Commercial barter exchange pools services for profit
| New York
Lois Dale got into the commercial barter business by discovering that, as a young New York entrepreneur with her own carpet sales and cleaning business, she was making ends meet by exchanging a lot of her company's services for those of other companies.
Since this was done with no parting of money, it was a boon to her struggling enterprise. By offering $1,500 of steam carpet cleaning each month, she was able to obtain such helpful assists to her own business as advertising space, consulting services, and carpentry and painting renovation for her office.
Miss Dale is just one of thousands of people across the country who have discovered that barter is becoming one answer to the shrinking dollar and the cash-poor society. She still has her carpet business, which she began with a capital outlay of only $2,000. But she has now added and become president of Barter Advantage Inc.
Miss Dale's New York barter exchange, according to Paul Suplizio, executive director of the International Association of Barter Exchanges in Alexandria, Va. , is but one of over 300 trade exchanges doing a business in excess of $300 million in 1981. This represents an increase of $50 million over 1979. In the mid-60s there was only a handful of exchanges, Mr. Suplizio says, but from 1970 on they have increased at the rate of 15 percent annually. He predicts that business will double in the next 10 years and calls the 1980s ''the barter decade.''
Failure of individual exchanges (which have tended to shake public confidence in areas where they occur) has usually been caused by undercapitalization and lack of good management, Suplizio says. The association has set up self-regulatory systems, and it maintains records, monitors legislation, and represents the industry before Congress and with the Internal Revenue Service and the Federal Trade Commission. It has also conceived and put into operation a code of ethics designed to ensure integrity and sound business practices on the part of members. Barter, he points out, may eliminate cash, but it does not eliminate taxes, and the IRS has now set out its rules on the matter.
Before venturing into the commercial barter business, Miss Dale educated herself in every detail, problem, and promise of such exchanges. She went traveling across the country to meet people who ran other barter exchanges. She attended a week-long convention in California of the International Association of Barter Exchanges and sought frank advice from the officers of that association. She went to the library and read everything she could find on barter. The most helpful, she decided, was ''Barter, the Way to Beat Inflation, '' by George Burtt (New York: Everest House, $10.95; $6.95 paper).
Earlier this year she launched her own company and joined the international association. She also set out to find members who had goods or services to exchange and were willing to pay an initial $295 for dues and membership the first year, and $150 each year thereafter, plus an 8 percent commission on every trade arranged by the exchange.
At present she has over 200 members, including lawyers, photographers, calligraphers, typing services, advertising agencies, beauty salons, building maintenance suppliers, dog trainers, and a dealer in wood-burning stoves. She hopes to have a thousand members by the end of the year.
Her exchange works on the credit system, which operates much like a bank account, with debits and credits. For instance, a travel agency member needed new brochures printed at a cost of $3,000. The printer who did the job did not need travel, but was moving to a new location and needed, instead, a mover and a painter. The mover, in turn, needed new tires for his vans. Each bought what he needed with trade credits, and got trade credits for his own goods or services.
In another instance, a dentist gave professional services worth $1,500. His credits bought an office renovation for him, and the renovator, in turn, took out his credits in new sinks, cabinets, and other home improvement supplies. Computers make the paper work manageable in recording, checking, and keeping track of noncash transactions for this organized pool of people with goods or services to exchange.
Although Lois Dale enjoys being in what she calls the matchmaking business, it has turned out to be much more difficult than she anticipated. She warns others that it takes far more time, energy, and organization than they might assume, and nothing about it is easy. So far, however, she is undaunted and foresees a bright future. To her, the secret of success will be to offer continuing and increasing services to her members.