HOW TO START AND OPERATE
YOUR OWN BARTERING CLUB
Bartering is not negotiating. Bartering is "trading" for a service, or for
the goods you want. In essence, bartering is simply buying or paying for goods or services
using something other than money (coins or government printed paper dollars). Bartering
has been around much longer than money.
Recent estimates indicate that at least sixty percent of companies on the New York
Stock Exchange use the principles of bartering as a standard business practice. U.S.
Congressmen barter daily to gain support for their pet projects. Aircraft manufacturers
barter with foreign airlines in order to close sales on million dollar contracts. Perhaps
you have experienced at one time or another in your life a friend saying, "Okay,
that's one you owe me . . ." Basically, that's bartering.
The reason bartering enjoys renewed popularity in times of tight money is simply that
it is the "bottom-line" method of survival with little or no cash. In times of
high interest rates, cash in anyone's pocket is indeed a very precious commodity, and
bartering is even more popular. Bartering affords both the individual and the established
business a way to hold onto cash while continuing to get needed goods and services. In
addition to saving a business the added costs of borrowing money, bartering can improve a
company's cash flow and liquidity. For anyone who is trying to operate a successful
business, this is vitally important. For individual families in these times, it makes
possible the saving of cash funds for those purchases where cash is necessary.
To start and successfully operate a bartering club, YOU MUST THINK IN TERMS OF A
BANKER. After all, that's precisely the reason for your business--to receive and keep
track of people's deposits while lending and bringing together other people who want or
need these deposits.
Your first task is to round up depositors. As a one-man operation, you can start from
your home with nothing more than your telephone and kitchen table; but until you get
helpers you'll either be very small or very busy--probably both! Run a small display ad in
your local newspaper. A good ad would include the following ideas:
NEW BARTERING CLUB - Trade your expertise or time for the merchandise or services you
need. We have the traders ready--merchandise or specialized skills. Buyers too. Call now
and register. ABC BARTERING, (123) 4567890.
When respondents to this ad call, you handle them just as a banker handles someone
opening a new account. You explain how your club works: Everyone pays a membership fee of
$100 to $300, and annual dues of $50 to $100. The depositor tells you what he wants to
deposit, perhaps $150 worth of printing services, and what he's looking for in
return--storage space for his boat over a three month period. If you have a depositor with
garage space for rent and who needs printing services, you have a transaction. But let's
say you have no "perfect match" for this depositor. On your list of depositors
you have a dentist who's offering $500 worth of dental work for someone to paint his
house. A woman has a garage to rent in exchange for dental work for her children. An
unemployed painter is willing to paint houses in exchange for a side of beef, and a
butcher wants to trade a side of beef for advertising circulars. Remember, when a new
member joins your club, he makes a deposit and states his wants or needs. In the above
example, you have a typical bartering club situation. Your service is to spend or line up
those deposits to match the wants or needs of the club members.
An affinity for people and a good memory are vital to this kind of business, especially
if you're running a "one-man show." Generally, when you have a buyer for one of
your depositors, you notify him or her right away with a phone call. You simply tell her
that Club Member A wants to rent your garage. She tells you fine, but she doesn't want any
printing services. You simply tell her to hang on because you are currently in the process
of contacting the dentist who'll do the work on her kids+ teeth. And so it goes in the
operation of a bartering club.
Some of the larger bartering clubs (with several thousand members) simply list the
deposits and wants or needs on a computer, and then invite their members to come in and
check out the availabilities for themselves. Others maintain merchandise stores where the
members come in to first look at the computer listing, and then to shop, using credit
against their deposits. The smaller clubs usually publish a weekly "Traders
Wanted" sheet and let it go at that. These methods all work, but we've found that
instead of leaving your members to fend for themselves or make their own trades, the most
profitable system is to hire commission sales people to solicit (recruit if you will) new
members, specifically with deposits to match the wants and needs of your present members.
Your sales people should get approximately 20% of the membership fee from each new
member they sign, plus 3 to 5 percent of the total value of each trade they arrange and
close. This last percentage, of course, is to be paid in club credits, spendable on
merchandise or services offered by the club.
You'll need a club charter, and in many areas a board of directors and a city or county
license. Check with your city or county clerk for more information. You should also have a
membership contract, the original for your files and a duplicate for each member. In most
cases, you can write your own contract, using another group's membership contract as a
guide, or have your attorney draw one up for you. You'll also need a membership
booklet--or at least an addenda sheet to your contract--explaining the rules and bylaws of
your club. Supply your members with consecutively numbered "club membership
identification cards" for their wallets or purses. Some clubs even give membership
certificates suitable for framing. You can pick these up at any large stationery house or
commercial print shop.
Two things are important to the make up of the membership package you exchange for
membership fees: First, it must be as impressive as you can make it. People want to feel
that they are getting a good bargain in exchange for their goods or services. Make the
package appear as professional as possible--printed on high quality paper,
professional-quality art work or photographs, etc. Secondly, your offer must be legal,
while still serving your needs.
You should have at least 100 members before you begin concentrating on arranging
trades. As stated earlier in this report, the easiest way to recruit new members is to run
an ad in your area newspapers, and perhaps even on your local radio stations as well.
