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Editor�s note:
Alan Elkin, CEO and the co-founder of Active Media in 1983, made the
following keynote speech at this year�s International Reciprocal
Trade Association�s 31st Annual Convention. Active International is
the world�s largest corporate barter company and has scores of
offices worldwide.
Alan Elkin Addresses
Peers With IRTA Keynote Presentation
There are so many people to thank and to acknowledge today and I
know I�ll miss quite a few of them. But let me thank Dave Wallach,
President of IRTA�s Global Board, for inviting me and of course the
other members of the board. I�d like to welcome the other corporate
trading companies who have come to this event as well as all the
exchanges who made the trek here too.
I
am pleased to help kick off an event with a theme as impressive and
as purposeful as �Modern Barter, Leading the Way to Economic
Recovery.�
There are more people at this event then we�ve seen in quite a
while. People continue to come to this prestigious convention from
all over the world and I want to welcome those companies who have
traveled great distances to be here. It�s hard to believe it is our
31st convention.
I
am humbled by the thought of being asked to speak as a
representative of my industry. For my entire career, I sought to do
the best I could for my own company, our employees and first and
foremost, our clients. I always wanted to learn from my colleagues
and was happy to help when somebody needed it. I count my years with
IRTA as part student, part educator, part teammate, part realist and
part optimist.
This is a very good time to speak to this group. So much has taken
place over the past few years that it�s difficult to know where to
start. It is as if we walked into a tunnel as one species and came
out as another one.
Over the past couple of years we have all found challenges in our
businesses. These challenges did not discriminate if we were a
retail exchange or a corporate trading company. They didn�t care if
we were a large company or small company. They didn�t care whether
we employed just a few people or hundreds.
Wherever we were, regardless of the kind of company we were, the
challenges of the marketplace were like dust storms, laying waste to
all that were in front of them.
Two
things happened over the past couple year � two things that could
have been crippling to any one of us but certainly had an impact on
all of us. The first thing was that money seemed to disappear,
shattering both consumer confidence and corporate movement.
It
wasn�t that clients went away. The just stopped doing business.
Consumers went behind the bunker walls and wouldn�t come out. Fear
of the future grabbed everybody. Company after company laid off
employees and those people certainly were no longer capable of
spending and those who remained on the job had to feel fortunate and
began to save money at dramatic rates.
Secondly, businesses stopped advertising. Instead they preferred to
sit on the sidelines until they knew which way the recessionary
winds would blow and would take steps only when there was some
assurance attached. They were reluctant to trade their
underperforming assets and sat with them in the event they needed
emergency cash.
These years have been difficult for both the retail exchange side of
our industry and the corporate trading side as well. It has been
said by some that our industry does better when the economy is down.
However, when the economy literally stops moving nobody does
particularly well. We have had a couple of years of unreliable
growth, if we have been lucky enough to grow at all.
As
difficult as things have been and still are, I believe it is a time
of possibility once again. The two parts of our industry have much
to gain from creating the new, �Modern Barter.� It�s easy to see
where we are different � exchanges are locally targeted and work
more in a retail environment. Corporate trading companies work in a
wholesale environment and cross borders all the time to move credits
or provide fulfillment.
I
believe the Modern Barter industry travels on two parallel paths and
it�s our job to make those paths converge. We both face the same
challenges in modeling our companies to assure that the consumer is
king. There is much to gain for the exchanges by working with
corporate trading companies. It can be very profitable for an
exchange to help a larger client with underperforming assets work
with corporate trading companies while maintaining their own
relationship with them. The services we provide could add to your
revenue when relevant to do so.
The
same holds for locations where the exchange can help the corporate
trading company serve their clients on a more local level.
Our
skills may be different, but our goals are the same � generating
more profit for our companies and helping to move our industry
forward.
Today, we are at a point where the global economy is resetting
itself. What that means is basically we have rebooted and must see
ourselves in a new and different way. Each of us has to accept the
fact that things are different now and that there are new criteria
for success. Unemployment remains at about 9.5% these days, but when
you factor in people who are underemployed or have stopped looking,
that number doubles.
