Recent estimates indicate that
at least sixty percent of companies on the New
York Stock Exchange use the principles of bartering as a standard business
practice. U.S. Congressmen barter daily to gain support for their pet projects.
Aircraft manufacturers barter with foreign airlines in order to close sales on million
dollar contracts. Perhaps you have experienced at one time or another in your life
a friend saying, "Okay, that's one you owe me . . ." Basically, that's bartering.
The reason bartering enjoys
renewed popularity in times of tight money is simply
that it is the "bottom-line" method of survival with little or no cash. In times of high
interest rates, cash in anyone's pocket is indeed a very precious commodity, and
bartering is even more popular. Bartering affords both the individual and the
established business a way to hold onto cash while continuing to get needed
goods and services. In addition to saving a business the added costs of
borrowing money, bartering can improve a company's cash flow and liquidity. For
anyone who is trying to operate a successful business, this is vitally important. For
individual families in these times, it makes possible the saving of cash funds for
those purchases where cash is necessary.
To start and successfully operate
a bartering club, YOU MUST THINK IN TERMS
OF A BANKER. After all, that's precisely the reason for your business--to receive
and keep track of people's deposits while lending and bringing together other
people who want or need these deposits.
Your first task is to round
up depositors. As a one-man operation, you can start
from your home with nothing more than your telephone and kitchen table; but until
you get helpers you'll either be very small or very busy--probably both! Run a small
display ad in your local newspaper. A good ad would include the following ideas:
NEW BARTERING CLUB - Trade
your expertise or time for the merchandise or
services you need. We have the traders ready--merchandise or specialized skills.
Buyers too. Call now and register. ABC BARTERING, (123) 4567890.
When respondents to this ad
call, you handle them just as a banker handles
someone opening a new account. You explain how your club works: Everyone
pays a membership fee of $100 to $300, and annual dues of $50 to $100. The
depositor tells you what he wants to deposit, perhaps $150 worth of printing
services, and what he's looking for in return--storage space for his boat over a
three month period. If you have a depositor with garage space for rent and who
needs printing services, you have a transaction. But let's say you have no "perfect
match" for this depositor. On your list of depositors you have a dentist who's
offering $500 worth of dental work for someone to paint his house. A woman has
a garage to rent in exchange for dental work for her children. An unemployed
painter is willing to paint houses in exchange for a side of beef, and a butcher
wants to trade a side of beef for advertising circulars. Remember, when a new
member joins your club, he makes a deposit and states his wants or needs. In the
above example, you have a typical bartering club situation. Your service is to
spend or line up those deposits to match the wants or needs of the club
An affinity for people and
a good memory are vital to this kind of business,
especially if you're running a "one-man show." Generally, when you have a buyer
for one of your depositors, you notify him or her right away with a phone call. You
simply tell her that Club Member A wants to rent your garage. She tells you fine,
but she doesn't want any printing services. You simply tell her to hang on because
you are currently in the process of contacting the dentist who'll do the work on her
kids+ teeth. And so it goes in the operation of a bartering club.
Some of the larger bartering
clubs (with several thousand members) simply list
the deposits and wants or needs on a computer, and then invite their members to
come in and check out the availabilities for themselves. Others maintain
merchandise stores where the members come in to first look at the computer
listing, and then to shop, using credit against their deposits. The smaller clubs
usually publish a weekly "Traders Wanted" sheet and let it go at that. These
methods all work, but we've found that instead of leaving your members to fend
for themselves or make their own trades, the most profitable system is to hire
commission sales people to solicit (recruit if you will) new members, specifically
with deposits to match the wants and needs of your present members.
Your sales people should get
approximately 20% of the membership fee from
each new member they sign, plus 3 to 5 percent of the total value of each trade
they arrange and close. This last percentage, of course, is to be paid in club
credits, spendable on merchandise or services offered by the club.
You'll need a club charter,
and in many areas a board of directors and a city or
county license. Check with your city or county clerk for more information. You
should also have a membership contract, the original for your files and a duplicate
for each member. In most cases, you can write your own contract, using another
group's membership contract as a guide, or have your attorney draw one up for
you. You'll also need a membership booklet--or at least an addenda sheet to your
contract--explaining the rules and bylaws of your club. Supply your members with
consecutively numbered "club membership identification cards" for their wallets
or purses. Some clubs even give membership certificates suitable for framing.
You can pick these up at any large stationery house or commercial print shop.
Two things are important to
the make up of the membership package you
exchange for membership fees: First, it must be as impressive as you can make
it. People want to feel that they are getting a good bargain in exchange for their
goods or services. Make the package appear as professional as
possible--printed on high quality paper, professional-quality art work or
photographs, etc. Secondly, your offer must be legal, while still serving your
You should have at least 100
members before you begin concentrating on
arranging trades. As stated earlier in this report, the easiest way to recruit new
members is to run an ad in your area newspapers, and perhaps even on your
local radio stations as well. Follow up on these inquiries with a direct mail
package, which would typically consist of a brochure explaining the beauty and
benefits of being a member of your bartering club, a sales letter, and a return
reply order form. After you've sent out the direct mail piece, be sure to follow up
by phone, and, if necessary, make a call in person as any other sales person
Another way of recruiting new
members is via a party plan such as many
multi-level programs offer. Allow a certain number of club credits for each party a
club member arranges for you. Insist on at least ten couples for each party, and
then as the "Attraction of the Evening" you or one of your salespeople give a
motivational talk on the benefits available through your program. Be sure you get
the names, addresses, and phone numbers of everyone attending, and be sure
that everyone leaves with your literature.
