BizX's purpose is to improve the lives and businesses of our communities. Here is one example of how we're living out that purpose.
Topic: BizX in the News
Thank you San Francisco Times/ BizJournals.com for Love! ❤️
BizX was proud to be featured in the San Francisco Business Times on BizJournals.com this past week in their article "How these Bay Area companies are stretching their dollars by bartering".
Full Text of the Article:
"Edward Brown, syndicated host of “The Best of Investing” on KDOW AM and “Sports Econ 101” on Sports Byline USA, buys airtime for his radio shows and then finds sponsors to shoulder the cost. But sometimes, he comes up short.
When he does, he makes the sponsorships available on the International Monetary Systems, a bartering exchange. Members of the exchange can purchase sponsorships from him on the IMS platform using bartering credits instead of cash. Brown will receive bartering credits that he can later use to purchase goods and services from other IMS members, such as electricians, attorneys, window washers and more, without a cash outlay.
Brown has used bartering for everything up to a $15,000 plumbing job on a commercial building he owns. He estimates he uses it for 25% of his building maintenance.
“You can’t pay your PG&E bill with your bartering scrip. If I go to Safeway, I can’t use my bartering credits. But with plumbers, electricians, attorneys and window washers I can,” Brown said. “If I can pay for these with bartering scrip, why would I use cash?”
And in a crisis, everyone from small businesses to large organizations like the Oakland As, are interested in conserving cash. Bartering exchanges are one way to do that.
For the Queen Anne Hotel in San Francisco, the Covid-19 shelter in place orders means a lot fewer paying guests
But rather than let this time go by without any benefit, Queen Anne Hotel owner Anand Gokel is using his stash of scrip on the BizX bartering platform to have a carpet cleaning company shampoo the hallways and the lobby, and also have a painting company refresh the entire interior of his 48-room, four-story 1890 hotel with new paint.
Gokel said he was able to save between $20,500 to $23,500 in cash by using his BizX scrip.
“I couldn’t have done either of these projects right now if I didn’t have my BizX dollars,” Gokel said, who has used bartering services for over a decade. For the hotel operator, he’s able to bank BizX credits when other businesses on the platform want to book rooms at his hotel and he has excess inventory to make the trade.
Jonathan Millington’s Ace Plumbing & Rooter in San Francisco conducts $30,000 to $50,000 transactions a year on the BizX platform, largely using it to make purchases for marketing and advertising and selling his plumbing services.
“I’ve used it 500-times more frequently this year since Covid-19. For the first time in 20 years of running this company, there were zero job orders on the board for my 30 plumbers on March 16,” Millington said, in reference to the day the Bay Area counties issued shelter-in place orders and the temporary closure of all non-essential businesses.
Millington, who has been stranded in Colombia since March and has had to run his business from afar, immediately went into action that day with a massive marketing campaign to inform Bay Area residents his company was still open for business.
He used his BizX scrip to cover half of his marketing costs. The BizX scrip paid for such items as a billboard, advertisements on anti-bacterial hand-washing stations in front of Safeway stores, and magnetic stickers to advertise his business on water heaters.
“My business has since rebounded and may be doing stronger than before the pandemic hit,” Millington said. He noted using a bartering service not only helps him stretch his dollars but also gives his plumbing business exposure to new customers on the platform who may refer him out to non-platform users who would pay him via traditional means of cash, check or charge.
How it works
BizX, founded in 2002 and headquartered in Seattle with an office in Berkeley, did approximately $100 million in transactions last year. The service does not charge a membership fee, but the buyer or seller each pays anywhere from a 6% to 7.5% transaction fee in cash.
IMS Barter, founded in 1985 and headquartered in Wisconsin, handled over $200 million in transactions last year. Businesses pay a one-time membership fee of $495 and then 6.5% per transaction in cash, or no membership fee but a 7.5% transaction fee.
Since Covid-19 hit, both bartering services are noticing a surge of interest on their websites.
“Our website is getting slammed and traffic is up at a minimum of 10 times higher than before Covid-19,” said John Strabley, CEO of IMS Barter. However, he noted enrollment of new clients remains flat. “A lot of new businesses are still in fear. They are just starting to wake up and look for solutions.”
When a business is totally shut down under temporary orders for non-essential businesses to remain closed, even a bartering service cannot help that business, said Bob Bagga, founder and CEO of BizX, noting that business has nothing to trade.
“But, we are trying to help companies prepare to reopen with ideas of how they can use marketing and advertising services on our platform and offset their Covid-19 related expenses to reopen,” Bagga said.
Both IMS and BizX have representatives to assist customers with ideas of the different businesses on their platform that they may be able to use and to also notify other members on the platform of their services and products that they could offer.
IMS and BizX also assist members on the platform by issuing a 1099-B at the end of the year, which is a form that records the gains and losses on the bartering exchange for that tax year. Companies are required to report this information even though money did not change hands.
“If you are a restaurant and paid $1,000 credits for use at your restaurant that’s income. But then you spent $1,000 in credits to have a painter paint your restaurant then that’s an expense. They zero each other out,” Bagga explained.
Bagga added one of the common misconceptions about bartering services is people think it’s a tax dodge or illegal. He said businesses that use bartering are required to provide a 1099-B to the IRS.
Strabley noted many people assume only small to mid-sized businesses use a bartering platform, when there are large companies that are also using it.
“There’s a hotel in Milwaukee that does six-figures a year on the platform and they use their credits from filling empty hotel rooms on advertising,” Strabley said.
Indeed. Before Covid-19 killed this year’s baseball season, Gokel was planning to use some of his BizX credits on purchasing an Oakland A’s suite for a May 2 game.
Bartering newbies at bat
Bagga advises businesses that are contemplating joining a bartering service to ask themselves two important questions.
One is how much capacity do you have to give away? If your hotel is fully booked every night with paying customers, then it does not make sense to join a bartering service. However, if your restaurant is usually 80% full on a given night, then it makes sense to use the bartering service to unload the other 20% of the tables that would otherwise go empty with nothing to show for it.
Secondly, Bagga advises newbies to consider what items they would want to spend their bartering scrip on, rather than cash. Gokel suggested seeking out bartering exchanges that have those items and services you would most likely use within your desired geography.
Brown advises bartering newbies not to inflate their prices and to price their products or services at the same level they would if they were charging cash.
“You need to keep a good reputation. If your reputation is good, you will stay busy,” Brown advised."
This article was originally posted on TechBullion. Read the full article here.
Bob Bagga is the Founder and CEO of BizX, a community of local business owners who buy from and sell to one another without spending cash, within the BizX network.
Article by BizX co-founder and CEO Bob Bagga was originally contributed to Startup Nation. Read the full article here.
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