When the economy is bad, trade and barter flourishes, says Linda Rubendall, owner of ITEX Nevada in Reno.
The company doubled its employment this year, bringing the headcount to six, says Stephen Friede, cash flow consultant. He works directly with ITEX members, calling as many as 50 people a day, helping them identify items they could barter rather than buy.
“Our role is to know what different companies want,” he says.
And sometimes they push trades. Mothers Day was the hook for a big florist promotion.
Barter exchange firms of which there are many make money when members trade. ITEX earns a 6
percent commission on each side of a transaction.
And members get to trade what they’ve already got. Not only does that keep a lid on cash outlay, says Friede, it can also boost business.
“Because all of our members use the same barter currency, they always try to purchase from a member before looking elsewhere. We tell them: speak to us before you spend cash.”
But trades aren’t direct each involves an amount, calculated in the ITEX dollar, kept in something akin to
a bank account, from which members deposit and withdraw. Should a member run a negative balance, ITEX charges 1.4 percent interest a month.
“It’s an economy within its own system,” says Rubendall.
An economy with a Web site that includes a directory similar to the yellow pages as well as a section in which members can buy and sell personal items directly.
And while trades are often for services like office and carpet cleaning, advertising, lodging or restaurant meals, the best sellers, says Rubendall, are cars, boats and real estate.
She and Friede both bought their cars with ITEX dollars. And she used $60,000 of ITEX credit to buy the 1,887-square-foot building her office occupies.
“If it had not been for barter,” she says, “I would not have been able to purchase this building.”
The Reno office began in 1960 as a franchise of BXI, the first organized barter franchise. It had just 20 clients when Rubendall took it over about two decades back. (Her husband’s carpet cleaning company was a member.) The Reno office now serves 350 local members, says Friede.
Nationwide, ITEX numbers 24,000 member businesses. It’s publicly traded as ITEX.OB.
While some companies suffer in a stagnant economy, barter booms.
“When the times are the worst is when people look for an alternative,” says Rubendall.
To ride that wave, ITEX Nevada this month launched a membership drive and cut the startup fee in half, to $500. Each office is permitted to set fees to reflect the size of its organization plus regional economics.
The Reno office generated $2 million in trade in 2006, $3 million in 2007, $4 million this year, and Rubendall sets a $5 million goal for next year.
But growth is also the stuff of worries. While it takes investment to grow any business, says Rubendall, it was stressful to buy the building more than two years ago and now it’s stressful to double staff.
Employees, meanwhile, worry about what a sagging economy means to their clients.
“We have personal relationships with all these people. We care. I know if a member can’t make rent this month,” Friede says.
Almost any business can qualify for membership. “I used to say, we want a pet groomer, not a pet psychic,” says Friede. “I was wrong.”
Local members include Boys & Girls Club, Nevada State Fair, Sierra Nevada Ballet, Java Jungle, Wild River Grill, Magic Underground, Sports West, Dolce Enoteca E Ristorante, Remcor Real Estate, Siena Hotel Spa and Casino, La Bussola, Mystic Rose, BBQ House, Domino’s Pizza and Tahoe Quarterly.
Remcor Realty president Maggie Bird says, “We accept ITEX dollars as commission income, down payment on real estate or to fill vacation rental time.”
Along with property maintenance and landscaping, she and her real estate agents have bought and sold cars through ITEX. Bird even used ITEX dollars to open a branch office and outfit it from tenant improvements and furnishings to phone system and supplies.
Magic Underground, an entertainment company owned by Mark and Ginger Kalin, uses its membership for
cleaning services, a must for its public venue at Pioneer Center downtown. They also use ITEX dollars to provide the company’s phone answering service, says Ginger Kalin.
Restaurant meals are an added bonus, as is her workout membership to balance those meals. What they trade, of course, are tickets to their magic shows.
Meredith Tanzer, owner of downtown art and gift boutique LaBussola, uses ITEX to nab gift certificates to reward employees. In return, she’ll trade merchandise or unneeded display racks and glass counter cases.
She also trades her own labor to help people redecorate, along with a line of homemade scents and soaps.
But no matter what the business, members of a barter network don’t dodge the taxman. ITEX currency is recognized by the IRS and taxed like greenbacks.
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