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How to start and operate your own bartering club
HOW TO START AND OPERATE YOUR OWN BARTERING CLUB
Bartering is not negotiating! Bartering is "trading" for a service,
or for the goods you want. In essence, bartering is simply buying
or paying for goods or services using some thing other than money
(coins or government printed paper dollars).
Thus defined, bartering has been around much longer than money as we
know it today. Recent estimates indicate that at least 60 percent
of companies on the New York Stock Exchange use the principles of
bartering as a standard business practice. And congressmen barter
daily to gain support for their pet projects. U.S. aircraft
manufacturers barter with foreign airlines in order to close sales
on million dollar contracts. Perhaps you have experienced at one
time or another in your life a friend saying, "Okay, that's one you
owe me..." Basically, that's bartering.
The reason bartering enjoys renewed popularity in times of tight
money is simply that it is the "bottom-line" method of survival with
little or no cash. In times of high interest rates, cash in
anyone's pocket is indeed a very precious commodity, and bartering
is even more popular. Bartering affords both the individual and the
established business a way to hold onto cash while continuing to get
needed goods and services.
In addition to saving a business borrowing costs, bartering can
improve its cash flow and liquidity. For anyone trying to operate a
successful business, this is vitally important, and for individual
families in these times, it makes possible the saving of cash funds
for those purchases where cash is necessary.
To start and successfully operate a bartering club, YOU MUST THINK
IN TERMS OF A BANKER. After all, that's precisely the reason for
your business - to receive and keep track of people's deposits while
lending and bringing together other people wanting or needing these
deposits.
So your first task is to round up depositors. As a one-man
operation, you can start from your home with nothing more than your
telephone and kitchen table, but until you get helpers you'll either
be very small or very busy (probably both).
You can run a small display ad in your local newspaper. A good ad
would include the following ideas:
NEW BARTERING CLUB!
Trade your expertise and/or time for the
merchandise or services you need. We have
the traders ready - merchandise, specialized
skills, buyers too! Call now and register.
ABC BARTERING
(123) 456-7890
When respondents to this ad call, you handle them just as a banker
handles some one opening a new account. You explain how your club
works: Everyone pays a membership fee of $100 to $300, and annual
dues of $50 to $100. The depositor tells you what he wants to
deposit, perhaps $150 worth of printing services, and what he's
looking for in return - storage space for his boat over a three
month period. If you have a depositor with garage space for rent
and needing printing services, you have a transaction.
But let's say you have no "perfect match" for this depositor. On
your list of depositors you have a dentist who's offering $500 worth
of dental work for someone to paint his house. A woman with a garage
to rent in exchange for dental work for her children. An unemployed
painter willing to paint houses in exchange for a side of beef, and
a butcher who wants to trade a side of beef for advertising
circulars.
Remember, when a new member joins your club, he makes a deposit and
states his wants or needs. In the above example, you have a typical
bartering club situation. Your service is to spend or line up those
deposits to match the wants or need s of the club members.
An affinity for people and a good memory are vital to this kind of
business, especially if you're running a "one-man show." Generally,
when you have a buyer for one of your depositors, you notify him or
her right away with a phone call.
You simply tell her that Club Member A wants to rent your garage.
She tells you fine, but she doesn't want any printing services. You
simply tell her to hang on because you are currently in the process
of contacting the dentist who will do the work on her kids' teeth.
And so it goes in the operation of a bartering club.
Some of the larger bartering clubs (with several thousand members),
simply list the deposits and wants or needs on a computer, and then
invite their members to come in and check out the availabilities for
themselves. Others maintain merchandise stores where the members
come in to first look at the computer listing, and then to shop,
using credit against their deposits. The smaller clubs usually
publish a weekly "traders wanted" sheet and let it go at that.
These methods all work, but we've found that instead of leaving your
members to fend for themselves or make their own trades, the most
profitable system is to hire commission sales people to solicit
(recruit if you will) new members, specifically with deposits to
match the wants and needs of your present members. These sales
people should get 20% of the membership fee from each new member
they sign, plus 3 to 5 percent of the total value of each trade they
arrange and close. This percentage, of course, to be paid in club
credits, spendable on merchandise or services offered by the club.
You'll need a club charter, a board of directors or officers, and in
many areas, a city or county license. Check with your city or
county clerk for more information on these requirements. You should
also have a membership contract, the original for your files and a
duplicate for the member. In most cases you can write your own,
using any organization membership contract as a guide, or you can
have your attorney draw one up for you. You'll also need a
membership booklet, or at least an addenda sheet to your contract,
explaining the rules and bylaws of your club. It's also suggested
that you supply your members with consecutively numbered "club
membership identification cards" for their wallets or purses. Some
clubs even give membership certificates suitable for framing. You
can pick these up at any large stationery house or commercial print
shop.
Two things are important to the make up of the membership package
you exchange for membership fees:
1. It must be as impressive as you can make it
2. It must be legal, while serving your needs almost exclusively.
Basically, you should have at least 100 members before you begin
concentrating on arranging trades. As stated earlier in this
report, the easiest way to recruit new members is to run an ad in
your newspapers, and perhaps even on your local radio stations as
well.
Follow up on these inquiries with a direct mail package, which would
typically consist of a brochure explaining the beauty and benefits
of being a member of your bartering club, a sales letter, and a
return reply order form. After you've sent out the direct mail
piece, be sure to follow up by phone, and if necessary, make a call
in person as any other sales person would do.
