Bartering in Business Barter is back in style and spanning the globe. Here's what you need to know to become the master of your exchange.

BIZ Experiences Chris DeMassa is busy trading on his company'sname. DeMassa, founder and president of 14-employee Arcata,California-based trademark research and consulting firm TradeMark Express,has bartered for everything from printing jobs to entertainmenttickets.

DeMassa, 49, thinks barter is a great way to build business. Heestimates 10 percent of his $1 million annual sales are generatedthrough barter. "That's 10 percent we wouldn't haveotherwise," he says. "It makes better use of ourresources and lowers our cost of doing business."

Barter is the oldest form of doing business. Today'scompanies barter for a number of reasons, from getting rid ofexcess inventory and finding new customers to conserving cash andsupporting the local economy. Companies exchanged $8.25 billion ingoods and services last year alone, according to the InternationalReciprocal Trade Association.

An Evolving Industry

A number of online barter exchanges arose during the dotcom era,only to go out of business after learning the hard way that peoplestill want human interaction. Meanwhile, small companies have grownmore sophisticated about barter over the past decade. There's abetter understanding of IRS reporting requirements, and businessowners are less likely to view bartering as a shady,under-the-table practice. The barter industry is "becomingkind of old hat. It's matured," says Jack Schacht,president of the National Trade Association, a Niles, Illinois, barterexchange.

BarterSystems Inc. in Kensington, Maryland, which has 10 employeesand approximately 1,400 clients, is one of more than 500 barterexchanges in North America. It uses a combination of e-mail,monthly account statements, mailers, magazines, online directories,in-house brokers and annual IRS 1099B forms to stay in front of itscustomers. "Our clients can see their statements and historiesonline and do a transaction online if they wish," says CEOPerry Constantinides. "We've empowered our clients to domore on their own if they want to."

DeMassa uses Bellevue, Washington-based barter exchange Itex. Helikes being able to track his company's account online and cancall an Itex broker if he wants to speak with someone. TradeMarkExpress posts ads on Itex advertising items it wants to trade, andItex gets 5 percent of any purchase/sale on top of an initial $995one-time fee--a trade-off DeMassa doesn't seem to mind."You'd probably be spending $3,000 or $4,000 a month inadvertising to reach the group of people that you reach throughbarter," he says. "If you look at it as a marketingexpense, bartering pays for itself."

Barter industry experts predict the globalization of barter overthe next decade, and it will be powered by a universal bartercurrency. "There are things happening out there that are trulyincredible," says Krista Vardabash, executive director of theInternational Reciprocal Trade Association. The globalization oftrade is well underway: 15 percent of the $5.62 trillion ininternational trade last year was in the form of barter, accordingto the World Trade Organization. Asia, Australia and Europe allhave thriving barter markets.

The challenge for barter exchanges will be balancing supply anddemand as small companies grow more sophisticated in what, how andwhere they want to barter. DeMassa sees barter exchangesencouraging their members to trade higher-ticket items, but theystill have a way to go as far as he's concerned. "I thinkthe barter companies are making a mistake by not pushing realestate, gemstones or stocks," he says. "There are anumber of things they can move that they don'tpromote."

The challenge for BIZ Experiencess who want to barter will befiguring out their options. Learn about the barter communities thatare active in your area, DeMassa suggests, and base your decisionon what's being traded instead of what fees are being charged.One good place to start is Irta.com, where you'll findeverything from conference information to checklists.

Looking ahead 10 years, Vardabash envisions a global tradecredit system that reaches the average consumer, who will makepurchases using local barter currencies. Small companies will buildB2C loyalty programs around barter like the airlines have done withtheir frequent-flier mile programs.

Whether this will happen is anyone's guess. Cash stillreigns supreme, after all. But Vardabash, for one, thinksthere's even more room for barter. "There's a littlesaying in our circles," she says. "'Cash is king, butbarter's the next best thing.'" And the BIZ Experienceswho masters the evolving barter process will truly be a jack of alltrades.