The
first action in the reset is that we need to accept that the past is
just that � the past. Then we must adapt to what has happened in the
marketplace and realize what the new expectations of us are. In
short, we must change. More than ever before, we need to listen to
our clients. We must understand that their needs have changed and it
is our job to make sure we are clear on what those needs are and are
experts in providing them. The way to do that is to listen to them.
We
can no longer be simple service providers. We must be partners on
their economic stage and be prepared to do the things that make them
successful. They all want more from us and want to pay us less for
it than they had in the past. The erosion of margins cannot be
ignored and we are all fighting to defend the pricing we�ve been
working under. The entire concept of procurement is under attack.
Our clients want to pay less from us and we want to pay less from
our suppliers.
It
is through our clients� success that we will find our own. Our place
on the economic stage is different from what it once was. Customers
are buying only what they need � there isn�t enough money for most
clients to splurge, so we need to be sure we are hearing what they
really need.
What makes things more difficult is we don�t know where any help is
coming from, or even if it�s coming at all. What has come out of
Washington has been either misguided or as of yet ineffective. There
are a host of new laws being implemented and each implementation
breeds uncertainty so in reality nobody moves. In my state of NY,
the Metropolitan Transit Authority, or MTA, has introduced a levy so
egregious that companies are having great difficulty paying it.
As
business owners, we do not know the impact or the ultimate cost of
health care changes and cannot say with surety how we will be
affected. But I can tell you one thing that I do know. Much of the
road to relief from the malaise of the marketplace will be paved by
us and others like us. We can lead the way to economic recovery.
Entrepreneurs have always been the pioneers for the economy and
continue to be so right now. We know what we are capable of doing.
We understand that we ARE the future and we don�t ask for much. Many
of us are simply saying to Washington and to our state capitals,
�Get out of the way. We can do it. Leave us alone and we will make
this right.� Entrepreneurs can find a way to re-cast the economy.
We�ve done it before and we will do it again. As this convention
maintains, modern barter will leading the way to economic recovery.
But
where will it really lead us? Will it lead us to some new morning of
hope and inspirational economic leadership? Perhaps. But unless we
understand the economy�s reset and how to work within it, we will
lead ourselves to the same place.
And
remember, it�s not just a domestic issue, it is an international
one. All around the world, people still look to America for the
clues as to where we are headed and what we are likely to do when we
get there. But presently the view in some circles is that our best
days are behind us. Our lead in the global economy diminishes as the
economies of others appear to be on a fast track.
I
recently returned from a trip to China, now the number two economy
in the world. I was very anxious to go and see for myself what this
growing, pulsing, lively economy looked like. Would China surpass
our economy? What was at the core of its marketplace and what could
I learn about the nature of doing business?
Despite everything we have read about China, let�s not lose sight of
the fact that China has an unemployment rate of some 16% and is
clearly suffering from changes WE have made here in America. Our new
frugality, our new goal of making things last longer or having
greater life spans and greater sacrificing on our part is making it
tough on manufacturing in China. Decreasing demand for consumer
products coming from the United States is not helping to power the
manufacturing force that nation has created.
The
middle class in China is being squeezed as their own, newfound
consumerism takes a hit from unemployment and the shrinking of their
own discretionary income. That�s with the understanding that if
China could elevate only one quarter of its population to middle
class status, they could surpass the buying power of the U.S.
The
U.S. economy, our supposedly shrinking economy, our allegedly
approaching midnight has everything to do with all the economies
around the world. At the end of the day, it is still America that
sets the pace. But in order to maintain our leadership position and
overcome a perception that we are fading like an autumn flower, our
thinking must change. The resetting going on is global in nature and
the world is still looking our way for clues. The global economy,
which is established by the economies of nations, relies so heavily
on its individual parts that a change of mood, spirit, the weather,
political activity or most of all, the internet, can have a real
impact on what happens thousands of miles away.
