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By Jay Abraham
Consequently, your bartered sales could be many times more profitable than your cash sales--or the highest profit sales you make.
Print your own "scrip" that is usable only at your place of business. While only your imagination can limit the advantages that having your own legal tender can do to benefit your business, here's just one to think about: Say there is something your company really needs or wants to acquire, but you can't afford it on a cash-paying basis. By using your own currency--where the cost is based on the cost of supplying the goods and services, and where you take delivery now but pay for it
much, much later--you can afford to buy the needed item.
Get terms, credit and discounts far better and easier than you ever could paying cash. You issue a $5,000 credit to a printer. He gives you $5,000 worth of printing and delivers it up front, right away. You pay with your barter scrip or credits, giving the printer one to two years to use his credit with you. Until the printer uses those credits, you haven't paid out anything.
Breakage. "Breakage" means the barter certificates that you issue but are never used when you trade with someone. A certain percentage of all barter credits issued--if they have an expiration date--will never be used. A major New Orleans hotel traded $125,000 worth of radio and TV time and issued barter scrip in that amount with a one year expiration date. Right up front, the hotel got $125,000 in advertising at regular hard-cash rates. But at the end of 12 months, only $35,000
worth of the barter scrip had been redeemed within the time limit.
Additionally, $35,000 in room trade produced $17,500 in "cash" food, beverage and miscellaneous sales with a gross profit in excess of $8,000 for the hotel. The hotel actually net $3,000 after all costs to enter into the trade ($8,000 profit, less $5,000 cost to fulfill the $35,000 worth of rooms). And all $35,000 worth of rooms were not used at one time. Use was spread out over 12 months, meaning the hotel got to pay the $5,000 over 12 months--interest free.
Convert Cash. Many barter items, merchandise or services you acquire can be sold or "converted" to cash at a fee well above the cost of acquiring them. Chrysler Corporation traded a Spanish television station 192 cars. The network sold the cars to its employees at a 30-percent discount on the cars' normal sticker price. The employees were overjoyed because the most the dealer would discount was 15 percent. So, the employees saved double. The average value of each car was
$10,000, and the television network received more than $1.9 million in real cash for the unsold air time that cost it nothing, since the air time likely would have gone unused.
Turn excess inventory into cash without losing regular business. A major international hotel corporation issues its own barter certificates in the amount of $7 million per year. Over the years, the certificates have become extremely popular in the advertising community since they are used at more than 1,500 hotels around the world. The hotel corporation trades for advertising on a trade basis because of the popularity of its hotels. The company saves an estimated $10 million a year in hard cash.
Stockholder benefits. Many companies issue employee and stockholder benefits in barter, either for the company itself or for other barter they have acquired. They give holiday presents, sales bonuses, customer inducements--all without using cash.
I've seen barter make people fortunes, save companies from ruin, add profit centers, improve people's lifestyles, open up tremendous new capital opportunities and stretch people's minds to incredible levels of possibility and achievement.
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About the author: This resource is (c) 1996 by Jay Abraham, a renowned marketing expert,
and is taken from the "Jay Abraham's Business Breakthroughs" newsletter.
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