When you hear the word “barter”, you might think of the old fashioned trading of chickens and cows. But bartering is actually a modern day practice that allows businesses to exchange goods and services using virtual currency. Barter can be especially valuable in times of economic fallout and recession.
We interviewed Nelson Liem, founder of Exmerce, a barter exchange business in Calgary, Alberta, to get his expert opinion on how businesses can leverage barter during economic downturns. Tiller is a proud member of the Exmerce community and we have experienced the financial and networking benefits firsthand.
Exmerce is host to a variety of goods and services including, but not limited to:
- Health and wellness (dental, physiotherapy, massage therapy)
- Trades (plumbing, electrical, roofing)
- Food and beverage
- Property and real estate
- Business services (accounting, advertising, legal)
In this interview, Nelson explains three key benefits of barter:
- Reach new customers and expand your market.
- Reduce cash expenses and improve cash flow.
- Turn downtime or excess inventory into profit.
6:08 – More than just farm trade.
“When most people think of trade or barter they naturally think of direct trading. When you think about farmers you think, ‘Okay I have eggs or chicken, can I exchange it for work on my farm?’ We naturally think of direct, one to one trades. Now, through a barter exchange we use a virtual currency called, ‘Trade Dollars’ to value products and services. So, whatever you as a business would charge out there in the cash world, that’s what you would charge in Trade Dollars through a barter exchange. For example, if you were a florist and in the cash word you normally charge a dozen red roses for $25 cash, through Exmerce or through a barter exchange it would be 25 Trade Dollars. So the Trade Dollars, you would bank that in your account, enabling you to now start purchasing other products and services with any one of the members that’s part of the barter exchange network. So it becomes very much a multi-directional trading, versus one-to one. So you’re not limited to buying what the other person is offering you.”
8:54 – A powerful strategy in times of recession.
“During times of recession, our business actually generally booms. It’s the simple fact that businesses out there are looking for ways to preserve or conserve their cash flow, because whenever there’s an economic fallout, people just naturally don’t spend as much, because cash is king. That is where barter becomes extremely powerful for businesses to utilize in times of economic fallout or recession.”
10:00 – 3 key benefits of barter.
“If I were to share the benefits of what it does for a business owner, it really does three things. One, it’s a way for you to reach out to new customers. Think of Exmerce or a barter exchange almost as an extension of your sales or marketing team. We help to promote your offerings to motivated buyers. And these motivated buyers are motivated to buy from you, because whenever they buy from you, they’re actually buying things at a discount because it’s on trade. The added benefit or value is that if you do a great job for a business member through a barter exchange, they may tell their non-bartering friends about you, which will lead to word of mouth cash referrals.
Number two, it’s a way for businesses to save cash. During times of economic downturn, the key is to save cash as much as you can. What you want to do is leverage trade or find ways to offset your cash expenses, whether it’s for your business or personally.
And lastly, it’s a way for companies to turn any sort of down time or excess inventory into profit.
Those are really the three key benefits of leveraging trade for a business.”
12:26 – More value than discounting.
“Through a barter exchange, the benefit to you as a retailer is you can sell it at the full retail value in Trade Dollars. So by selling it at the full retail value in Trade Dollars, you’re still getting the full value of that product or service. And again, you want to bank the Trade Dollars in your account, enabling you to start purchasing other products and services with any one of the members that’s part of the barter exchange. Essentially, there’s more value or there’s more dollars that you can utilize versus discounting it.”
13:57 – Creative solutions for employee rewards.
“There are lots of creative ways to utilize trade to pay or reward your staff. In terms of rewarding your staff for a job well done, any little gifts of appreciation – a restaurant gift certificate for take-out, flowers, a gift basket – those are things that you can utilize on trade to simply appreciate and show gratitude for your staff so that they stay with you for the long term. Through a barter exchange we can actually set up what you call ‘sub-accounts’ for staff. So with that, you can actually bonus your staff in Trade Dollars, so let’s say you have a staff member that did a great job. You can bonus them 100 Trade Dollars and they will now have 100 Trade Dollars to spend with any one of the members that’s part of the barter exchange… As a small business owner, you can really get creative with almost building another compensation plan for your staff, whether it’s a health and wellness perk, or again, just showing your appreciation for your employee.”
16:53 – Drive new business and create value.
“As a business owner, when considering participation through a barter exchange, there’s really two things you need to consider. One, can the barter exchange drive you new business? And on the flip side, when you’re part of the network and you bank those barter or trade sales, how do you spend it so that it creates value for your business or for you personally? It’s always important to browse the member directory to see how you can actually spend it on your business. And the key is to identify where you’re currently spending cash on your business or personally, and seeing how you can leverage barter or trade to offset some of those cash expenses.”
18:10 – Yes, it’s legal.
“A lot of business owners aren’t aware that the federal government actually passed what was called the ‘Barter Income Tax Act’ in 1982. So as per Canada Revenue Agency here in Canada, they actually consider your bartering income the same as cash income. So one Trade Dollar or one barter dollar is equivalent to one Canadian cash dollar. So as a business owner, anything you purchase on barter for your business, you can actually still write that off as a regular business expense. Personal expenses unfortunately, you can’t do anything about that. You still do have to report your barter sales. So at the end of the calendar year, let’s say you did $10,000 in barter sales or trade sales, and you do your cash sales. You would still have to combine the two and pay taxes to the government because they see it dollar for dollar.”
20:18 – Businesses of all sizes barter.
“Through a barter exchange, everything is above table. It has to be reported to the government. So really, this is just an alternative sales and marketing tool for businesses to utilize, whether you’re a startup, in the growth phase, or a mature business. And again, barter or trade becomes especially more powerful during times like this when you’re in an economic downturn.”
Experience the value of barter with Exmerce.
You can learn more about Exmerce, barter, and the power of trade at exmerce.ca. And for more information on how barter works in Canada, click here.