If all those in attendance
at these parties do not join, then follow up on them, first
by phone and then with personal sales presentations. Once you've got them
interested in your club, do not let go or give up on them until you have signed them
as members. Also be on the lookout for those who would be most likely to want to
promote a similar party for you. Offer them an item of merchandise they might be
particularly interested in, and club credits if they+ll not only join, but also stage a
party for you. A bit more expensive, but just as certain of success are free
seminars. Rent a large meeting room, advertise in your local papers, and then put
on a hard-sell recruiting show. Such a plan is very similar to the party plan idea,
but on a larger scale.
As stated earlier, you can
begin operations right out of your home, but working
out of your home has a number of growth inhibiting factors. After a certain period
of time, the growth of almost any kind of business will be retarded when it's
operated out of a home. As soon as you can possibly afford to, move into an
office of some sort. Keep your eyes open and consider the feasibility of sharing
an office with an insurance agent or real estate broker. Check your newspaper
classifieds for businesses willing to share office space or to rent desk space or
other office amenities.
This is the kind of business
that demands an image of success. You just can+t
keep people from "dropping in' when you're operating strictly on a local basis.
And when you attempt to hire sales people, a suitable place of business to work
out of is just as important to them as how much commission they're going to
receive. Image is very important, so don't neglect it.
Ideally, you should have one
salesman for approximately every 50,000 people in
your area. Run an ad in your local newspaper, and also list your needs with your
state's employment service. Hire only commission salespeople. Give them a
percentage of the membership fee for each new member they sign, plus a small
commission on each trade deal they close. Assign each of your people specific
territories, and insist that they call on potential commercial accounts ranging from
the "hole in the wall" rubber stamp shop to magazine publishers and commuter
airlines. There's plenty of business available in every city or metro area in the
country. Encourage your sales people to be creative and imaginative when calling
on prospects. Then, be sure that you keep an open mind and listen to their wild
trading proposals ( some "wild" proposals have been known to become "wildly"
Schedule "open discussion"
sales meetings every morning before your
salespeople "hit the bricks." Have each of them report on their selling efforts from
the day before, and present to you a written list of prospects they plan to call on
today. Set up sales motivation workshops to be held at least once a month, and
once a week schedule a motivational speaker or play one of the widely available
success/inspirational tapes as a closing feature of your morning sales meetings.
Stock sales success books and encourage your people to borrow them to take
home and read. Your sales people will make you rich, but only if you turn them on
and keep them flying high with personal motivation.
Should you or should you not
accept installment payments from new members?
Yes, by all means, but only when you've got their signature on a contract drawn up
for your benefit and deemed legally binding by your attorney. What about bank
cards? Yes, indeed. In fact, you'll find that the capacity to handle bank cards will
greatly increase your sales.
Precisely how much capital
are you going to need in actual start-up costs? We
would estimate at least $500 for your printing and legal fees, unless you can trade
charter memberships in your club for these services. Timewise, you're going to
be putting in 18-hour days and 7-day weeks, until you get those first 100 people
signed up. And there won't be any money for salary or long-deserved vacations
from these first 100 members you sign. You'll need it all for advertising,
membership packets, and office set-up. However, if you can really work at it, you
should be home free in six weeks or less. Then you can set up your office, hire a
couple of girls to handle the paperwork, and take on a salesperson or two.
Reputation and success in matching
offers to wants will be just as important as
image, so give it your all. Don't give up. Stand behind the implied as well as the
real promises you make to your members. Should you offer a guarantee of
satisfaction? Only so long as it makes money for you, and you can back it up.
There's not a person in business anywhere who enjoys refunding a customer's
money. But don't forget that the existence of your business depends on service.
The more you project an image of a "people pleaser," the greater success you're
going to achieve. This is definitely not a business for someone who doesn't enjoy
"waiting on" people. You've got to like people, enjoy helping them, and want the
inner satisfaction that comes from selling new ideas.
Bartering Clubs are a growth
industry. Some clubs in areas with a metropolitan
population of 300,000 or more are reporting incomes of over a million dollars.
The average in cities of 100,000 population is about $150, 000 per year. No
experience or special training is required to begin a Bartering Club. The direction
of the entire operation is equally suited to women or men. Both do equally well as
salespeople. It's a business that fills a need, and a kind of membership program
people will stand in line to be a part of once they've been introduced to the
Now you have the plan. It's
going to take an investment of time and effort to get
organized, but after your initial work to establish this business, you can become
quite wealthy in a relatively short time. Read over this plan again. Determine if this
is "the one" for you, and then go all out. It's up to you, and all it takes now is action
on your part.