Benefits of Business to Business Barter

Business-to-Business-barter-small December 10, 2015| Sam Burlum | BusinessBuy LocalCommunityEconomyFree EnterpriseInnovationSmall Business

Written by, Samuel K. Burlum, Investigative Reporter and author of The Green Lane, a syndicated column Published on  www.SamBurlum.com 

Source: When cash is tight, and budgets are limited, what are Small Businesses to do when trying to accommodate all of their growth needs, while also trying to grow their client base? More companies and small businesses are considering the usage of Barter to help them with these shortfalls.

Small businesses life blood relies on cash flow in order to support its needs and make a profit for its owner. Not all businesses are so lucky to have constant clientele to provide ongoing patronage that will allow for a business to experience growth or advancement. Today’s risky economic climate has curbed many banks from funding small ventures due to the extremely high amount of potential risk of a business defaulting on their loan. Business owners must rely on other avenues of funding their business while conserving their cash for rent, utilities, inventory, and payroll.

Businesses can enjoy the many benefits in bartering with one another, when addressing growth solutions for that business. Businesses can target needs in the areas of marketing, site renovation, advertising, meals and entertainment for events, and other critical professional services using barter. Cash conservation seems to be at the top of the mind awareness however there are several other benefits to having a business to business barter relationship.

Barter income is treated just the same as any cash income, and barter can be used as a marketing tool. Most barter platforms, like Badger Barter, will provide for you at the end of the year a 1099B, which will reflect all the sales you have made using the barter system. Barter purchases which are tax deductible when using cash to make that purchase, are also tax deductible when purchased using trade credits.

When a business signs up for a barter system, they are usually interviewed by a Trade Consultant, whom helps you review all of your spending habits and your future sales projections to see which other businesses would be the right trade partners in the barter system. Even larger companies have begun to adopt bartering. It is estimated that over 65% of Fortune 500 companies engage in barter in one degree or another. Some barter platforms even allow you to apply for a line of credit, so your business has an opportunity to get the things it needs before it opens its doors to the public.

Business to business barter allows for each business to build a strong trust and long term relationship with one another. This new brand loyalty comes from a place where both parties mutually respect each other’s products/services, and understand how to properly engage in the barter platform. Both businesses are trying to reserve their cash, yet they are both willing to borne services that help each other grow. Business to Business Barter builds something that most cash exchanges can’t, and that comradery.

In an environment where it seems there is a cash register on every corner, businesses which offer barter and trade, can outlast businesses that offer the urgent “sale.” People who practice commerce with barter understand the importance and value brand loyalty, and would rather work with a fellow business that accepts barter, than one that is only about the hard cash in the till.

Businesses that offer barter often can have a habit of referring other businesses to the same client. Barter alliances are made when a client of one service is looking for another niche service provided by a similar type business. This usually happens under normal circumstances between attorneys that practice different areas of law; or physicians that recommend their patients to a specialist, but with barter something else takes place.

Businesses begin to work together to keep the wealth within the community, rather than see the potential customer head outside the network. The dog-eat-dog competition that occurs has a tendency to slightly simmer, knowing that all of the businesses within the barter network all have similar objectives. So businesses begin to work together in preserving cash assets; and begin to realize the true value of each other’s expertise when barter is in play.

Most barter platforms do limit the number of businesses within a specific category, to prevent “stacking” so businesses within the barter system have an opportunity to flourish. These exchanges are promoting their barter members, since participation is not always free. Barter trade platforms do charge a small fee for the services they provide, which sometimes can be paid with the barter credit itself. Usually these fees are minimal and are aimed at providing a support staff that is there to keep the barter network full of viable barter choices.

Samuel K. Burlum is an investigative reporter who authors articles related to economic development, innovation, green technology, business strategy, and public policy concerns. Burlum is also a career entrepreneur who lends his expertise as a consultant to start-up companies, small businesses, and mid-size enterprises, providing advisement in several areas including strategic business planning, business development, supply chain management, and systems integration. He is also author of The Race to Protect Our Most Important Natural Resource-Water, Main Street Survival Guide for Small Businesses, and Life in the Green Lane-in Pursuit of the American Dream.

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Motorsports Marketing No Longer Just For NASCAR

Source: Motorsports Marketing and Race Car Sponsorship no longer just apply to the race teams involved in the top stock car sanction body, NASCAR. Many local and regional businesses are finding value in advertising and supporting racing teams involved in other forms of competition.

