As the owner of downtown Hartford’s Black-eyed Sally’s, James Varano is no stranger to cash transactions. In fact, his restaurant — with its combination of southern cooking and live music — generates nearly $2 million in revenue annually. But to keep some costs in check, Varano has relied on an approach that has gained popularity among small businesses, particularly in recent years: bartering.
“We have bartered our food, drinks and catering services [in exchange] for cleaning, landscaping, painting, signs and printing,” Varano explained, noting he estimates trading services saves his business up to $40,000 a year.
His company is not alone. Bartering, it seems, is big business, accounting for more than $12 billion globally in estimated value last year, according to the International Reciprocal Trade Association (IRTA), which tracks the commercial barter industry worldwide.
Closer to home, more than 2,000 New England small businesses — mostly from Connecticut — are members of Bristol-based Barter Business Unlimited (BBU), which was founded 2008 and helps facilitate bartering partnerships across the region.
“Bartering offers businesses an opportunity to increase their exposure, create new relationships and save money,” said Debbie Lombardi, founder and president of BBU. In Connecticut alone, the organized barter exchanges create nearly $50 million in business activity, Lombardi estimates.
Through BBU, Lombardi explained, member businesses — from small shops to corporations — can earn ‘barter bucks’ through bartering which can be redeemed for any other member’s services — ranging from entertainment and travel to real estate and remodeling. To qualify, all businesses must be legal entities, pay an application fee (which is currently being waived for new members through year-end), and agree to abide by fair trading rules established by the BBU.
For James Pinto of Plainville-based Affordable Marine Care, a full-service boat repair shop, bartering has enabled his company to tap into businesses that, he says, would not have been possible in a cash only environment. In fact, he has exchanged boat accessories and used boats for legal services and health care.
“Sometimes a barter dollar, if spent properly, feels like it’s worth more than a cash dollar,” said Pinto, whose company has been involved in bartering since 1993.
Once again, this year, Pinto’s company will be participating in the BBU’s annual Nov. 7 expo, a one-night bartering showcase scheduled from 4 p.m. to 9 p.m. More than 1,500 businesses and 3,000 visitors are expected to attend according to BBU’s Lombardi.
“We anticipate hundreds of thousands of dollars will be bartered during our expo hours alone,” Lombardi said, noting the event is held each year in advance of the holidays to help businesses — and their employees — with shopping needs.
One of the beneficiaries of the event — and a key participant — is Windsor Locks-based Hillspoint Hotel and Conferences, which is hosting the expo, in part, in exchange for barter dollars.
“Bartering has enabled us to move our business forward,” said Mitch Marron, director of sales for the 165-room hotel, which currently uses 12 bartered vendors for various services. “It will remain a component of our business model.”
Bartering has also proven to be an effective tool for Patrick Herzing, general manager of Michael’s Greenhouses in Cheshire. “As a seasonal grower, we often had an excess of poinsettias and holiday plants,” Herzing said. “But we learned we could barter them for things we needed rather than write them off for a loss or heavily discount them.”
To help businesses find the right bartering match, Lombardi said, her company employs eight full-time barter brokers, who understand a wide range of industries and company needs and align vendor services and business needs to get members the best possible deals. As a result, some small firms have expanded the percentage of business they conduct through bartering. Lombardi estimates that BBU bartered deals account for between 3 to 15 percent of their total business among members — a number she expects to see grow as the economy gets stronger.
“In 2008, bartering deals kept a lot of small businesses from going under,” Lombardi said. “But in a good economy, people have fun with bartering and take more risks; it’s a recession proof endeavor.”
The challenge her organization faces, Lombardi argues, is helping business owners understand how bartering works and giving them the tools to do it successfully.
It’s a lesson that Black-eyed Sally’s Varano has learned well. Even though the value of bartered services are still taxable, Varano says, the experience is about more than just saving dollars. “I have met many small business owners like me and have made some good friendships through bartering,” he said. “Plus, I’d rather spend barter dollars than cash any day.”
