The Art of Barter Inc., based in Elgin, works with about 1,400 small businesses across the Chicago area. The company essentially "barters small business' services in exchange for other business' services through 'barter dollars,'" said John Hora, co-manager of the Art of Barter.
Hora gave the example of a printer, in the barter network, who needed an apartment roof redone. The printer hooked up with a construction worker within the network, who re-tiled the entire roof. The printer, who had earned barter dollars by providing printing services to clients within the network, used those barter dollars to pay for the construction worker's labor.
Hora estimated the printer saved about $13,000 by using his barter dollars. The Art of Barter made a profit by accumulating 10 percent of that sale, $1300.00
Art of Barter, he added, is "a legal underground economy," licensed by the Internal Revenue Service, where millions of barter dollars are ready to be traded. Some of their clients include Swizzle Inn in Elgin; El Sombrerito in Carpentersville; and Dr. Dana Landin, an Elgin chiropractor.
But it's not for everyone. A potential client must apply and if the Art of Barter approves a client, which is mainly based on how marketable that client is within their small business network, the client will pay a fee, depending on how much business he wishes to attain.
Bartering, they say, has changed over the last two years.
"During good economic times, people would use their barter dollars for fun stuff including cruises, spas and sports tickets," said Hora. "Now, barter dollars are going toward more of the essentials, the practical expenses," like printing, car repair, dentist work and eye care.
In this economy, writing out less checks is a plus, notes his partner.
"I don't know anyone who is doing well in this economy," said Ronald Szekeres. "Most of our clients are much worse off in 2008 than in 2007. Hard working, small business owners are struggling to make it and they're turning to us."
However, clients can remain optimistic.
"I tell potential clients that I don't have a crystal ball, but we have 1,400 small business owners and there's bound to be someone interested in your services," said Hora.
"There is hope. If you put good stuff in, you'll get good stuff out."
WTTW Interview on Chicago Tonight April 07/08
Video available upon request.
Barter trades help a business generate cash sales
By Jim Kendall
Mark Golden rewarded an employee with a trip to Mexico for two. Nice reward — at no direct cost to Golden because he used barter dollars.
“We love barter,” said Golden, an ophthalmologist and head of Doctors for Visual Freedom, a Lasik eye clinic at Woodfield Shopping Center in Schaumburg. “Barter patients are excellent patients because they refer their cash-paying friends.”
Golden has it right. Barter’s not for everybody. For one thing, not everything is tradable. “We use barter dollars to trade services, but not products,” explains John Hora, vice president at Art of Barter Inc. in Lombard. “One of our members may put in new drain tile for your sump pump; you’ll pay in barter dollars for the service but in U.S. dollars for the tile.”
“If you take the time to understand it, barter can be a really good thing,” said Robert Itzkow, a Chicago attorney who doesn’t barter legal services but represents companies that are into barter. “It’s a form of advertising. I may come to your restaurant with trade dollars today but come back next time with cash.”
Using barter to add incremental income to your business may make sense. Like any other tool, however, barter must be managed.
Claude Jewell, a 20-plus year barter veteran who said the concept “brought customers I wouldn’t get” to his Glen Ellyn diving store and who today runs Claude Jewell Scuba in Oak Park, suggests that newcomers restrict barter to 5 percent to 10 percent of their business. “You can get too many (barter) credits and discover you can’t pay the gas bill,” he warned.
Although you can engineer your own trades — landscaping for house painting is one example — Your barter dollars will run through a barter account akin to a checking account in that barter credits go in and out depending on whether you are buying or selling services. You and the IRS will get a 1099 at the end of the year.
Barter groups actively promote members within their family. Last Monday, for example, www.artofbarter.com listed 17 new members whose services ranged from a Willow Springs document shredder to a Palatine architect.
Barter groups charge an initiation, or membership, fee, and levy a cash transaction fee on each trade.
© 2005, 121 Marketing Resources Inc.
