The weekly newsletter for everyone interested in barter--the world's most versatile business tool!
November 21, 2000
The Industry Standard Magazine Says Barter Companies Need Cash Business To Grow
One of the top magazines reporting on the new economy, The Industry Standard, stated in its November 20th issue that barter companies are finding it difficult to build a business around barter, and "underscores the limitations that relegate this type of transaction to a bit role in the economy."
Citing that the barter business is one-quarter of 1 percent of the U.S. gross domestic product, the Standard said "it's curious that barter should get so much attention from Internet startups. There are many shortcomings to barter exchanges, and they're magnified when you consider how convenient it is to use money." (Ed. Note: The question for the small business owner isn't how convenient money is, but rather how easily it is obtained!)
As often happens, a quote from a well-known person is used to make a point. In this article, Robert Laurent, an economics professor at the Illinois Institute of Technology and a former economist at the Federal Reserve Bank of Chicago, offered his insights. "Bartering can be problematic because it requires you to find someone willing to trade a good or service when and where you want it. Such matchmaking can be difficult and time consuming. Without money, you'll have a hell of a time running a complex society."
Unfortunately, those experts in other areas aren't as well versed on the subject of trade exchanges, which the article is all about. They don't understand the dynamics of a trade exchange. Laurent's comments pertain to bi-lateral trading (direct, one-to-one trading) not multi-lateral trading which occurs within a trade exchange where the trade dollar received by a trader/seller can be used anywhere within the trade exchange to make a needed trade/purchase. In fact, the writer then alludes to how, for online barter exchanges to succeed, they must pair up traders.
Trade exchanges, online or off-line, don't pair up traders per se. Rather they have built a marketplace, a conduit if you will, where additional business can be done outside the cash marketplace. And they provide a valuable alternative currency for the cash-strapped, small and mid-size businesses around the country.
Finally, no one in the commercial barter industry is suggesting that we eliminate money...what is needed in today's world, especially for the small business sector is additional liquidity. Trade dollars offer such liquidity and are a form of secondary capital, as are gift certificates (a company's scrip), frequent-flyer miles, unused production capacities, due bills, etc.
The story further suggests that barter companies need cash businesses to grow, citing Bigvine's merging with internet company AllBusiness.com (reported in our October 24th report) and Ubarter's sale to Network Commerce, thereby wrapping their barter services into other e-commerce offerings.
Unfortunately, the story never addressed what elements are really needed for the commercial barter industry's growth.
Have You Contacted Your Trade Exchange Yet For A Tax Professional?
Small businesses are more likely than other taxpayers to run afoul of the nation's tax code. But a government report says it has more to do with the complexity of the tax laws, and lack of assistance from the IRS, than it does with entrepreneurs intentionally trying to cheat the tax man.
That's why more and more of the nation's 40 million small business taxpayers are using a paid tax professional to help them do their taxes. As a member of a trade exchange you can obtain these services using barter!
Here And There. . .
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