Author: bpwebbrian

What I barter for

~ bpwebbrian

When I’m talking to a potential new barter partner about the possibility of joining a barter exchange, at some point or another they always ask the logical question: “What is available to purchase through the exchange?”   Unfortunately, I’m now buying so many things through barter that often I fumble at answering the question because my mind can’t quickly sort out that which I buy on barter from those things that I do not. To that end, I’d like to post here just a sample of items/services that I have personally bartered for just this month (the last 17 days).  Please note that this is not a complete list.  You should also note that this level of purchases is totally normal for me.

  • Regular martial arts class for all 3 of my kids
  • Dog grooming
  • Weekly book-keeping
  • Baked goods for employee gifts and person consumption (yum!)
  • Automobile smog test
  • A large number of clothes for my kids
  • House/office cleaning services
  • Weekly landscape maintenance
  • Pest control (sprayed for spiders around my house)
  • Low fat frozen meals (20)
  • Koolaid packets
  • Leather purse (gift for my daughter…. Don’t tell! <grin>)
  • Business lunch at a local restaurant
  • State map showing fishing locations (gift for hunting buddy)
  • Chiropractor
  • Massage therapy
  • Carpet cleaning
  • Dry Cleaning
  • Programming services that I will charge a client in cash for
  • Regular basketball practice/coaching for my boys

Barter for Psychotherapy?

~ bpwebbrian ~ 1 Comment

From time to time I’ve had folks tell me that bartering within a particular industry is “not allowed.”  Usually the person I’m talking to will vaguely refer to the IRS, the SEC or some other regulatory agency without any specifics.  Not satisfied with this, I’m trying to track down some hard facts and here’s the first area that I’ve nailed down.

Based on my research it appears that bartering for psychotherapy services is NOT in and of itself illegal, however it does raise some serious ethical issues and could quite possibly be against the ethical code for some professional organizations in the industry.  The concern here is that a patient/therapist financial relationship needs to be extremely strait-forward so as not to allow for the possibility of the patient to be taken advantage of due to the therapeutic relationship.

In California (where I am) the primary concern of the Calif. Bd of Behavioral Sciences and the Calif. Assn of Marriage and Family Therapists (CAMFT) is the issue of “dual relationships”.

1.2 DUAL RELATIONSHIPS-DEFINITION: Marriage and family therapists are aware of their influential position with respect to patients, and they avoid exploiting the trust and dependency of such persons.

Marriage and family therapists therefore avoid dual relationships with patients that are reasonably likely to impair professional judgment or lead to exploitation. A dual relationship occurs when a therapist and his/her patient engage in a separate and distinct relationship either simultaneously with the therapeutic relationship, or during a reasonable period of time following the termination of the therapeutic relationship.
Not all dual relationships are unethical, and some dual relationships cannot be avoided. When a concurrent or subsequent dual relationship occurs, marriage and family therapists take appropriate professional precautions to ensure that judgment is not impaired and that no exploitation occurs.
1.2.1 UNETHICAL DUAL RELATIONSHIPS: Other acts that would result in unethical dual relationships include, but are not limited to, borrowing money from a patient, hiring a patient, engaging in a business venture with a patient, or engaging in a close personal relationship with a patient. Such acts with a patient’s spouse, partner or family member may also be considered unethical dual relationships.

The former legal analyst for CAMFT, Richard Leslie,  adds to this in a recent article:

Do not permit the patient to pay for therapy by rendering personal services to you (e.g., fixing your car, landscaping, cleaning your house, editing a book, giving a massage, cutting your hair). Do not permit the patient to barter for therapy with items of subjective value (paintings, sculptures, hackies, collectibles).

Even barter of items with an objective value (cord of wood, bag of horse oats) may present difficulties. While the barter has a fixed value, the trade of it may entail meetings outside of session or meetings at the patient’s or therapist’s residence.

Ultimately it appears that it is up to the individual therapist to determine if they feel that bartering for services constitutes an unethical dual relationship.  I can see both sides of the issue on this one.  From the one point of view, if the specifics of a barter are determined before the therapeutic relationship starts and the terms of the arrangement are as strait-forward as a cash relationship (as they should be if the barter was conducted through an exchange) then I really don’t see a problem here.  That being said, my friend who is a therapist and helped me with this research did not feel that barter has a place in his business.  He feels that patient/therapist relationships must be so squeaky clean that all possible grey areas are to be avoided.

Added 9/27/10
Here’s an article on the topic that appears to be very well thought-out:  http://www.zurinstitute.com/bartertherapy.html

Why do barter exchanges have such bad security?

