Few economists seem to understand basic aspects of modern barter systems that will allow the bypass of money systems for things most people need. Banks and nation states money systems are no longer monopolies, since people can circumvent them with electronic, money-free trading systems.
Before exploring barter we need to acknowledge that barter existed in all primitive societies before money and some 50% of all production and transactions still take place outside official money-based GNP-measured sectors of the world's economies.
In 1995, the UN Human Development Report estimated unpaid (bartered) production at $16trillion – simply missing from global GDP figures. Yet barter is considered archaic and quaint by many in our modern economy. After the money system has become entrenched in a culture, barter markets that still exist are considered crude and impractical – especially for societies with high financial turnover.
What changed everything about barter is the fantastic growth and capability of modern networked computers. A system that handles all items, goods and services, that hundreds of millions of people want to buy or sell and allows transactions to be made easily, quickly, and at low cost, is now commonplace.
Check out the genius of Alan F.Kay
Many startup experts tell you to barter to save money - but very
few actually tell you how to realistically use bartering to
reduce costs. Considering the great potential of barter trade
exchanges in the Internet, I went searching for information on
this oft-forgotten money saving business strategy. Here is what I
found out:
Direct Barter and Exchange Barter
There is a big difference between Direct Barter and Exchange
Barter. Direct Barter means to swap your product or service for
the product or service of your vendor. Exchange Barter is the use
of your excess time, capacity or inventory to trade for goods and
services you need without using cash when you're part of a barter
group with other businesses, and each business earns "trade
dollars" that can be exchanged for needed items.
A trade dollar is the form of currency used by a retail barter
exchange. In the United States, one trade dollar equals one U.S.
dollar. Trade dollars are good for purchases within the issuing
barter exchange, or within other exchanges that have reciprocal
agreements.
The purchases are made using trade dollars accumulated from your
sales at a full retail basis. Essentially, clients can purchase
what they need using their trade dollars instead of cash and pay
back what they owe with what they have in equivalent retail trade
dollars. A line of credit can also be established to clients who
are credit worthy and need to spend before they have accumulated
trade dollars. Then over time they pay it back with their goods
and/or services.
How The Barter Exchange Works
An example will help to easily understand how Exchange Barter
works: the ABC Restaurant wants to advertise on the local radio,
which is also a member of your Barter Exchange. The full rate
card price for an ad would be $35 per insertion. The restaurant
buys a 40 insertion run for $1400 in trade dollars.
If you figure that the food cost to earn
a trade dollar is $0.25 to earn a $1, the real cost of their
advertising program is only $350. You can easily see why
it’s smarter to barter!
It Makes Sense to Barter
Barter is an old idea that got new life thanks to the enormous
communicating powers of the Internet. By joining a barter
exchange you benefit greatly by getting new customers that you
did not have before. When someone joins an exchange, they're
exposed to hundreds of thousands of potential clients and new
possibilities for:
- Moving Excess Inventory
- Moving Time Sensitive
Services
- Increasing Cash Flow...
- Creating a Competitive Advantage
Do Your Homework and Join a Barter Exchange
Don't believe the misconception that you'll somehow get
shady products or services in barter. It simply is not true.
Do your homework on any barter exchange you plan to join and check it out before you
join. There are many information sources and it is simply good
business practice to verify references, speak with present
members of the exchange, and check with the competition and trade
associations.
New barter articles will be added soon to the Internet Coaching
Library as we find interesting themes, so bookmark this page and
come back frequently.
Take care,
Ricky
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About the Author:
Enrique De Argaez is the webmaster of the "Internet World Stats" website. Since
2000 he has been collecting Internet Usage Statistics, and
publishing the data for over 233 countries and regions of the
world for free use by the academia, the global business community
and the general public. For more information on Internet World
Usage, please visit: http://www.InternetWorldStats.com
