When times get hard, some businesses barter so they don’t burn cash

09 Apr When times get hard, some businesses barter so they don’t burn cash

Candice Williams, The Detroit News

At a time when businesses are reeling from slowdowns or outright shutdowns during the coronavirus pandemic, some are turning to an age-old practice: bartering.

In Michigan, companies are using bartering exchanges to acquire supplies, equipment and services while keeping cash in their pockets.

“Whether than writing checks because cash is down now, they have another way to buy the goods and services they need, and then they’re saving cash,” said Fred Detwiler, founder of Oak Park-based Trade First.

Trade First, with 4,000 local members, is among bartering exchanges that do business of $12 billion to $14 billion dollars per year around the world, according to the International Reciprocal Trade Association. Rochester Hills- based Metro Trading Association is another longtime group in Michigan with 1,800 active businesses. 

Barter systems have historically served as resources for businesses during economic downturns such as the recession of a decade ago. Members of such networks earn trade dollars by providing goods and services with others in the system. Trading systems may also extend lines of credit.

“Barter is down to some degree in revenue, but they also have been able to be very active and very creative in aggressively putting buyers and sellers together even in this difficult time,” said Ron Whitney, president and CEO of the International Reciprocal Trade Association.

Brien Worrell, owner of the Milford landscape business Brien’s Services, said he recently purchased a barbecue grill through Trade First. He’s been a member for about 15 years and provides landscaping services to other members.

Since landscapers in Michigan can’t work under the current executive order, Worrell said he said felt more comfortable using points he’d earned to purchase the grill. “If I would have had to buy a grill today using cash, I would not have,” he said. “You want to save. Cash is king, so I wanted to save that.”

Tedd Handelsman, president of Better Health Markets & Cafes, said the location he manages in Novi saw increased traffic from both cash and barter customers stocking up on groceries and essentials. He said he plans to use those dollars through Trade First for advertising, he said.

“Last month we banked a lot of dollars for future purposes and probably will, too, in April,” he said. “I’m sure we’ll be spending in May, June, in the fall or whenever things get back into some type of normal.”

In addition to the financial benefit, there’s a sense of comradery among members. For example, some restaurants are offering gift cards through bartering exchanges to help carry them through at a time when they can only offer carryout and delivery.

“We’re getting ahold of the people in the system that have currency to spend in the system to say ‘Buy these gift cards from this restaurant. I know you can’t go there now, but you can go there in the future,'” said Mike Mercier, founder of Metro Trading Association. “The restaurants have needs now. They want to get their carpets cleaned, they want to get their hoods cleaned, they want to do a lot of maintenance they probably wanted to do before the pandemic, but couldn’t get to it. They want to spend dollars, so they need to get dollars into their account. That’s how we’re helping one another.”

Dave McManamon, owner of Dave & Amy’s restaurant in White Lake, has been a member of Metro Trading for 10 years. He said he views his trading account as a savings account.

“I use it for certain things in the restaurant, but it’s almost a way of having a savings account that you never had,” he said. “Being that I have some trade money available, I know that I have back up to buy food or essentials I need for my personal self. Or to help out an employee, because we’re not done with this year. Who knows what’s going to happen?”

Auto services is next on McManamon’s list.

“I’m going to get my brakes done, oil change,” he said. “Right now I have more time on my hands, so it allows me to get things done. The trade dollars allow me to keep going. It’s a great backup plan to have. Especially in this situation.”

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