~ bpwebbrian ~ 4 Comments

Does this open vault remind you of your barter exchange account?  Is it just me or does it seem totally insane the way barter exchanges handle (or should I say DON’T handle) security?  As of right now I belong to two exchanges.  Both have the same general idea about security.  Anyone with an account that has my ID number can charge my account without my permission through the exchange’s website.  OK.  That’s wierd enough, but the real punch line is that I need the other party’s permission (or my broker’s blessing) to remove a charge from my account.  I can’t do that through the exchange website on my own without approval.  That totally blows my mind.   This is like saying that anyone can write a check out of my bank account on their signature (not mine) and I have to beg “pretty please” if someone charges me incorrectly.

Shouldn’t it work exactly the opposite of that?  Shouldn’t someone have to request my permission to charge my account (including my broker) and shouldn’t I be able to remove an erronious charge without outside approval?  When I’ve asked my brokers about this I’ve gotten two responses:

  1. This is a left over vestige from when all barter transactions were processed manually.  That may very well be true, but it in no way satisfies my desire for security.
  2. This is the way we always do and it is extremely rare for there to be any problems because of it.  Well, I have to admit that I’ve never had a problem either so maybe I’m worried about nothing.  That being said the whole premise of vendor being able to charge my account without my specific permission doesn’t sit well with me.

I should probably point out that as strange as this system might sound to someone outside the “barter community” this is a TOTALLY NORMAL and accepted practice for barter exchanges.  It’s not just my two barter exchanges that do this.  As far as I can tell this lack of security is a common thread across the majority of barter exchanges.

Know what barter really "costs."

~ bpwebbrian

Part of bartering effectively is knowing the value of what you are trading away and what you are trading for.  With that in mind it has come to my attention that it’s very likely that your barter profit margin is different than your cash profit margin.  Some barter brokers like to try to make it sound like barter dollars are free but for most traders this simply is not true.  Here’s a common calculation for cash profit margin:

(Cash Sales – Overhead – Cost of Goods Sold – Labor) / Sales = cash profit margin

Because barter is on top of my normal cash sales I look at overhead as a “sunk” expense that doesn’t contribute to my barter profit margin.  It’s all paid for by my cash sales and doesn’t need to be included in my barter costs.  If your labor is salaried or conducted personally in available time then the same could be true for labor.  That being said, my staff is hired hourly on a per project basis so personally I have to keep labor in the calculation.  Another difference between cash and barter profit margin is your barter commission.

“Cost of goods sold”  (COGS) for physical items is probably the trickiest expense to deal with.  If the product sold comes out of your normal product inventory then it clearly needs to be a barter expense.  The complication comes when you are bartering away non-standard  inventory (over-stock/breakage/liquidation/etc.) that is not part of your normal product inventory.  In that case you need to either include it in your cash overhead or as a barter expense, depending on which way you feel provides you with more meaningful accounting reports.  Although I personally lean toward counting this as a barter expense, if you are including all your overhead as a sunk cash expense as mentioned above, it’s probably more consistent to look at it as a sunk cash expense too.

So… with all that in mind here is a revised profit margin calculation adjusted for barter:

(Barter Sales – Cost of Goods Sold as appropriate – Labor that is specific to the transaction – barter commission) / Sales = barter profit margin

I suppose I shouldn’t wrap up this post without pointing out that I don’t have any formal accounting training.  Please comment back with any problems you see with my take on this subject.

Personal Expenses

~ bpwebbrian

Short version:
It is good to spend barter credits on personal expenses.

Long version:
I’ve run into a couple of traders who have set up rules for themselves that keep them from ever fully realizing their best possible return on barter.  These people are generally conservative in nature and in their zeal to make sure they don’t “waste” their credits on frivolity, have decided that they will never spend barter credits on personal expenses.  For some this is just an out-cropping of self-discipline gone wrong, but others actually believe that there is a legitimate business reason to avoid personal spending on barter.

When you accept payment in cash in your business, you take some portion of that cash and spend it on personal expenses.  Realize it or not, it is something every profitable business does.  Obviously you will have some book-keeping problems if you start paying for personal expenses directly out of your business account which is why most folks draw cash out of their business in the form of payroll, owners-draw, dividends, etc.  These funds are pulled out of your business, you are appropriately taxed on the funds as personal income, then you spend the money on personal expenses.  Barter is no different!  You can pay yourself in barter credits rather than cash, then turn around and spend those barter credits on personal expenses.  There is nothing to it!  It doesn’t matter if you are a sole proprietorship, llc, or some type of corporation.