Another way of recruiting new members is via the Amway Introduction
Party Program. Allow a certain number of club credits for each
party a club member arranges for you. Insist on at least 10 couples
for each party, and then as the "Attraction of the Evening," you or
one of your salespeople give a motivation-benefits available
recruiting talk. Be sure you get the names, addresses and phone
numbers of everyone attending, and be sure that everyone leaves with
your literature.
If all those in attendance at these parties do not join, then follow
up on them, first by phone and then with personal sales
presentations. Once you've got them interested in your club, do not
let go or give up on them until you have sign ed them as members.
Another thing - take a page from the Party Plan Merchandiser's
Handbook, and look for those who would be most likely to want to
promote a similar party for you. Offer them an item of merchandise
they might be particularly interested in, and club credits if
they'll not only join, but also stage a party for you.
A bit more expensive, but just as certain of success are free
seminars. Rent a large meeting room, advertise in your local
papers, and then put on a hard-sell recruiting show. Such a plan is
very similar to the party plan idea, but on a larger scale. An
inside tip: Whenever you stage a recruiting party or seminar, always
"pad the audience" with your own people, who will of course lead the
way for those you+re trying to recruit.
As stated earlier, you can start operations out of your home, but
working out of your home has a number of growth inhibiting factors.
After a certain period of time, the growth of almost any kind of
business is retarded when it's operated out of a home. So just as
soon as you possibly can afford to, move into an office of some
sort. Keep your eyes open and consider the feasibility of sharing
an office with an insurance agent or real estate broker. Check your
newspaper classifieds for businesses willing to share office space
or to rent desk space or other office amenities.
This is the kind of business that demands an image of success. You
just can't keep people from "dropping in" when you're operating
strictly on a local basis. And when you attempt to hire sales
people, a place of business to work out of is just as important to
them as how much commission they're going to receive. Image is super
important, so don't neglect it!
Ideally, you should have one salesman for every 50,000 people in
your area. Run an ad in your local newspaper, and also list your
needs with your state+s employment service. Hire ONLY commission
salespeople. Give them a percentage of the membership fee for each
new member they sign, plus a small commission on each trade deal
they close.
Assign each of your people specific territories, and insist that
they call on potential commercial accounts ranging from the "hole in
the wall" rubber stamp shop to magazine publishers and commuter
airlines. There's plenty of business available in every city or
metro area in the country. Encourage your sales people to be
creative and imaginative when calling on prospects. Then, be sure
that you keep an open mind and listen to their wild trading
proposals (some "wild" proposals have been known to be come "wildly"
successful)!
Schedule "open discussion" sales meetings every morning before your
salespeople "hit the bricks." Have each of them report on their
selling efforts from the day before, and present to you a written
list of prospects they plan to call on today. Set up sales
motivation workshops to be held at least once a month, and at least
once a week schedule a motivational speaker or play one of the
widely available success/inspirational tapes as a closing feature of
your morning sales meetings. Stock sales success books and en
courage your people to borrow them, take them home and read them.
Your sales people will make you rich, but only if you turn them on
and keep them flying high with personal motivation.
Should you or should you not accept installment payments from new
members? Yes, by all means! But only when you've got their
signature on a contract drawn up for your benefit and deemed legally
binding by your attorney. What about bank cards? Yes indeed! In
fact, you'll find that your capability of handling bank cards will
double or even triple your sales.
Precisely how much are you going to need in actual start-up costs?
We would estimate at least $500 for your printing and legal fees,
unless you can trade charter memberships in your club for these
services. Timewise, you're going to be putting in 18-hour days, and
7-day weeks, until you get those first 100 people signed up. And
there won't be any money for salary or long-deserved vacations from
these first 100 members you sign. You'll need it all for
advertising, membership packets and office set-up. However, if you
can really work at it, you should be home free in six weeks or less.
Then you can set up your office, hire a couple of girls to handle
the paperwork, and take on a salesperson or two.
Reputation and success in matching offers to wants will be just as
important as image, so give it your all. Don't give up; stand
behind the implied, as well as the real promises you make to your
members.
A couple of final notes: Should you offer a guarantee of
satisfaction? Only so long as it makes money for you, and you can
back it up. There's not a person in business anywhere who enjoys
refunding a customer's money. But don't forget that the existence
of your business depends on service. The more you project an image
of a "people pleaser," the greater success you're going to achieve.
This is definitely not a business for someone who doesn't enjoy
"waiting on" people. You've got to like people, enjoy helping them,
and want the inner satisfaction that comes from selling new ideas.
This is definitely a growth business. Bartering Clubs in
metropolitan population areas of 300,000 or more are reporting
incomes of over a million dollars. The average in cities of 100,000
population is about $150,000 per year.
Actually, no experience or special training is required. The
operation of a Bartering Club is equally suited to women or men.
Both do equally well as salespeople. It's a business that fills a
need, and a kind of membership program people will stand in line to
be a part of, once they've been introduced to the benefits.
This is the plan. It's going to take your time and effort to get
organized, but after your initial work to establish this business,
you can become quite wealthy in a relatively short time. Read over
this plan again; determine if this is "the one" for you, and then go
all out. It's up to you, and all it takes now is action on your
part.
One of the best of all the available sources of ongoing help and
knowledge about bartering is a quarterly publication entitled
Bartering News. Write and ask for a sample copy. The address is:
Bartering News
PO Box 3024
Mission Viejo, CA 92690
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