Most people realize that barter has become an important aspect of international commerce. What they don't realize is that barter activities can also be very profitable for small business owners, for professional people, and for those working in the various building trades.
Invariably, all businesses have some excess capacity, or are encumbered with some unproductive assets. Examples of excess capacity would be: empty hotel rooms, unsold airline seats or cruise cabins, unsold advertising time or space, empty theater seats, health club memberships, and any periods of time in which professional and trades people aren’t working to capacity. Unproductive assets would be any inventory of slow-moving or unsaleable merchandise, i.e. trade-ins, last year’s obsolete models, etc.
Barter aids the businessperson who has reached a certain level of cash sales and still has the capacity to expand output. Few and fortunate, indeed, are the business people who, having made an investment in plant and equipment, find themselves operating at full or over-full capacity. For most firms, spare capacity and unwanted inventory are a normal occurrence, but these seeming negative conditions can actually give you a powerful economic opportunity. They permit you to increase your sales at a low incremental cost.
When you are involved in a barter exchange such as IMS, you will be able to finance the purchases of things you need out of additional sales of your own products and services. Whenever you buy something on barter, you can be certain that the purchase will be offset, or paid for, by additional sales to other clients of IMS. In a strictly cash situation, however, the money that you spend for that same purchase would have to come out of existing sales - not new sales. When you make a cash purchase, you have no assurance that this will result in additional sales of your own products.
The economic advantages of barter hinge on the fact that barter brings in NEW business. Barter sales are an increment over and above cash sales. Remember, clients of IMS go out of their way to deal with other clients, because this enables them to pay for the things they buy out of extra sales and no out of their cash, which stays in the till. Therefore, your involvement with IMS establishes new business relationships for you.
It would be an unusual coincidence if a barter exchange consisted of firms who had previously been each other’s cash customers. So affiliating with IMS will, on the whole, result in new business for you, rather than the displacement of pre-existing cash business. You will gain from an intangible web referrals, advertising, and associations that will generate both additional cash and barter business.
In the final analysis, the most advantageous way for business people to finance their own purchases is through increased sales. The success of commercial barter lies in stimulating these additional sales, while conserving cash.