"First Canadian Barter Exchange is bringing businesses together"
Mia Thomas, Burnaby Now
Published: Wednesday, August 20, 2008
There's something very stripped-down and bare-bones about a barter system: take what you need, give what you have.
It was something that appealed to Amber Noakes and her husband, Sukhi Kular, when they started First Canadian Barter Exchange 12 years ago with two other partners.
Kular was in advertising, working with small businesses who would trade their services or products for advertising.
The barter exchange formalized that and expanded on it, says Noakes, the company's sales and marketing manager.
"With a barter system, you don't have to exchange with just two people, you can exchange with multiple partners so people can get the things they need," she explained.
"This was a good way to help those businesses get ahead. If you're a smaller business, it lets you play on a bigger scale."
Members start off with a certain amount of barter dollars to spend on other members' businesses.
Their own business is promoted through the barter exchange network as an option for other members, who would then bring in their own barter dollars to spend.
The barter exchange company helps and guides them through the process.
"We regulate the system," Noakes said.
Businesses learn about other companies in the network through the barter exchange's directory and e-mails. The company also has 4 brokers who work with a company to find what they need and put their own information out there.
"There's only a limited amount they can spend before they owe," said Sunny Parmar, the barter exchange's sales supervisor.
"That's a large part of our job, helping people to generate business. It's a great way to get new business, especially for newer and small businesses."
Bayne Vardy, practically a charter member of the First Canadian Barter Exchange, agrees.
The president of B.C. Furnace and Air Conditioning Ltd. for the past 26 years, Vardy joined the barter network at its inception, his first foray into the barter system.
"I was intrigued by it," he said, noting he didn't just jump in blindly. "I had to make sure it was legitimate and all the taxes were in place."
With little cost on his part, and the advertising the company does, it seemed like a good idea. Vardy was particularly attracted to the idea of only paying if someone in the network used his company.
"That was very appealing to me," he said. "It's almost like guaranteed advertising. If you don't get results, you don't pay."
One of the benefits of belonging to the network has been the clients who come calling as a result.
His business is seasonal - air conditioners in the summer, furnaces in the winter - and, at the end of each season, he has stock that has to clear.
Special deals for barter members is a way for him to do that, bringing in customers who might not otherwise be buying a furnace at that moment or might be tempted to go elsewhere.
"It does tap into a market that I know I would have difficulty marketing to," Vardy said.
"It also allows me to turn over inventory that's out of season."
In turn, he's made good use of other members' products and services.
"I've done everything from 'decal'-ing my trucks to printing, office furniture, carpet cleaning, alarm system monitoring (and) office janitorial services."
It also helps that there are few members in his field, reducing the competition. Over time, he has seen few drawbacks.
"People who first go into it may have a little difficulty with spending," Vardy said.
"Once they know how to keep the cash rolling over, they can pay for things such as rent and hydro."
Alan Kwong, who owns the Burnaby franchise of Dinner's Ready, joined the barter exchange in April and is also seeing the benefits. After first hearing about the company in a Burnaby Board of Trade newsletter, he met Parmar at a board of trade event and was sold.
It's a large part of what Parmar does, he explained: network.
"I'm always on the lookout for events to meet people where I meet someone and see if they have something we could use as a service," Parmar said.
The company gets eight to 10 new members a month, many through networking events but also through referrals from other members.
"People love the concept of barter, but they don't know how a barter exchange works," said Noakes.
"I thought it might be interesting to try out, ... being able to barter for things that you need," Kwong said, explaining that being able to get signs and laser toner were two immediate benefits.
And there was the marketing aspect of belonging to the network: "Being able to get people familiar with the concept of Dinner's Ready, and people are more likely to try something new if they're not paying cash for it, if they're trading their services for it."
It's early days, but Kwong is happy with how the barter system is working for his company, explaining many of the other members will get gift certificates for his company with their barter dollars.
"Whatever we need, we try to barter for first rather than buy," he said. "It's definitely a lot more flexible than doing a one-to-one trade."
When First Canadian started, someone might spend 20 barter dollars on a pizza, Parmar said. Now, members are making deals that involve tens of thousands, even a hundred thousand, barter dollars. The company has now grown to include 600 members and do $4.5 million in barter dollar business.
"There's such a wide scope for what people do," Noakes said.
"The nature of business is, ... there's always things (people) need," she said. "And there's not enough cash flow to get them started. There's always that desire to do more than your budget allows."
In turn, Parmar said, companies often have extra of something.
"They have excess capacity in terms of time, in terms of space, in terms of inventory," he explained. "We deal a lot with excess capacity."
If something is sitting around, literally or metaphorically collecting dust, there might be someone who would be able to pick it up in exchange for their own products or services.
"What's the cost to put it on barter?" Noakes asked.
It's not an under-the-table, nudge-wink at the taxman system, they note, explaining barter dollars are recognized by Revenue Canada. No tax is "not one of the benefits," Noakes emphasized. "It's like having a credit card you can charge up with no time limit."