It
is a challenge for us here in the U.S., because over time we have
lost some of what has made us great and we have to get it back. We
have let the notion that hard work and sacrifice will pay off slip
away. We have to return to that kind of thinking, otherwise we will
lose the momentum and then the leadership. But how do we find a way
to recapture an attitude where solid ethics and hard work guided our
paths? First we need to understand why we moved away from it.
It�s understandable that we�ve lost some of that attitude. In our
zeal to make things easier, we�ve created tools and behavior that
moved us away from that sold work ethic. It�s natural for people to
want their lives to be better than the lives of those who came
before them. It�s even more natural to want better lives for our
children and grandchildren. We want them to have a better life than
we have.
We
don�t want our kids to live with fear and concern for their
day-to-day activities. We want it to be easy for them. We want to
relieve the stress they feel. We have the tools to do it, so we
might as well make it easier on our kids.
Some may say we are creating a spoiled generation. I believe it�s
worse than that. I believe we have created an ill equipped current
and future generation that will run the risk of handing our
tomorrows to others around the world.
I
read a story not long ago in the New York Times about a family that
was transferred to China. When they arrived, their kids had to drop
back a grade because they were not in a position to compete with
other children their own age. The kids did the best they could with
their new classmates and pushed to achieve along with them. When the
family was transferred back to the United States and went back into
schools here, they were advanced a grade because of their edge in
education.
We
need to be motivated by that and return to the way we once thought
about things. We need to go back to a time where preparation was the
key and where performance came first followed by leisure or fun. The
more we educate, the more we innovate.
But
it�s not only our children that must develop this attitude. This is
a lesson we should teach ourselves as well. We, as adults and the
current holders of our economy, must adapt and adopt that attitude.
Don�t avoid doing something because it is hard or stressful. That is
nonsense. Whatever it takes to achieve on behalf of our businesses
is what we ought to be doing. Remember, the reward is in the sale,
not in the presentation.
What we are seeing now, in whatever part of the world we seem to
look, is evidence that our runaway consumerism cannot and will not
be sustained. Our economies can�t handle it. Here in the United
States, it doesn�t matter where on the political spectrum you stand,
you understand that we can�t stay here. Our system has become
clogged. We are bottlenecked and extremely partisan in an
environment that relies on compromise for its success. Regardless of
what happens in the elections next week, we have to know that we
have to work with one another.
And
I don�t just mean politically. I mean the components that make up
the barter industry � all of us here. We know we are sitting on top
of an engine that pushes our economy and creates jobs. We believe
there is still an opportunity to pump $12-$14 billion in trade into
the economy. We can create 50-70,000 jobs per year � and we know we
can act as a parallel capital system.
Because of the reset in the economy there is now great opportunity
for us to work together. Regardless of whether you�re a corporate
trading company or a retail trade exchange there are ways we can
overcome the space between us. We can share capacity. We can help
each other provide services to our clients. We can try to utilize a
universal currency that helps all of us. We can steer clients to
each other when our services are right for them. Let�s buy from each
other, sell to each other and accept each other.
The
one thing we cannot do is remain stagnant. Our customers and clients
are expecting new ways from us. We must provide those new ways. My
company is privileged to do business in 44 countries around the
world and we have had to change our thinking in order to
successfully work in each one of them.
I
believe in the global economy. I believe we play a role in how a
family in London spends its money on the kids or how a business in
Indonesia gets the raw materials it needs. That gives us an
opportunity and a responsibility. We can be one of the great and
dynamic forces of this century. We can create jobs, we can move
goods, and we can put billions into economies all around the world.
The
blistering two years we�ve all endured have forced many of us to
change already. We ARE Modern Barter and we ARE leading the way to
economic recovery. With each step we take, the Retail Exchanges and
Corporate Barter companies are bringing the global economy, filled
with opportunity, closer to each of us. It is within our grasp now.
Let�s embrace what we can do together in order to bridge the gap
between where we have been and where we can be going.