Travel to any local dirt or asphalt circle racing track on a Friday or Saturday night and you will find race cars, full fender and open wheel, covered in flashy graphics and logos of businesses and companies you may have never heard of. Local and regional businesses such as RV Escape from Branchville, New Jersey, a company that sells and rents travel trailers and recreation vehicles to or Halmar International, a construction company with corporate offices located in Nanuet, New York; have devoted themselves to all out race car team sponsorship programs. Race tracks like those of the Orange County Fair Speedway, Middletown, New York, are built to accommodate tens of thousands of race fans, many whom reside within a 50 mile radius of the speedway dubbed the “Hard Clay.”

With over 20 regularly schedule races over a given race season, means direct exposure of brands, businesses, products and/or services to race fans whom attend such race events. From the hobby class entry level form of stock car racing, street stock-pure stocks, to the upper tier of regional dirt track racing divisions, big-block modified division, you will find cars donned in advertising from local pizza shops to large regional and national companies. Businesses have discovered the value of race car and racing team sponsorship, which in the past was usually reserved for the elite of racing communities, are now a part of doing daily business in order to compete for local championships. Racing teams are competing just as much off the track as they are on the track, for sponsorship dollars, mainly because there are so few businesses available with marketing and advertising budgets for promoting their products and services at sporting events.

Businesses are finding bargains at local and regional speedways, and are seeing a higher return on investment on their sponsorship dollars. Companies are getting far more for their advertising dollar, because the local or regional racer has realized in order to gain a commitment from a business for sponsorship, they must offer much more than just spot on the car for logo placement. Drivers, their teams, and their car have been making themselves available for talent appearances, where they are on site at an event on behalf of the sponsor. Drivers are finding that they are asked to participate in the creation of marketing and advertising collateral such as print ads, video, photos, and social media; repurposed for targeting audiences who have an interest in auto racing and may be potential customers of sponsor’s products.

Race car sponsorship has transformed from donating a few dollars to an individual who is conducting a fundraising drive so he or she can race; to a full time job and business of offering a suite of advertising and marketing services to potential corporate sponsors. The evolution has been long coming. There are two major factors to this change. Attendance is up at the local and regional speedways where seats at NASCAR races have gone empty. The economy has been playing a role in the transfer of race fans since the price of admission to NASCAR events are out of reach for the average working class family. So they have been making their way to second best; the local dirt speedway in their own back yard. With the transfer of race fans, brings higher potential customer conversion ratios; so dollar for dollar advertising reach is increasing.

Another factor is that more businesses are searching for creative ways to reach potential customers, where they aim to maximize their advertising dollar. A full page ad in the local newspaper could cost upwards of $2000 for a one time print. That newspaper will usually stay in front of the subscriber for less than a week before it finds its way into the recycle bin. A local business or regional company can enter into an agreement with a local racer for that same amount of money, could have their logo placed on the side of a racer’s vehicle, race car trailer, back of their uniform, on the racer’s website or social media page, and in an unlimited number of pictures taken by race fans.

A night’s worth the full schedule of race events could last up to six hours of entertainment. Most speedways can seat up to 2500 race fans. If you calculate advertising reach, a business can touch potential future clients for less than .80 cents per person. That is less than the cost of most paid per click ads banner ads on the internet. Calculate that number of race fans multiplied by 20 races divided by your sponsorship commitment (dollar amount) and you can calculate your return on investment per reach. Based on an entire season, if exposed to 50,000 race fans over the term of the race season, a business which spends $2000 on a sponsorship package would reach each potential consumer for less than .04 cents per race fan per race.

You will find more businesses adopting some level of motorsports marketing program as a part of their marketing/advertising mix. From new and used car dealers to now regional products like Extreme Kleaner, can be found advertising their brands on local race cars. Some events are captured on video and are syndicated on Youtubeand on social media. These are marketing outlets not available to sponsors just a decade ago.

“In order to compete in a regularly scheduled season, and race up front, you have to have the sponsor dollars behind you. Racers are willing to be more accommodating to businesses whom choose to put their advertising dollars at work on the side of a race car,” added Tommy Vigh Jr., long time driver at the Orange County Fair Speedway, Middletown, New York.

“What use to be a hobby, is almost now a full time job,” contributed local stock car racer Ron Constable from Layfette, New Jersey, “One will put in just as much work in the shop as is spent behind the wheel. The cost has risen sharply over the last few years so now we must be willing to give more to businesses for their sponsor dollars.”

Samuel K. Burlum is an investigative reporter who authors articles related to economic development, innovation, green technology, business strategy, and public policy concerns. Burlum is also a career entrepreneur who lends his expertise as a consultant to start-up companies, small businesses, and mid-size enterprises, providing advisement in several areas including strategic business planning, business development, supply chain management, and systems integration. He is also author of The Race to Protect Our Most Important Natural Resource-Water, Main Street Survival Guide for Small Businesses, and Life in the Green Lane-in Pursuit of the American Dream.

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