Barter Business Booming Among Budget-Conscious O.C. Companies

By HOPE HAMASHIGE

Nov. 30, 1994 12 AM PT

SPECIAL TO THE TIMES

When Brian Stevens got married, he went all out. He hired a limousine and a band, and he ordered engraved invitations, flowers, food and dozens of boxes of candy with the date of the wedding embossed in gold.

No cash changed hands, though. Stevens, owner of Aloha Graphics and Printing in Costa Mesa, bartered printed business cards and flyers as payment for the entire celebration. Stevens also bartered a honeymoon in Hawaii with his bride. And when their first child was born, the Stevenses paid the $8,000 in medical bills by firing up the printing equipment again.

Spurred by the recession, which left many businesses cash-poor but with an abundance of inventory, bartering for goods and services is in vogue, and Orange County is leading the way. It is home to some of the largest U.S. barter exchanges as well as the one national magazine, BarterNews, devoted to the topic. The magazine, which has a national circulation of 30,000, is headquartered in Mission Viejo.

“We like to say that we can get you anything you need from the cradle to the grave,” said Katherine Picquelle, spokeswoman for Orange-based TradeAmericanCard, “meaning that we have obstetricians to morticians and everything in between available for barter. You can trade printing services for pot-bellied pigs if you want.”

The industry is growing nationwide. About $7 billion worth of barter business was conducted in the United States and Canada in 1993, up from $6.4 billion the year before, according to the International Reciprocal Trade Assn. in Alexandria, Va.

The common wisdom about bartering is that it blossoms during economic downturns, when people have little cash on hand. Bartering is particularly attractive to small businesses as an alternative to purchasing goods and services with cash.

Southern California’s prolonged economic slump made the region a perfect environment for barter exchanges, which act as brokers for companies that want to make swaps. Now, even with a recovery underway, traders are reluctant to abandon their frugal ways.

“When times are tough, barter is a nice alternative,” said Jack Kyser, chief economist of the Economic Development Corp. of Los Angeles County. “Once you get involved with it and see what it can do, you keep doing it because it makes life easier.”

A widespread misconception about bartering is that participants avoid paying taxes. Both traders and brokers are quick to point out that the barter exchanges send both clients and the Internal Revenue Service a form stating the dollar value of the year’s transactions.

That does not dampen the enthusiasm of veteran traders.

Sheri Gregg, controller for Irvine-based Advanced Business Machines, said her company has taken to bartering in recent years and plans to increase the amount of swapping it does to about $250,000 next year. That would be up from the $150,000 projected for this year.

“We love it. The bottom line is we save cash when we do this,” Gregg said. “Besides, the owner is a true entrepreneur, so he is a wheeler-dealer. Bartering fits into his lifestyle.”

Another reason that bartering may find a permanent place in the local economy is that the economic downturn spawned scores of small companies--the very businesses most likely to barter.

“The economy went through a restructuring,” said Jon Goodman, director of the entrepreneur program at USC. Southern California’s economy has made a permanent shift, Goodman said, favoring companies that are more agile and adaptable--typically the start-ups. Those entrepreneurial firms have been quick to recognize that swapping goods and services is a creative and cost-effective way to do business, Goodman said.

Though bartering is now gaining wider acceptance, the concept is not new. Barter Exchange International, the nation’s oldest barter exchange company, was founded 34 years ago in Huntington Beach. The firm has since moved its headquarters to Burbank, but it still has a strong presence in Orange County, with 600 corporate members registered at its office in Huntington Beach.

Orange County is also the home base for the nation’s largest independent barter exchange. TradeAmericanCard, in business for more than 20 years, boasts a membership of 2,500 companies. Its annual trade volume, valued at $12 million, leads the nation.

Another big barter brokerage, Itex Corp. of Portland, Ore., will make its first move into California when it opens an office in Westminster on New Year’s Day. The company plans to have 20 offices in Southern California within five years.

The industry even has its own expositions. TradeAmericanCard is hosting Barter Expo tonight from 6 to 10 at the Sequoia Conference Center in Buena Park. The event will showcase the products and services of the brokerage’s clients. Another barter exchange, BXI of Orange County, will put on an expo Dec. 11 at the Orange County Fairgrounds in Costa Mesa. Both events are free and open to the public.

Though most businesses barter to pay for services such as advertising or goods such as office equipment, some also share the benefits. Advanced Business Machines, for example, barters for employees’ year-end bonuses. Last year, the company’s 32 employees got Christmas trees in an exchange arranged by management. This year, ski-lift tickets are a possibility.

“Snow Summit is a member of one of our exchanges, and we are thinking of buying skiing passes,” controller Gregg said. “It’s the end of the year, and the owners don’t feel like they have to skimp when they are using trade dollars.”

Trading Information

Where to get information about barter exchanges in Orange County:

* BXI of Orange County

18377 Beach Blvd., Suite 217

Huntington Beach, CA 92648

(714) 847-5477

* Global Exchange Network Inc.

1920 Main St.

Irvine, CA 92714

(714) 756-5665

* TradeAmericanCard

777 S. Main St., Suite 77