How To Start a Barter Club
By
James Harvey Stout (deceased). This material is now in the public
domain. The complete collection of Mr. Stout's writing is now at
http://stout.mybravenet.com/public_html/h/
>
Jump to the following topics:
- We can consider these
issues.
- We
can acquire a franchise from an established barter club.
(This chapter describes the procedures in starting and
operating a barter club. The chapter does not cover every possible
detail, but it gives guidelines -- and an overview such that we can
decide whether we want to start a club of our own.)
We can consider these
issues.
- The focus.
- A for-profit business.
- A non-profit organization. It can be a social-service
agency which might direct its efforts specifically toward
low-income people. Those people do not have much cash, but they
do have many skills which can be traded.
- An informal club. This could be a group of friends who like
to trade.
- A specialized group. We might want to limit membership to
one group: our own neighborhood, or our own church, or our own
age-group (e.g., senior citizens), or only one skill (e.g.,
babysitting or tutoring or car-pooling), or only one product
(e.g., home-grown fruits and vegetables).
- Income and expenses.
- Income. We can earn money in many ways:
- Service charges. If our service charge is 10% for each
transaction, and the members are spending an average of $200
per month through the club, that $20 might be multiplied by
1,000 members into $20,000 per month, or $240,000 per year.
- Membership fees. Some clubs charge $250 or more as an
initial membership fee.
- Annual dues.
- Additional services. At some clubs, the management does
more than just oversee other people's sales; it engages in
its own sales -- in real estate, insurance, advertising,
travel packages, and other goods and services.
- Grants, donations, fund-raisers (if our barter club is a
non-profit organization). In Oregon, a barter club was
started by a VISTA volunteer; that government agency paid
for the director's living expenses while he created the
club.
- Expenses. The expenses can include rent, salaries of
employees, postage, printing, telephone, office supplies,
transportation, etc. If our barter-club is a non-profit
organization, volunteers might perform some of the tasks.
- The business aspects. We need to know about taxes, business
insurance, bookkeeping, zoning, licenses, etc. We can get that
information from business texts, college courses, the Small
Business Administration, accountants, attorneys, other barter-club
directors, and other experts.
- The format of the organization.
- A barter club. We maintain ongoing accounts for our
members, to keep track of their debits and credits, probably in
the form of "units" (which are equal to $1 each).
- A clearinghouse. We simply keep a list of the members (and
their goods or services); we do not set up the trades, or
accept any responsibility for the outcome (except to remove
members who violate rules). When members want to make a trade,
they can use one of these procedures:
- They call us. We look at our list of members. We find
someone who has what the caller wants, and we give that
phone number to the caller.
- They refer to a directory of members. The directory has
a list of members, their phone numbers, and their goods and
services.
- A brokerage. We have a list of people who barter; when
someone calls to request a particular item or service, we
arrange the deal, and we charge a commission.
- Acquiring new members. We can consider these options:
- We can invite friends, neighbors, and co-workers.
- We can invite members of a group to which we belong: our
church, social club (e.g., Kiwanis), volunteer organization,
senior citizens group, retirement community, food co-op, social
service agency, school club, or government-funded program. For
example, in one community, the Head Start program initiated a
barter group of its own.
- We can use newspaper ads, fliers, notes on bulletin boards,
announcements in local Usenet newsgroups, listings in local
directories on the World Wide Web, a listing in the phone
directory, radio ads, television ads, press releases, etc.
- We can call individuals who have classified ads. In our
phone call, we can say, "If you are not able to sell that item
with your ad, maybe you'd like to try to barter it
through our club."
- Our explanation of bartering. In brochures, press releases,
and conversations, we can explain various aspects of bartering:
- The benefits. Give a personalized presentation by referring
to individual needs; for example, the person might want to save
money, or to share, or to meet people, or to help people, or to
have fun, or to get a specific item or service (e.g.,
babysitting).
- The process. People are accustomed to using money;
bartering might be an alien topic, so we need to give details
regarding the club and its operation.
