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October 4, 2011

Written by Bob Meyer, Editor of BarterNews

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From the desk of Bob Meyer... 10/04/2011

Bartering New Again, Reports Craigslist

The use of Craigslist�s for possible barter deals is reportedly soaring, as it�s the latest trend due to the prolonged economic downturn. BarterQuest says it has seen a 150-percent increase in users since the recession.

NATE Eyes 2012 Convention Venue

The NATE (National Association of Trade Exchanges) board of directors is looking for a location to stage next year�s annual convention. To stay abreast of what the association for independent trade exchanges is doing click here.

Zuckerman Concerned About America�s Future

Mort Zuckerman, Editor of U.S. News & World Report, says last month was the first time in 66-years the U.S. had no jobs created. That situation, along with a real unemployment of 19%, is unprecedented and cannot be allowed to continue, he contends. According to Zuckerman the way out of the malaise is for the U.S. educational system to undergo a massive, concentrated effort to educate our young in math and science.

It�s That Time Of The Year Again

Trade exchanges everywhere are gearing up for the coming holiday season with their holiday barter expo�s. Experienced traders know the value of attending these events to view hundreds of products and services on display for purchase on a full trade basis.

Major Story In New York Times On Greeks Turning To Barter Networks

The Sunday (October 2, 2011) issue of the New York Times reported in their �International Section� about the growing interest in barter networks in Greece. The title of the article: �Battered by Economic Crisis, Greeks Turn To Barter Networks.�

All back issues of "From the Desk...� can be accessed by clicking here.

(Please feel free to forward our newsletter to your friends and colleagues. We have a �box� at the end of the newsletter for your convenience. See you next week. . .)

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IRTA�s Convention A Hit

IRTA�s 2011 International Convention at the Aventura Spa Palace Resort in Riviera Maya, Mexico, surpassed everyone's expectations. The first-class all-inclusive resort, according to IRTA president Michael Mercier, was the finest property ever to host an International Reciprocal Trade Association convention.

Over 50 barter exchanges and 115 people attended the two-day convention, which included of engaging speakers and informative seminars. �We hit it out of the park with this convention,� enthused IRTA Executive Director Ron Whitney, �the challenge going forward will be to maintain the new standard set at the Aventura Resort. Some of the finest barter companies in the world came together with the unified goal of improving their trade exchanges, while also elevating the barter industry as a whole.�

At the convention, the IRTA membership adopted a modernized Ethics Code. This new Code contains important guidelines for barter exchange conduct on the relevant issues facing the barter industry today. It was the result of the hard work of the Ethics Code Revision Committee which consisted of IRTA President Mike Mercier (Metro Trading), IRTA Treasurer Mary Ellen Rosinski (Tradesource), IRTA Secretary Annette Riggs (Community Connect Trade), Harold Rice (American Exchange Network), and IRTA Executive Director Ron Whitney.

�The new IRTA Ethics Code is a huge step forward in setting meaningful standards in the barter industry. The Code is a clear indicator that membership in IRTA represents the highest level of professional conduct and ethical standards available in the industry,� said Mary Ellen Rosinski, IRTA Treasurer and Global Board Member.

For more info on IRTA and to view their Ethics Code click here.

Is Your Trade Exchange Missing Out On Valuable New Business?

If your barter company�s listing on isn�t current, you are definitely missing out on new business. The web site receives heavy traffic � with over 150,000 page-views every month. Entrepreneurs and corporate executives check the thousands of articles, the weekly �Tuesday Report,� and the �Contacts Section� of our site. They use the latter to find barter companies with which to do business.

Is your barter company�s listing up-to-date?

To keep your listing current is very easy. See the links below to (A) update any changes to your company�s listing, such as new location, phone number, web site or other information, and (B) if your company has not been listed.

Here�s how to get on board:

To make changes to your listing click here.

For new listings click here.

In Today�s Economy What Motivates
Better � Cash Or Non-Cash?

As we slog through an economic atmosphere that feels more recessionary than recovery in nature, the debate over the economic impact of non-cash has a new context.

According to the most recent Performance Perspective executive briefing released by Madison Performance Group (MPG), non-cash rewards, in the right circumstances and in the right combinations, can actually be more effective and therefore more efficient than money alone.

MPG is the worldwide leader in developing employee engagement and incentive marketing programs for Fortune 1000 corporations that include Citigroup, Kawasaki and Siemens. The company implements customized strategies to motivate workers, applying proprietary sales and marketing techniques to maximize employees� success.

As highlighted in the perspective, non-cash awards � merchandise, travel, gift certificates and gift cards, a simple thank you (anything that�s processed/delivered outside of the payroll practice) � are better investments and thus more affordable solutions for companies looking to �do more with less.�

The �cash is king� bias, long held by many business leaders and the reason some organizations still have closed minds when it comes to the potential impact non-cash cash awards, could be playing within their organizations. MPG senior vice president Mike Ryan, says, �Cash should always be front and center in the compensation mix. But is the promise of money really what motivates us to do our best when we do our work? And, perhaps more importantly, does cash alone represent what we really want to get out of the job?�

Non-cash motivators, including praise from immediate managers, can be more effective than the three highest-rated financial incentives: cash bonuses, increased base pay, and stock options. Additionally, non-monetary compensation can maximize effectiveness in aligning the goals of the organization with the emotional priorities of its people.

