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04/27/2010

Manufacturer Used Barter For Quick Turnaround

A glass manufacturing company located in the Southwest, although producing good products, was forced into a Chapter 11 bankruptcy due to severe management problems. But under a new management team full of enthusiasm, and with the help of a seasoned barter consultant, the company was turned around and �back on its feet� within two years.

How did such a quick turnaround happen? Certainly having a good product helped. But sales potential always existed, so that wasn�t the answer. It was due to a series of decisions by a hardworking 3-man team, whose dedicated overtime efforts boosted the company�s sales 50% within a 9 month period � to over $3,600,000.

One of their smartest moves was realizing that barter could hasten their recovery. They committed to utilizing up to 11% of their gross for bartering, as long as they felt the trade was well spent. Lacking experience in this area, they retained the services of a well-known barter consultant who was paid in trade dollars along with a promise of stock (an equity position) in the company.

Here�s what the consultant suggested to the new management team: �Work on the obvious needs first and get as much done on trade as possible.� In analyzing the situation he was aghast to find that this company had never produced any catalog materials or brochures to showcase their excellent products, even though their method of sales was primarily through distributors.

This meant that sales were only made to distributors within driving distance of the company�s plant. Because their products could easily be shipped across the nation, the first priority was to design professional four-color brochures.

Immediately moving on this project, they produced the desired materials by using the members within the exchange, i.e. a photographer, copywriter, typographer, color separator and printer. With these selected pieces in hand they then attended conventions, as well as instituted a direct mail campaign to a select group of potential distributors.

Next, the consultant worked on improving the company�s financial statement by boosting their assets through the acquisition of real estate and trust deeds, with a mix of trade dollars and the company�s products. His 30 years of experience as a real estate exchangor provided the company with an invaluable service in this area.

Deferred maintenance problems were also addressed, including plumbing, electrical work, and a new face lift for the administrative offices. As well, the mundane everyday expenses were dealt with in an expeditious manner ... using trade dollars whenever possible.

Such things as simple catering for their marathon management meetings, the handling of company travel expenses, and the use of perks in the form of gift certificates to select restaurants in the area for the hardworking staff were all obtained through barter.

With determination, effort and an assist from barter, the company made a remarkable turnaround from bankruptcy to the possibility of going public.



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