I
look forward to working with you to make our industry the dynamic
force in the global economy we know it can be.
Thank you.
Is Your Trade Exchange Missing Out On
Valuable New Business?
If
your barter company�s listing on BarterNews.com isn�t current, you
are definitely missing out on new business. The web site
BarterNews.com 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.
IRTA Gains Favorable Opinion On Lawyers Bartering
On October 29, 2010, the North Carolina Bar Association approved a
favorable opinion which allows lawyers in North Carolina to
participate in barter/trade exchanges, subject to the following
reasonable criteria:
1) The barter exchange exercises no influence over the judgment of
the lawyer.
2) The barter exchange's listings and advertising for the
lawyers are truthful.
3) The barter exchange accurately discloses which states the lawyer
is licensed to practice in.
4) The barter exchange provides a complete and impartial list of all
participating lawyers in the exchange and does not restrict the
number of lawyers in the exchange.
5) The barter exchange does not do "in person" solicitations of
members by the barter exchange manager or broker on behalf of a
exchange member lawyer.
6) Advance payments for litigation expenses or other expenses
of representation must be paid in cash, check or credit card, since
Rule 1.15 requires a lawyer to deposit such funds in a trust account
and barter dollars cannot be deposited into a bank trust account.
In the future, IRTA will use this opinion to persuade those few
State Bar Associations who have a negative opinion on this matter to
reverse their anti-barter exchange stand.
Questions may be directed to
IRTA Executive Director Ron Whitney at (757) 393-2292 or
ron@irta.com.
�
International visitors look for BARTER CONTACTS in our Global Barter
Section. If YOUR exchange isn�t listed see the forms on the lower
left of the page. (Click
here.)
�
Attention trade exchange owners...thousands of visitors every month
visit our BARTER CONTACTS section on our web site where we have
names & addresses of barter companies in the USA. If YOUR exchange
isn�t listed, or the information is incorrect, you can correct the
situation by using the forms to the lower left of the USA map. (Click
here.)
Click here
www.barternewsblog.com.
ITEX CEO Steven White�s
Annual Message To Its Stockholders
Dear Valued Stockholders,
Operating any business involves balancing a number of variables,
including growth, capital resources (human, equity and cash),
strategy, vision, execution and various stakeholder needs and
expectations. It is my job as CEO, with the Board�s oversight, to
allocate our resources wisely for their best long-term benefit, to
focus on the right opportunities, to avoid distractions, and try to
meet the needs and expectations of our various constituencies
without compromising the integrity and stability of our
organization.
The
majority of our decisions are based on what we believe to be best
for ITEX�s long term success, not on maximizing short-term gains or
taking unnecessary risk. We believe our long-term perspective is
evident in our consistent and steadily improving financial results.
Organizational Priorities
In
2003, our newly-elected Board and management team set four key
priorities for the organization that we still follow today. The
priorities are:
-
Increase the value
proposition to our members by making participation in the ITEX
Marketplace cost effective, easy and profitable;
� Provide
exceptional service to our franchisees, paying an equitable revenue
share to assist in their success;
-
Fairly compensate
our employees and provide a secure, innovative work environment
that provides opportunity for professional advancement;
-
Increase stockholder
value by improving operating performance, building assets and
long-term potential.
Historical Results Since 2003
We
have accomplished much over the last seven years to the benefit of
all ITEX stakeholders.
ITEX is in the best financial condition in its history; our member
and broker base is considerably larger due to successful
acquisitions; our brokers and staff have excellent tools and
resources to be efficient and productive; the value proposition for
our members continues to improve; our technological infrastructure
is robust and scalable; we are timely, compliant and transparent in
our public company reporting; our stock price has consistently
appreciated over the years; we now pay quarterly stock dividends;
and our position ranking as number one in our industry is
undisputed. It has taken a lot of hard work from our cohesive team
and astute management of our assets to get us where we are today.