February 3, 2002: Mike See, vice president of Trendsetter Men's Wear in Orland Park, said Barter now accounts for 35 percent of sales for his home-based men's clothing business. See joined Art of Barter, a Skokie-based barter brokerage, in 1994. See has used his barter credit to pay for accounting services, floral services and even dinners at area restaurants. "Today's businesses are looking for new business, and barter gives them an extra dimension," See said. ….about 80 percent (of members) are service-oriented, vice president John Hora said. "…. It's cheaper to buy things with widgets than with cash," Hora said. Since the Sept. 11 terrorist attacks, Art of Barter has experienced a surge in business. "When things (sales) get tight, people are very resourceful and they find ways to keep things going," Hora said. Ken Courtright, owner of Mr. C's restaurant in Oak Lawn, allows customers using barter credit to dine there from Sunday through Thursday. The restaurant, 9848 Southwest Highway, reserves its high-volume days for cash customers. Courtright has belonged to Art of Barter since 1997 and estimates that he does about $20,000 worth of bartering each year. "I thought it (barter) might be a good way to stimulate business during the slow periods," he said. Courtright has used his barter credit for dental services and to have his parking lot sealcoated.
Syndicated Television Show, "Right on the Money" aired nationally Spring 2000: John says there's no limit to what you can trade. He's even had clients pay for entire weddings with barter dollars, from the dress to the prenup. But John cautions that bartering shouldn't be the core of anyone's business. Rather, he says, the icing on the cake. "John: I can bring 'em extra business that they wouldn't have had otherwise, and they can use that money to buy things they would've otherwise had to pay cash for. And that's how they save money. It's how it hits the bottom line."
October 1997: Bartering saves money because it's cheaper to buy things with widgets than it is with cash," said John Hora of Art of Barter, Inc., a Chicago-based company that has about 1,500 businesses in its barter system. "Everyone is paying cash for things they could trade for." But Hora cautions that it takes a while to get the hang of understanding the value of bartered goods and services. "It can be tricky, so we teach our clients to start off small because you make mistakes in the beginning," he said.
Insight on the News December 1, 1997: More and more, small and medium-sized retailers are joining countertrade "exchange" companies, or bartering networks, in an effort to circumvent cash shortages, an especially useful strategy during critical growth periods. "Everybody's got to pay back the debt from the easy credit we've had the past 20 years," says John Hora, vice president of Art of Barter in Chicago, an exchange that tallied $34.5 million in trading last year. "When it's hard to find cash, barter's that much more appealing." Companies actually can save cash by bartering an underutilized asset, says Hora. A hotel with empty rooms or advertisers with unsold space can trade their commodities or services so as not to lose money on the fixed costs.
May 1996, NBC Morning News/Chicago: Art of Barter was featured on the NBC TV Morning News in May, 1996. AOB vice president, John Hora was interviewed live on the air by Anchor/Host Derek Blakely. The day before the interview an NBC camera crew came to the AOB offices and shot tape of the interior which was shown during the interview. Here John explains that he got his start in barter by trading Orange Crushes to his sister for Eskimo Pies when they were kids."
Restaurants & Institutions November 15, 1995: Cash poor? Can't afford to get the place painted? The Art of Barter (AOB), Chicago, one of about 400 barter companies scattered throughout the country, says think again. You could pay for painting of lawyer services or carpet cleaning or even printing and advertising by trading meals for them. "The advantage of barter is not in the price you pay for the goods or service," says John Hora, vice president of AOB, "but in the cost of the 'money' which you're paying."
July 1995, WCIU Channel 26 Television/Chicago: AOB President, Ron Szekeres and Vice President, John Hora explain barter and the company history as featured guests on the Linda Marshall Business Report. "We received several calls from surprised AOB members who are regular viewers of the show and follow the televised stock ticker that runs along the bottom of the screen."
Art of Barter 609 E. Chicago St., Elgin, IL 60120-5760
Tel. 847-214-5656 Fax 847-214-5657 Email: email@example.com
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