The advantage in spending barter credits on personal expenses is that it opens up more opportunities to spend barter credits wisely.  It totally baffles me that a business owner would sit on thousands of dollars of barter credits, yet still pay cash for dental work or carpet cleaning in their home.    By paying yourself (in part) in barter credits that you use for personal expenses, you free up cash in your business that can be used EITHER for cash business expenses that you can’t trade for, OR EVEN BETTER, cash profit payouts to yourself.  Either way you win.

A final passing thought:  Just because I’m saying it’s good to spend barter credits on personal expenses doesn’t mean that I’m indicating to spend frivolously.  All the normal rules of wise purchasing still apply.  I’m just saying there is nothing inherently bad about using barter credits for personal expenses.

Spending Successfully – Types of Purchases

~ bpwebbrian ~ 2 Comments

As I continue to develop my barter strategy I’m beginning to see my purchases fall into a handful of categories.  Where your barter purchases fall into these categories in a large part determines how successful your barter effort is over all.  Additionally, I think looking at these categories can help traders find more trades that help their bottom line.  In my opinion trade purchases fall into three categories:  Cash Replacement, Value Added, and Luxury Purchases.

Cash Replacement Purchases
These are the absolute best kind of trade.  This is when you trade for something that you would have bought for cash.  Personal examples of things that I trade for in this category include food, dentistry, automotive repair, etc. .  These trades represent a direct conversion from barter dollars to real dollars assuming that you purchase these goods/services at comparable prices to cash prices.  If you are looking to get the absolute most out of barter, dig through your checkbook and credit card statements looking for things that you can switch over to barter.

Added Value Purchases
This one is the hardest one to grasp of the three categories and I’m only now realizing the value of this group.  Purchases in this group are items that you would not have purchased for cash, but they still represent significant real value to you because they free your time for family or cash generating work.  Of all things of course time is one of the most limited and I’ve met few productive people who aren’t interested in freeing up more time.  Examples of these types of trades would be hiring a landscaper, book-keeper or even a house-keeper.  I like doing my own yard-work and I would never hire someone for cash to do it for me.  That being said, I am willing to hire someone on barter that will do a better job than I do and it will free up time for me to work or play.  The same thing applies to book-keeping.  My wife enjoys doing our books, and was very resistant to the idea of hiring a book-keeper.  She was more open to bartering for one and now that we’ve made this switch she is extremely happy with it and uses that time very efficiently in other areas of her life.  Although this kind of a trade does not generate a direct conversion of barter dollars to real dollars, it has a very real positive effect on your business and personal life and is a good area to spend barter credits.

Luxury Purchases
This is the one to be careful with.  They are purchases that are totally for fun that you would not have made for cash.  Certainly I would be the last person to tell you that you shouldn’t spend barter credits on yourself for fun (check on the barter vacation I bragged about), however I know that some people go over-board in this area.  My only comment on this area is that you don’t want to make so many luxury purchases that you don’t have credits available for making the other two types of purchases described above.

It’s worth mentioning that some folks are so against luxury purchases that they don’t believe you should make any personal purchases at all.  This is totally incorrect in my opinion and I will write more on this topic later.  For now suffice it to say that you should make as many “cash replacement” trades  as possible regardless if these purchases are business or personal.

So….take a look at how you conduct your trades and see where your purchases fall into these categories and start making some changes as you see fit.

My first Universal Credit trade!

~ bpwebbrian

I completed my first “UC” or Universal Credit trade today.  Here’s the deal:  There are a couple organizations that many trade exchanges can belong to that allow them to trade between each other.   It’s one of the ways to accommodate a trade  outside of my exchange network.

Once my new trading partner and I negotiated an initial agreement, we contacted both of our brokers and confirmed that they could send/accept UC credits. I was informed that the seller always needs to initiate a UC exchange so I gave my broker contact info for the buyer’s trade broker, the amount of the trade, and the name of the buyer’s exchange.   My broker than requested that the transfer  be made.  Later that day she contacted me and let me know that my account had been credited.  It was almost as simple as a normal trade within the exchange.  I  paid my normal commission to my exchange on the trade but there was no additional expense because UC was used.

It should be noted of course that not all exchanges belong to the organizations that allow for this kind of trade and even when they do, they have to have a stock of these credits on hand to accommodate the trade.

Barter vacation summer 2010!