- "Resource identification." At non-profit barter clubs
(i.e., clubs where many members are not business-owners), some
people might believe that they have nothing to offer to the
group. We need to explain that everyone has barterable goods
and skills: garden produce, unwanted possessions, babysitting,
unskilled labor (e.g., yardwork, housecleaning), the products
from hobbies, etc. This book has a long list of items which can
be bartered.
- Our office. We might be able to barter for office
space -- paying with barter-club units or our services. A small
non-profit club can be operated from our home, or from a donated
room.
- Units or direct trades. We can use either system:
- Direct trades. In this system, we trade one item directly
for another.
- Main advantage: It doesn't require much paperwork; we
simply keep records of the members, their phone numbers, and
their "needs" and "wants." Then, when someone calls us to
set up a trade, we look through our records to find someone
who might be interested.
- Main disadvantage: The system relies on a "double
coincidence," i.e., a situation in which I have what you
want, and you have what I want. But, for example, if you
want my computer-programming skills, but I don't want your
pottery, we can't make a trade.
- Units. Units are a type of "money" which the members
exchange among themselves; they are equal to $1 each.
- Main advantage: This system does not rely on a "double
coincidence"; i.e., you can buy my computer-programming
skills even if I don't want your pottery. You aren't paying
with the pottery; instead, you are paying with units, which
I can spend at someone else's place of business.
- Main disadvantage: It requires an ongoing,
time-consuming bookkeeping system to keep track of the
members' debits and credits. We also have to deal with abuse
of the system; for example, some people will use other
members' goods and services (on credit), and then they will
not provide goods or services whereby they could pay off
that debt to the system. Clubs solve this problem in various
ways:
- They might simply prohibit "deficit
spending." The members cannot spend units which they do
not have.
- In some clubs, the members must call the office for
an authorization for each check. In the office, an
employee checks the files to be certain that the check is
backed by enough units.
- Membership applications usually ask about a
prospective member's finances -- employment history,
credit history, etc. People who have been financially
irresponsible can be prohibited from joining our club.
We
can acquire a franchise from an established barter club. We can
consider these issues:
- Expense. A franchise could cost $25,000 or more.
- The viability of the franchise.
- We can talk to some people who have bought
franchises, to ask whether the franchiser has been helpful to
them or whether they should have done it on then own (without
the franchiser's help, and without spending $25,000 or more for
that help).
- We can investigate the franchise by the same means by which
we would investigate a barter club (as explained in the chapter
regarding barter clubs).
- The application. The franchise application will probably ask
about our business experience, our barter experience, our
employment history, and our educational background. We might
also be required to disclose our finances: credit history,
financial statements, sources of income, any mortgages, any loans,
any bankruptcies, etc.
- Training. When we buy a franchise, part of the fee will pay
for our training.
- The topics of training. The franchiser will teach us about
marketing, accounting, office procedures, staffing, sales (to
recruit club members), member relations, general management
procedures, software for barter clubs, taxes, advertising, etc.
- Training at the franchiser's headquarters. This might be a
week-long session for us and our key employees.
- Field visits. The franchiser will probably send a
representative to our office periodically, to review our
operations and to give advice.
- On-going support. We can call the franchiser with our
questions, or we can ask a representative to visit us. One
franchiser has a cost-free "800" phone number for support, and
it promises to send a rep "within hours" if we have an
emergency.
- Training for our sales staff. One franchiser can send a
professional sales manager to us to help in the hiring,
training, and motivating of our sales team.
- Other support. The franchiser might give additional
information through newsletters, regional seminars, and
national conventions.
- Software. The franchise will have software which is specially
designed for barter clubs. The software will be able to record
transactions and fees, handle our bookkeeping, print mailing
lists, and produce monthly statements.
- The operations manual. The manual will cover all aspects of
the business.
- Printed material. The franchiser will provide the materials
which we need for our club: forms, contracts, membership cards,
brochures, audiovisual presentations, manuals, marketing kits,
advertisements, receipts, etc.