THE ENTERPRIZE ZONE
Bartering has never completely gone away, but it always seems to claim the spotlight in trying economic times.
The practice of trading goods and services with one another goes back centuries. But during the current economic downturn, the practice – as an actual worldwide industry – has seen an upsurge in interest, and so has the companies that specialize in bartering.
Some Austin and West Side businesses have been lured to bartering in order to save money. That was true for Greg Kaufman, owner of Smartbox Chicago, a portable storage and moving company. The business opened in Austin near Central and Roosevelt in May 2007, but relocated to Melrose Park in April. Smartbox is a member of Art of Barter, an Elgin-based company with more than 1400 member businesses in the Chicago area and throughout Illinois.
Art of Barter’s clients trade goods and services with other members via credits deposited into their accounts. No cash is ever exchanged. The members can use those credits to buy services from each other. Art of Barter, founded in 1991, gets a percentage of every transaction, and its members pay a one-time fee to join. Clients also pay accounting and marketing fees. Kaufman has been with Art of Barter for about two years.
“By utilizing Art of Barter, it brings us business we wouldn’t otherwise get,” he said. “Some people use their services because it’s available on trade. They would have normally looked elsewhere.”
Smartbox Chicago uses one other bartering company as well. And though cash continues to be the main form of payment for the storage company, 5 percent of their business comes from bartering.
“Bartering has gone up a bit, but not much,” said Kaufman concerning his business during the current recession.
Art of Barter provides its members the flexibility to trade with many different vendors, thus eliminating direct trading between only two parties, explained John Hora, the company’s co-founder. Hora, a native of Hinsdale, started the company with business partner Ron Szekeres. By using Art of Barter, members may receive anything from plumbing and electrical repairs, to legal advice and auto repair – without having to come up with cash money.
“There are increased sales for the new customers we bring you, and cash saved by using barter instead of cash,” said Hora.
Many Americans, he noted, assume that because the economy is in such bad shape that the bartering industry is taking off. Not true, said Hora, who started his career as a marketing consultant. The current recession has not negatively impacted Art of barter, though its members have been affected. For clients, there business is down about 25 percent.
“If not for the negative impact on our clients, we would be up much, much more,” said Hora. “We aren’t making zillions and zillions of dollars, but we are attracting a higher caliber of clients.”
Bartering as an industry began in the 1960s, but took off in the 1980s and ’90s. Art of Barter is just one of many bartering companies in the United States and worldwide. The geographic proximity of an area, he noted, is important to the bartering industry. A person, Hora noted, for instance, wouldn’t go far outside their area to see a dentist paying out of their own pocket. But, if it involves “barter dollars,” and that person can save their money, it’s a trip they’ll make.
Hora’s company has seen steady growth in the last three years, though it has no desire to expand outside Illinois. “We’ve been in business 18 years and have just barely scratched the surface,” he said.
Finisha is a freelance writer covering Austin’s business community. The Enterprize Zone is a regular feature in Austin Weekly News.