system. That is, failed companies are generally allowed to go under, leaving the rest of the economy healthier. In other areas of the world, the governments make every attempt to prop up their corporations--at a heavy economic cost.

  Most business leaders and honest businesspeople want genuine fraud to be prosecuted because they know that markets work on trust. (Unfortunately, this basic capitalist truth has been ignored by some of the media in their "guilt-by-association-with-all-business" stampede.)

• Business bankruptcies in the U.S. annually over the past seven years have ranged from a low of 35,992 to a high of 54,008 per year.

• Congratulations to the European Union and their decision to put off any retaliation against the 30% U.S. steel tariffs. It's a sign that trade sanity is returning, which is sorely needed by the world economy.

This Issue's Glossary of Terms:

Clearing Arrangement :
A common type of exchange in international trade that allows continuous trading over long periods of time. Without trying to balance equities on every trade, the partners both keep track of what they've traded, and upon completion they balance things out. Such an arrangement allows trade to continue as a process rather than as single events.

Cold Storage:
Placing your equity in passive investment.