If you want to boost sales, acquire new customers and reduce cash expenses, consider the world’s oldest form of doing business: bartering. While bartering, or trading, dates back to caveman days, it remains a powerful business tool today and is particularly helpful during tough times. Plus, it works exceptionally well for the restaurant industry, converting empty tables and pizza boxes into extra revenue.
John Kubisiak, owner of Toppers Pizza (toppers.com) in Waukesha, Wisconsin, has benefited from bartering for four years. “Bartering brings in sales from an entirely different network—one that we wouldn’t otherwise tap into,” says Kubisiak. “Consequently, we’ve landed different types of customers on a consistent basis.” Kubisiak then uses those earned barter dollars to buy needed services and supplies, and to reward his employees; he also uses them for personal needs.
How Bartering Works
In its oldest, simplest form, bartering involves an equal trade. One person or business swaps goods or services for something in return. But these days, most business owners don’t have the time or resources to pursue such arrangements directly. Enter the professional barter exchange. The exchange does all the legwork for its members, promoting the goods and services available for trade (in Kubisiak’s case, his menu is posted on the barter organization website). In return, members pay a one-time joining fee, plus small fees for each transaction.
When a member purchases an item, he does so in barter dollars or trade credits. So when Kubisiak barters pizzas, he can then use the trade credits in his account to purchase offerings by other members. It’s not unusual for actively bartering companies to generate 5% to 10% of their income through trades. (Keep in mind that in the eyes of the IRS, barter transactions are treated like cash, and all transactions are reported accordingly.)
Selling Through Barter
Kubisiak likes that bartering doesn’t compete directly with his cash business. “Most of the business we get through bartering is on top of what we already do, numbers-wise, so it feels like bonus business,” he notes. Bartering is particularly effective in the hospitality industry because “it’s a way to utilize disappearing assets,” says small business expert Ray Silverstein, author of The Small Business Survival Guide: How to Survive and Thrive During Tough Times. “If you don’t fill a table or hotel room on any given night, you’ve lost that opportunity to generate income. Bartering helps fill the gaps.”
Bartering restaurateurs can control exactly what and how much they’re willing to trade. For example, some will barter only dine-in meals; others will also trade takeout orders and private parties (Kubisiak, for example, doesn’t discriminate between delivery and pickup). Restaurants can agree to barter up to a certain dollar amount per month. For large orders or parties, they may choose to trade 50-50 with cash or barter only up to a fixed dollar amount. This way, the restaurateur knows what to expect each month—although some want all the trade dollars they can get.
One of the biggest benefits, according to Kubisiak, is that bartering “introduces our product to a group that may never have tried us, and then they’ll tell other people about us. They may also become customers outside of their business.”
Buying Through Barter
What can you buy through barter? Just about anything. You can use credits for everyday expenses, such as property maintenance, office supplies, exterminators or advertising. Kubisiak has used his barter account to buy grease traps, get windows cleaned, and service the heating and cooling systems. He recently used barter to acquire a 1973 Mercury Marquis that he plans to use as a promotional vehicle.
In addition, barter allows you to provide employee incentives and vacations you might not otherwise be inclined to purchase, and to reward yourself for your hard work. Hotels and airlines participate in barter exchanges, too. Kubisiak, for example, has given spa packages to employees and arranged manager trips to the Bahamas and Costa Rica. “I’ve personally gone fly-in fishing in Canada a few times, and it’s fun to buzz around the barter organization’s marketplace when you have some extra trade credits to spend.”
While bartering isn’t for everyone, it’s particularly well-suited to pizzerias and restaurants, especially in times when sales are down. Says Kubisiak, “The biggest thing for us is getting our product in people’s mouths, and barter is a great way to do that.”
