Barter Till You Drop : Trading for Goods, Services Grows Even in Recovery
When Brian Stevens got married, he went all out. He hired a limousine and a band. 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 & 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 has grown, and Southern California 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 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. Bartering is particularly attractive to small businesses as an alternative to cash purchases of goods and services.
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 at 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 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 undergone a permanent shift, he 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 home base for the nation’s largest independent barter exchange. TradeAmericanCard, in business for more than 20 years, has 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 hosted Barter Expo last week in Buena Park. The event showcased the products and services of the brokerage’s clients. Another barter exchange, BXI of Orange County, will stage an expo Sunday at the Orange County Fairgrounds in Costa Mesa. It is free and open to the public.
