barter Martin Lee on 30 Jan 2007 01:29 pm
Using a Barter Exchange
In my previous post, I talked about how you could literally create cash using barter trade. If you have a perishable product or service, then it is even more effective.If a hotel has rooms that are empty for a day, these “assets” are gone when tomorrow comes.
If you are providing a service and have some slack time today, that time is also gone when tomorrow comes.
Why not barter trade these for something tangible?
However, there are some difficulties that you might face when trying to do a one-to-one barter trade.
1) You wanting what the other party has and he wanting what you have. And this has to occur at the same time.
2) Even if the first point is achieved, the value of what you are offering to each other has to be similar.
3) It takes time to find someone who’s willing (and has the right goods) to barter trade with you.
4) If the barter trade is not completed by both parties at the same time, you run some risk of the trade going bad.
That sounds pretty discouraging but before you give up on the idea of using barter trade at all, here is one way of overcoming them.
By using a barter exchange.
A barter exchange allows you to sell your goods or services to other members in the exchange for some form of “barter currency” or “barter dollars”.
Suddenly, all the difficulties presented earlier are gone.
You can trade your stuff for barter dollars and use it to shop in the exchange for something that you want later. There is now a way to convert your “assets” into something tangible.
You can even get free advertising when you list your products on the exchange!
Sounds great but there are a few important things that you should know:
1) A barter exchange only works if it has enough members. No use selling your things for barter dollars only to find out there is nothing that you want to buy.
2) Using a barter exchange is not free. Some barter exchange charge a joining fee of a couple of hundred dollars and a minimum monthly fee. On top of that, there is likely to be cash fees on your barter trades. However, the fees paid could still be well worth it as you will be able to “create cash” from your barter trades.
3) Control is very important in a barter exchange due to the existance of barter dollars. Any abuse by the owner can ultimately lead to a collapse in the exchange. For that reason, a barter exchange is usually closely regulated.
4) Some barter exchanges exist as a network of exchanges by allowing their members to trade with one another. This greatly increases the chances that you have to barter trade successfully.
