LATEST NEWS Trade Contracting
August 1, 2006
Trade you: Bartering is thriving
It helps contractors make better use of down time
Contractors try to keep crews busy, despite weather, seasonal cycles and scheduling problems which contribute to down time. But suppose a contractor could access contracts that needed completing all year round?
The only hitch: instead of cash, these jobs pay in goods and services.
It’s called bartering, but has little in common with ancient merchants haggling in the town square. Instead, participants register with barter networks that provide a database showing what members need and what they have to offer.
“We have a lot of tradespeople and construction companies as members,” says David Holland, vice president of The Barter Network, a Toronto-based company. “The typical construction member is a small-to-medium-sized company offering plumbing, electrical work or drywalling. Most of them offer their services during down time when they’d be unlikely to be working on anything else.”
The Barter Network charges a $299 membership fee, then takes a five per cent commission on goods and services exchanged. Instead of bartering directly, members trade for dollar value credits which go into an account bank. Credits are “spent” on what other members offer.
“Construction members opt for anything from media kits, business cards and brochures to prescription glasses, electronic equipment or certificates for local restaurants,” says Holland. Other available goods and services: vehicle repair, dental work, vacation travel or client gift packages.
Barter companies are only as good as their members and management, says John Tanti, founder of Toronto’s B-Commerce, stressing that a good network helps its members to promote their companies and offers Certified Trade Brokers to help maximize deal value.
“One size does not fit all,” he says. “A larger company would require larger value for barter, but when they tell us what they’re offering and what they need, it gives us some leverage to find what they’re looking for.”
Antonio Valencia, is franchise owner of Certa Pro Leaside Inc. and a Barter Network member.
“We provide painting and small drywall repairs,” says Valencia. “Typically, the value of the jobs ranges from $500 for residential work to as much as $20,000 for commercial work. Our deals are usually structured to give us half of the value in cash and half in barter.”
Valencia says his company has traded for anything from client entertainment packages, to advertising services. So far, he says he’s been happy with the company’s involvement.
“It’s like regular business.You expect glitches, but most of the time it works out. We’re also building up relationships with new customers and some barter customers become cash customers, or refer us to other clients.”
David Ho, General Manager of triho Contractors, and B-Commerce member says his company performs between $20,000 and $30,000 worth of barter services per year, primarily electrical contracting.
“We use the account to buy hotel rentals, artwork, furniture and printing — anything we can use in the business,” says Ho. “If you bank the credits, they’re useless so we spend them as quickly as possible.”
Ho says that his company tends to use down time to fulfill barter contracts.
“Barter customers usually have to be somewhat flexible on the scheduling, within reason, but you have to prioritize,” he says. “If it affects the client’s business operation, you have to go right away.”
One aspect of bartering that some network clients initially overlook is taxes —including sales tax — which still apply.
“For accounting purposes, revenue is revenue and expenses are expenses” says Holland. “The government wants its taxes, dollar for dollar.”
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