It can be argued that people are indeed a source of unique advantage � one that is hard to replicate, and companies need to take care of today�s skilled workers by aligning reward strategies with what people really want: rewarding work, meaningful relationships, acknowledgment, freedom, and flexibility.

Even in these recessionary times, employees think more frequently about material awards than they do their cash equivalents. Employees think more frequently about tangible awards � even when they are on an equal value to cash � and that the increased interest may lead to higher performance and greater returns on the aggregate compensation investment. Non-cash enticements can be used to close performance gaps across a wide variety of enterprise-level metrics, or they can be used to encourage improved outcomes at the local level.

�As an uncertain economic forecast continues to place cost demands on companies, it�s time to reexamine the old paradigm that cash is the most reliable motivator,� Ryan concludes. �With new studies showing that non-cash, in the right circumstances and in the right combinations, can be �more effective and efficient� than money alone, companies looking to maximize the impact of their compensation costs would be wise to blend non-cash elements into the mix.�

For more information click here.


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How To Position Your Company for Maximum Exit Value

By Chris Blees

What color of car would you rather buy? Based on your personal preference, the answer to this question will affect how much you are willing to pay for a vehicle that is identical in all aspects other than color. What has this got to do with the market value of your business you might ask? Well, simply put, traditional valuation techniques generally ignore one important factor in their calculation, the buyer.

For example, assuming a dealer has two used cars that are the same make, model, year, etc., but one is blue and the other is silver. They will almost certainly be priced exactly the same. However, if your preference is for a blue car, you would no doubt buy the blue car. In fact, the dealer would have to discount the silver car for you to consider that as an option. Therefore, your preference has effectively determined a higher value for the blue car over the silver one, despite market-value suggesting that they are both worth the same.

So how do you apply this logic to the value of your business? If you�re thinking about selling your business sometime in the future, you probably have no idea who will buy it and what their preferences are, so what can you do now to position your company to maximize value from an exit, and where do you start?

In terms of business acquisitions, there are generally two main buyer groups, each with very different views of what is important to them. These groups consist of either financial buyers and strategic buyers. Financial buyers generally are individuals or groups of individuals looking to invest in a business, whereas a strategic buyer is usually a company looking to add to its existing operations.

As an example, let�s assume that after some initial research you determine that the most logical and likely buyer type is a strategic one. You then determine, based on other acquisitions in your industry, that the primary focus of most buyers is the quality of the customer base being acquired, rather than say the management team, who will most likely be surplus to requirements after the deal.

Therefore, if the last five years have been channeled into increasing and maintaining quality customers over the same time frame, the buyer would most likely pay a higher price for the business. This example highlights the impact of focusing attention on the right aspects, which we call value drivers, of the business to make it the most attractive to likely buyers when it comes time to sell in the future.

Value drivers can include, among other things:

  • Customer Base

  • Management Team

  • Products & Services

  • Competitive Advantages

  • Location

  • Quality of Financial Reports

  • Financial Performance

While you can control and manage most of the value drivers of your business, other aspects specific to a buyer will also determine the potential value that they can justify paying, including:

  • Risk tolerance

  • Required rate of return on investment

  • Ratio of equity and debt used to purchase the business

  • Cost of debt

The impact of these factors is not possible to plan for, but is buyer specific and will result in different values being placed on exactly the same business by different buyers. They should be considered when negotiating an actual sale with actual buyers. In order to position your business to maximize value when the time is right, go through the following exercises:

1.    Undertake a market analysis of who is buying similar businesses to determine the most likely buyer-type for your business.

2.    Review recent transactions to determine what values are being achieved.

3.    If possible, contact typical buyers anonymously to understand the value drivers they�re primarily looking for in an acquisition target.

4.    Understand the level and source of debt that could reasonably be secured to finance an acquisition of your business, so you can estimate the likely ratio of debt and equity.

5.    Perform a strategic planning session for your business, ensuring the long term goals of the company are focused on growing the right value drivers based on your analysis above.

6.    Create key performance indicators in order to track specific value drivers on a monthly basis � include this as part of your monthly financial package to ensure efforts are maintained over time.

7.    Review the process on an annual basis to ensure any changes in buyer types and value drivers are known and addressed in a timely manner.

Gaining a better understanding of how different buyers might view the value of your business can benefit you, if you�re looking to sell and help you build a more valuable company.

Chris Blees is the President and CEO of BiggsKofford Certified Public Accountants and BiggsKofford Capital Investment Bank. He sits on the Board of Advisors for the Alliance of Merger & Acquisition Advisors, chairing the Certification Committee. He is co-author of Middle Market M&A: Handbook for Investment Banking and Business Consulting, scheduled to be released February 2012.

For more information click here.

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There are many forms of secondary capital�which can be defined as any financial instrument that measures and communicates value in a common language. Would you like to see and learn more about the many forms of secondary capital?

 We have 70 free, informative and inspiring, articles for you in our �Secondary Capital Section.�

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