Selling Futures: Barter
Your Future Production or Services
By Christopher J. Sweis
At age 18, I was already
one of the youngest commodity brokers in America. I was on
the road to discovering barter dollars, an age-old currency
with a digital twist.
Futures, commodities, contracts
There I was, a young kid who knew only one thing well -
hard work. I was in Chicago's heart, living to the beat of
America's commodity drum as I breathed in what was to become
the future of trading. I loved the exhilaration I felt.
Learning about trading futures contracts at the Chicago
Mercantile Exchange and the Chicago Board of Trade was
something I hadn't envisioned before it became a reality.
Little did I know, but the lessons I was learning were not
just a means of survival and wealth - this was the beginning
of a road that would lead me to barter dollars and the
What is a barter dollar, anyway?
It's simple. Barter dollars are just like futures contracts
traded at the Mercantile Exchange and the Board of Trade.
Barter dollars are a currency. They measure the exchange of
goods and services between businesses and individuals.
Barter dollars give people the ability to purchase a future
good or service that equals the amount of barter dollars
Each barter dollar is measured against the value of a
product or service based on its cash (US dollar)
equivalence. A barter dollar is like a �due bill� or
�promissory note." It is legal tender - an enforceable and
contractual right to purchase goods and services within a
barter network. It is like a US dollar that is a Federal
Reserve Note that is backed by the Federal Reserve, except
that a barter dollar is backed by goods and/or services
within a network of companies that accept barter dollars.
These wonderful barter
dollars are spent like cash or credit cards - and, they may
be used at stores that have nothing to do with original
Why would you want to use barter dollars?
Selling excess inventory using barter dollars helps you
purchase items you would usually use cash for. You can also
sell future products and services for barter dollars that
you can borrow from an accredited barter exchange or barter
bank. For entrepreneurs with lots of capacity but limited
sales this can offer a real boost to their gross revenue and
How do you measure a business' excess capacity?
Take an airline, a cruise ship and a radio station, for
Planes fly every day. Every time a plane flies with unsold
seats, that's excess capacity. An airline doesn�t need to
add more fuel, flight attendants or food to accommodate a
full flight versus a flight booked to 70% capacity. Why not?
Salaries are a fixed cost.
Insurance has a fixed rate.
The amount of fuel is fixed, too.
The very second a plane leaves the ground the opportunity to
generate additional revenue thrusts into the atmosphere
quicker than I can say, "barter dollar." So, if an airline
on average sells 70% of its tickets, then you can say the
airlines has 30% excess capacity.
Empty cabins amount to excess capacity as soon as the ship
ships out. Talk about sinking! That revenue is lost and can
never be regained � a total loss. A lost opportunity at sea.
Advertising's the name of the game. There are radio spots to
sell every day. If a broadcasting company has a total of one
thousand 30-second spots to sell per day but only sells
about 700, then it must either give away the other 300 radio
spots for free - or fill them with in-house ads and
public-service announcements. Dead air doesn't fly when
sound waves determine whether a company sinks or swims.
In all of these examples the excess capacity had an
expiration date. Once that date had passed the revenue
opportunity had, too.
By offering a portion of
your business' excess capacity in return for barter dollars
you can reduce the amount you lose or waste every day by
accepting barter dollars, which are recognized by the IRS as
a currency and are considered gross revenue or income and
act like �due bills� and �promissory notes.�
You can accept barter
dollars for, say, 10% of your current monthly gross sales
and still have excess capacity to meet sudden cash demand.
In the case of the airline, they can offer all tickets not
sold five days before a flight's takeoff to barter-dollar
clients. This gives the airline an extra opportunity to sell
the tickets for cash. Selling tickets for barter dollars
also generates the highest MSRP (Manufacturer Suggested
Retail Pricing) an airline can get for the tickets.
The barter dollars businesses acquire can be used to replace
current cash expenses like radio advertising, printing and
employee benefits - to name a few. Many businesses around
the world today profit from accepting barter dollars for
goods and services because they are able to move excess
capacity and save the cash that they are spending on
A bright light
The whole barter dollar concept hit me in 1990 when Dean
Hnilica showed me how to do my first barter-dollar
transaction, for two fax machines that my business needed at
the time. Then, it hit me �
Soybean futures contracts are traded daily at the Chicago
Board of Trade (where many of my friends still exchange
insanity and brain cells for wealth and debt) even though
they don't deliver 100,000 bushels of soybeans until
November. We can look at a barter dollar line of credit the
same way - it gives you the right to buy today and pay back
later with future products and/or services you will offer in
return for barter dollars. This is what pays back your line
Companies can borrow barter dollars easier than they can
borrow cash because the barter dollars are assigned to
future products and/or services that a business guarantees
in return for the barter dollars it can spend immediately.
All of this is like an interest free loan, which is great!
Your business gets the capital it needs to grow and expand
on a $100,000 line of credit, for example. All you pay are
transaction fees similar to VISA or MasterCard transactions.
The benefit is two-fold. You sell future goods and services
now assigned in the line of credit. You also get to buy the
things you'd normally pay cash for using these incredible
Management and bartering
Managing barter dollar
transactions within your business is important. You want
barter dollars to be additional and incremental newfound
business on top of your current cash business. You must
watch and make sure that barter dollars are used to offset
cash expenses and do not get in the way of current cash
orders or clients. Too much barter can affect cash flow
negatively - and if a business does not use barter dollars
to offset cash expenditures it loses its value.
Cash is King?
Kind of, but being a
profitable business is your number one goal. If you accepted
only cash and shut the door to credit cards, debit cards,
gift certificates, private label lines of credit, purchase
orders or any other means of payment, then you'd risk losing
Dean of Barter Dean Hnilica�s father told a credit card
processing salesperson who came into his shoe shop in the
70s that accepting credit cards as a form of payment was
"No one in his or her right mind will ever take a credit
card. I think we will stick with just cash on the barrel,�
he told the salesperson.
Times, they are a changin'
Mentality has certainly shifted since the 70s. Today, if you
don�t take credit cards, debit cards - or even smart cards -
you are going to lose customers to your competition. The
same can be said for barter dollars. In fact, I am going to
say it right now:
�If your business does not accept barter dollars a form of
payment, then you are going to lose potential clients to
competition that accepts barter dollars for a portion of
their goods and/or services!�
Barter dollars are a relatively new concept, but soon
technology and education will bring this currency to the
same point VISA and MasterCard transactions are at today.
Currently, less than 1% of all US businesses barter.
However, it's an industry that has grown every year for the
last 20 years. Bartering grows in a recession and in a
booming economy - and the Internet has made barter easier
As society educates itself on barter you will probably see
critical mass as market penetration reaches 15%. It will be
just like what you saw with credit cards, the Internet and
TV (I had to throw that one in there since it is where I get
to see all my favorite sports teams � the Cubs, the Bears,
the Bulls - and, yes, I am a Cubs fan).
Remember -- an auctioneer will sell your goods and services
for cash at a discount, maybe as low as 5 cents on the
dollars. That's the truth - just ask any of the business
owners who have recently gone out of business. Maybe they
went out of business because they did not accept barter
dollars, had too much excess inventory, not enough sales and
used cash on expenses that they could have used barter
"Hmmm," just a hunch.
When you accept barter dollars for your goods and/or
services you typically sell them at MSRP or full value. Save
your cash and use barter dollars to replace your cash
expenditures and your business will be more profitable. And
yes, cash will still - and always will - be King.
Copyright Ibart, Inc. Reprinted with permission.