Notable Accomplishments Since 2003 Include:
Fiscal 2010 In Review
I�m
pleased to report in fiscal 2010 our financial condition continued
to strengthen. Fiscal 2010 represented our seventh consecutive
profitable year, reflecting increases in revenues, operational
income, net income, assets, stockholder�s equity and stock price. In
addition, we have a strong, high quality balance sheet, ending the
fiscal year with $5 million in cash, double last year. Operational
income increased to $1.674 million compared to $1.027 million last
year; a 63% increase. Net income increased to $946,000 or $0.26 a
share.
We
attribute our financial success, in part, to the disciplined
management of our finances, our ability to utilize a lean, smart,
and industry-experienced staff, and our dedicated brokers. We have
sought to only add positions suitable for a company our size to
ensure profitability in difficult economic times. SG&A expenses,
including corporate salaries and benefits (excluding depreciation)
have steadily declined as a percentage of revenue from 41% in 2003
to 23% in 2010.
During this same period, the cost of Marketplace revenue, which
represents compensation and investment in our Broker Network,
increased from 60% to 64%. We are very proactive in helping our
franchisees succeed. For example, we have a highly qualified
corporate staff dedicated to servicing their needs; we continually
upgrade internet tools and marketing materials; we host weekly sales
and customer service training calls; we host a �CEO call� with
franchisees every few weeks, which includes a Q&A session; and each
year we sponsor a national convention and two regional conferences
that facilitate teamwork between our staff and franchisees. Last
month, we held the largest regional conference in our history on the
gulf coast of Florida.
In
2010 we continued our investment in our technology, our web services
initiatives, and various broker initiatives including new desktop
computers and the latest software packages.
We
announced a $2 million stock buyback plan in March 2010 and
commenced a first ever quarterly cash dividend payment in June 2010.
As a result of our strategic decisions and execution, key
acquisitions and a lot of hard work, ITEX is now in its best
financial position and poised to have success in the future.
Selected Fiscal 2010 Highlights Compared To Fiscal 2009
-
Income from
operations increased to $1.674 million from $1.027 million;
-
Revenue increased to
$16.925 million from $16.502 million;
-
Net income increased
to $946,000 from $607,000;
-
Earnings per share
increased to $0.26 from $0.17;
-
Cash at end of
period increased to $5.169 million from $2.557 million;
-
Stockholder equity
increased to $14.869 million from $13.981 million;
-
Increased
our revolving credit facility from $1.5 million to $2.5 million
with a lower interest rate; and
-
Paid a cash dividend
in the amount of $0.025 per share during the fourth quarter.
Our Future
ITEX�s future continues to be very bright. We have a healthy balance
sheet with access to more than $8 million in capital, including our
bank credit facility. Access to capital is the key for pursuing
strategic opportunities.
Operational cash flow in 2011 is expected to remain strong, allowing
us to continue to invest in our Broker Network and in our
technology, make quarterly cash dividend payments, and fund our
stock buyback plan. We will review our cash position quarterly to
balance between the short and long-term needs of our business and
determine the best return to our stockholders.
While cash preservation is not our sole objective, it has great
value in uncertain economic conditions. ITEX�s results since 2003
demonstrate the benefit of maintaining a longer-term perspective.
Although cash can be readily dissipated on short-term objectives, it
takes discipline to develop capital to preserve our ability to
capitalize on opportunities when they arise.
We
continue to work on improvements to our proprietary TEAM software
and plan to launch a new platform in late 2011. When completed, all
trading community participants will benefit from an even more
robust, flexible, and efficient technology platform.
We
approach our business with a sense of pride and with a focus on
excellence. The policies and strategies we have implemented over the
past several years are creating revenue, reducing expenses, and
continue to foster a high-performance culture. We are optimistic
that our strong performance will continue � to the benefit of all
ITEX stakeholders.
Once again, I would like to personally thank our employees and the
franchise network (and their staff) whose dedication and drive is a
vital component in our success; our members, for whom we strive to
deliver value and service; and our valued stockholders for your
continued support and interest.
Sincerely yours,
Steven White
Chairman and CEO