Follow up on these inquiries with a direct mail package, which would typically consist of
a brochure explaining the beauty and benefits of being a member of your bartering club, a
sales letter, and a return reply order form. After you've sent out the direct mail piece,
be sure to follow up by phone, and, if necessary, make a call in person as any other sales
person would do.
Another way of recruiting new members is via a party plan such as many multi-level
programs offer. Allow a certain number of club credits for each party a club member
arranges for you. Insist on at least ten couples for each party, and then as the
"Attraction of the Evening" you or one of your salespeople give a motivational
talk on the benefits available through your program. Be sure you get the names, addresses,
and phone numbers of everyone attending, and be sure that everyone leaves with your
literature.
If all those in attendance at these parties do not join, then follow up on them, first
by phone and then with personal sales presentations. Once you've got them interested in
your club, do not let go or give up on them until you have signed them as members. Also be
on the lookout for those who would be most likely to want to promote a similar party for
you. Offer them an item of merchandise they might be particularly interested in, and club
credits if they+ll not only join, but also stage a party for you. A bit more expensive,
but just as certain of success are free seminars. Rent a large meeting room, advertise in
your local papers, and then put on a hard-sell recruiting show. Such a plan is very
similar to the party plan idea, but on a larger scale.
As stated earlier, you can begin operations right out of your home, but working out of
your home has a number of growth inhibiting factors. After a certain period of time, the
growth of almost any kind of business will be retarded when it's operated out of a home.
As soon as you can possibly afford to, move into an office of some sort. Keep your eyes
open and consider the feasibility of sharing an office with an insurance agent or real
estate broker. Check your newspaper classifieds for businesses willing to share office
space or to rent desk space or other office amenities.
This is the kind of business that demands an image of success. You just can+t keep
people from "dropping in' when you're operating strictly on a local basis. And when
you attempt to hire sales people, a suitable place of business to work out of is just as
important to them as how much commission they're going to receive. Image is very
important, so don't neglect it.
Ideally, you should have one salesman for approximately every 50,000 people in your
area. Run an ad in your local newspaper, and also list your needs with your state's
employment service. Hire only commission salespeople. Give them a percentage of the
membership fee for each new member they sign, plus a small commission on each trade deal
they close. Assign each of your people specific territories, and insist that they call on
potential commercial accounts ranging from the "hole in the wall" rubber stamp
shop to magazine publishers and commuter airlines. There's plenty of business available in
every city or metro area in the country. Encourage your sales people to be creative and
imaginative when calling on prospects. Then, be sure that you keep an open mind and listen
to their wild trading proposals ( some "wild" proposals have been known to
become "wildly" successful).
Schedule "open discussion" sales meetings every morning before your
salespeople "hit the bricks." Have each of them report on their selling efforts
from the day before, and present to you a written list of prospects they plan to call on
today. Set up sales motivation workshops to be held at least once a month, and once a week
schedule a motivational speaker or play one of the widely available success/inspirational
tapes as a closing feature of your morning sales meetings. Stock sales success books and
encourage your people to borrow them to take home and read. Your sales people will make
you rich, but only if you turn them on and keep them flying high with personal motivation.
Should you or should you not accept installment payments from new members? Yes, by all
means, but only when you've got their signature on a contract drawn up for your benefit
and deemed legally binding by your attorney. What about bank cards? Yes, indeed. In fact,
you'll find that the capacity to handle bank cards will greatly increase your sales.
Precisely how much capital are you going to need in actual start-up costs? We would
estimate at least $500 for your printing and legal fees, unless you can trade charter
memberships in your club for these services. Timewise, you're going to be putting in
18-hour days and 7-day weeks, until you get those first 100 people signed up. And there
won't be any money for salary or long-deserved vacations from these first 100 members you
sign. You'll need it all for advertising, membership packets, and office set-up. However,
if you can really work at it, you should be home free in six weeks or less. Then you can
set up your office, hire a couple of girls to handle the paperwork, and take on a
salesperson or two.
Reputation and success in matching offers to wants will be just as important as image,
so give it your all. Don't give up. Stand behind the implied as well as the real promises
you make to your members. Should you offer a guarantee of satisfaction? Only so long as it
makes money for you, and you can back it up. There's not a person in business anywhere who
enjoys refunding a customer's money. But don't forget that the existence of your business
depends on service. The more you project an image of a "people pleaser," the
greater success you're going to achieve. This is definitely not a business for someone who
doesn't enjoy "waiting on" people. You've got to like people, enjoy helping
them, and want the inner satisfaction that comes from selling new ideas.
Bartering Clubs are a growth industry. Some clubs in areas with a metropolitan
population of 300,000 or more are reporting incomes of over a million dollars. The average
in cities of 100,000 population is about $150, 000 per year. No experience or special
training is required to begin a Bartering Club. The direction of the entire operation is
equally suited to women or men. Both do equally well as salespeople. It's a business that
fills a need, and a kind of membership program people will stand in line to be a part of
once they've been introduced to the benefits.
Now you have the plan. It's going to take an investment of time and effort to get
organized, but after your initial work to establish this business, you can become quite
wealthy in a relatively short time. Read over this plan again. Determine if this is
"the one" for you, and then go all out. It's up to you, and all it takes now is
action on your part.