~ bpwebbrian

OK, so it’s only a mini-vacation but still…it counts!  We’re going to start out by going to a big water park for all-day fun in the sun, then drive down to Santa Cruz for unlimited rides on the board-walk, then after that up to a vertical wind-tunnel to learn how to fly!  Even though it’s only a 3 day vacation, all of this for my family of 5 ( including two rooms for two nights at a nice motel near the beach in Santa Cruz would cost me a small mint in cash.  So it’s that much sweeter that I will be paying for everything but food and gas on barter!  Eat your heart out folks.  The only thing that isn’t completely nailed down yet is the water park tickets, but I’ve got a couple different people working on that and I’m flexible about  which park so I feel confident that it will work out.

Cutting your exchange out of a deal

~ bpwebbrian ~ 4 Comments

Fairly early on in my “barter experience” I ran in to a couple different people who found me through a barter exchange, but wanted to arrange a deal outside of that exchange.  This comes down to a basic ethics issue.  Barter exchanges send business to me.  That’s really their primary job as far as I’m concerned.  They are my “outside sales” force.  So with that in mind, I think it’s a VERY bad idea to cut them out of a deal.  My goal is to establish a reputation among brokers that it is a positive, easy, and PROFITABLE experience to send folks to me for a  deal.  Beyond the obvious that Test you are cutting your own throat when you fail to pay your sales team, it is also unethical to do so.

That being said, things are rarely black and white.  The world is full of shades of grey so you need to look at situations individually.  Here are a couple situations where I would consider doing business outside an exchange with contacts who are in my exchange network:

  • Business started outside the exchange
    If you are doing business with someone in your barter network, where the original contact did not come wholesale jerseys from your exchange, I see no problem working with post them directly for cash or barter or even cash & barter.  If the sale did not originate with a lead from the exchange all bets are off.  For example, I have a long time client that we did cash business for years, then later on we realized that we are both in the same barter exchange.  I see no problem continuing to deal with them directly or even on doing a part cash part barter deal with ?bn them (that might be normally prohibited by my exchange).
  • Long term vs. short term
    I have a vendor that I found through my barter exchange and it turned out that he wants some of my services directly.  He wanted to work directly and totally Publications cut out the exchange to save the commission fees.  After much conversation, I agreed that if our first job was run through the barter exchange, I would be willing to do some work on direct trade after that.  My goal is for this to be a long term vendor and I fully cheap nba jerseys expect that after a relatively small amount of direct trade we’ll be back to 100% through cheap jerseys the exchange.  My reasoning in making this deal was two-fold.  Firstly, much like an outside sales person, I don’t think it’s reasonable to always expect that a commission will be earned from every sale that is ever made with a client that a on salesperson brings in.  Often sales people earn their commission Coffee is on that first sale only.  In this case, the exchange will be earning for the first sale and (most probably) many wholesale mlb jerseys more down the road after the direct deal is done.  Secondly, I had to look at the “greater good” here.  It seemed quite likely that the whole deal would fall apart if I didn’t make some kind of a concession to this vendor.  The exchange would have earned nothing if I hadn’t agreed to do some trade outside of the exchange.

As usual, please feel free to post back about your experiences with this issue.

Holding on to your barter partners

~ bpwebbrian

I have not had much of a problem holding on to my barter partners, but I try not to take things for granted.  Just because I have a good barter partner now, doesn’t mean I won’t lose them down the road due to some dissatisfaction that they have that I am not even aware of.  Additionally I feel a responsibility toward folks that I’ve recruited into a barter relationship and I want to make sure that it’s working for them.  The last thing I want wholesale nfl jerseys to do is develop a Plan fantastic barter vendor, then lose it!!!

So…I just sent out the following Project email to my primary barter partners this morning.  What do you think?

I’m dropping you this note because I really value bartering with you and I want to make sure that you are getting everything you can out of first it.  Barter has been incredibly profitable Publications for my business over the last year and I want to help it be an equally beneficial experience for you.  One of the down-sides about using cheap mlb jerseys a barter exchange is that I often think they should spend more time giving members information about how to barter effectively.  I feel a special responsibility toward those of you that my wife and I have recruited into IMS, and I want the experience to be as good for you as it is for us.

I would love to get together with you and spend some time talking about how you can most effectively use barter as a business tool.  I’m not selling anything and there is nothing in it for me la other than re-enforcing wholesale nba jerseys a win-win relationship.  Some of you have been bartering longer than I have so in that case our meeting could be a brain-storming session прямых where we are both learning something.  Please give me a call to set up a time to get together or use the link below to use my cheap mlb jerseys online tool for setting up an appointment.  Please consider this an open invitation so even if you don’t want to get together now, I’d be happy to talk later.

P.S.  I’m in the process of setting up a website about how to get the most out of barter, I’ll drop you a line when it’s up and running.