If you’re interested in joining Midwest Business Exchange but have questions about how it works, what it entails, and what you stand to gain, you’ll find answers to common questions on this page. The team at MBE is committed to ensuring that our members are informed, educated, and prepared, so that they can get the most out of their trade dollars. If you don’t find the answer that you’re looking for, do not hesitate to reach out to us via our contact form or give us a call at (269) 344-8800.
Bartering generates new customers, allowing you to expand your market and maintain your paying customers. This is incremental business: customers who bypass competing businesses to do business with you. In fact, the average MBE member does $5,000 in additional business annually.
Barter conserves cash and increases profits
Barter creates new customers because buyers are motivated to pay with their products or services and save cash. Simply put, if you had to purchase a copier for $1000, what would you rather do? Write a check or pay with an equal amount of your products or services at their normal selling price? Most businesses prefer to trade and conserve cash.
Barter moves excess inventory
Retailers: Stores must keep their inventory moving. Each season, customers shop for the most current merchandise. MBE will bring you buyers to move excess inventory, minimizing the advertising costs and heavy discounting otherwise needed to accomplish this.
Manufacturers and wholesalers: We can coordinate the selling of your surplus inventory while helping you obtain the best possible prices for your products. We negotiate for you to receive either the going price in the marketplace or at least your full normal selling price to distributors. This allows you to maintain your current pricing integrity as well as upgrading your return on investment.
Increase productivity by filling downtime and unused capacity
Service business: Increase billable hours! If you are not at 100% capacity twelve months a year and can handle new customers, we can help you fill your idle time with new business opportunities. And now, you will have trade dollars to purchase what you need.
Hotels: Suppose you have ten vacant rooms at $100 a night and you need a new brochure for $1000. Barter provides a way for you to buy your brochure, fill your rooms (at your cost on the rooms), and maintain your cash.
Manufacturers: If you are currently operating at 90% capacity, going to 93% changes very little in the cost of production. Wouldn’t it make sense to take on a new barter customer to cover the cost of next year’s product catalog?
Networking expands your customer base
Barter customers will bring you all of the cash referrals that your present clients bring. Additionally, you will gain new paying customers, as long as you give your barter customers the same great services and pricing as you offer everyone else.
Our trade brokers phone member businesses that regularly purchase your products or services and facilitate an introduction. Our brokers become part of your sales force. We provide a free listing in our membership directory. We place your ads in our monthly newsletters. Newsletters are direct mailed to thousands of businesses. We can provide you with free special offer coupon ads. We send emails to help you sell your products and promote your services. We connect your web page to our MBE web page and promote your business through our website. We produce trade shows for member businesses where they can display what their company has to offer. We host informal gatherings where members can Network. We help you distribute your flyers and brochures by direct mail to member businesses. We also provide regional and national exposure to businesses looking to expand their horizons. We do this through the “Barter Banc” and “Universal Currency” which is nationwide.
This problem should only be temporary if your products or services are marketable. The amount of business you get, however, will depend on your type of business along with normal supply and demand factors. If you are not getting as much business as you want, MBE may also be able to help you. Call us! We can help you by perhaps offering a special offer coupon or maybe to direct mail your brochure to our members. Often we have members who would be happy to purchase your goods or services but simply don’t know about it.
Barter income is treated the same as cash income. There are no tax advantages or disadvantages to bartering. Trading should be considered a marketing tool, not a tax tool. Midwest Business Exchange provides your company with a 1099B at the end of the year for all of the sales you have consummated on our network. Cash purchases that are normally tax deductible as business expenses are also tax deductible when purchased on trade.
A trade exchange eliminates the restrictions of one-on-one trading where each business must want what the other has to offer. An MBE trade consultant works with you to bring your company new sales, increase your market share, and minimize cash outlay for everyday business expenses. Clients of an exchange use trade dollars, instead of cash, to handle their transactions.
An exchange acts as a third party record keeper, providing monthly statements to clients, which reflects all trade purchases, sales, and a current trade dollar balance.
Globally, over 470,000 businesses are involved in Barter. It is estimated that 65% of Fortune 500 companies engage in barter to one degree or another.
There is a one-time membership fee of $250, which is mitigated by being provided with an equal amount of trade credit as well as monthly dues of $10, which serve to cover accounting, marketing, and member services.
The problem with one-on-one trading is that each business must want what the other business has to offer. In our Exchange, however, everyone can trade with anyone, even if they do not want what the other person has. Trade can often be spent just like money, on items everyone needs often and wants. Another problem with one-on-one trading is that the parties often forget to pay sales tax or income tax on the transaction. This is not a problem when working through MBE. We are recognized as a third-party record keeper by the IRS. MBE records all transactions, issues monthly client statements, and reports all IRS 1099B sales at the end of each calendar year. This amount is listed in the upper right corner of the first page of your December statement which you will receive on or after January 10th of each year.
You can spend your trade in many of the same ways you spend your cash. If your products or services are in high demand, we are happy to call you first and tell you who is looking to purchase from you and what their needs are. This way you can decide if you can handle more business and know ahead of time what the job entails.
With barter the sales process is flip-flopped. It is very easy to make sales on barter and can take some effort to buy on barter, however, as you become more experienced with barter, buying becomes easier.
First of all, keep in mind that a large percentage of our members are not listed in our directory or are located in other states. If you can’t find what you need, please call us. Secondly, it’s a good idea to make a long list of things that you normally spend cash on. Ask for our “Wants and Needs” checklist for ideas. Do not limit yourself to worrying about one or two one-time purchases. Look at your business checkbook for more ideas. Think, too, of your personal needs. If you regularly take cash out of your business for personal living, travel, home improvement, etc., why not take out the barter income instead and save your cash for products and services the barter network cannot so easily acquire?
Yes. Certain services, such as a building contractor, who might hire additional carpenters for cash clients, may have to wait until he has time available for a barter client. Service businesses must give priority to their cash business in order to survive. Trading represents the extra business used to fill the sporadic lulls in business activity. This situation is not really a disadvantage to the trader if he does not expect to use the MBE for emergencies in every instance. Careful advance planning, along with patience, is required to make trading a pleasant and profitable experience.
Saving trade credit in order to purchase a very specific high-demand, low profit-margin item can only frustrate and discourage a client. To get the most benefit from MBE, each client should work with as large and diverse a list of needs as possible. Everyone should spend trade as they go along, rather than saving it for something that may or may not become available when needed. Exceptions may include large construction projects, such as a new home or commercial building. Planning ahead and working closely with MBE to arrange for goods and services is the key to using your trade credit successfully.
Of course. Many clients use trade credit to pay employee bonuses or commissions. Some even pay employees a portion of their regular salaries on trade. At your request, we will set up employee sub-accounts and will assist your employees in spending their trade credit advantageously. The employees, of course, need not pay our broker’s fee. This can be paid by the client when credit is transferred to the employee’s sub-account. Call us for help introducing this program to your employees.
It is possible to pay some of your bills with trade credit on the goods and services you use. MBE can even use trade credit to help clear past due accounts receivable. Businesses that are unable to pay the cash they owe you might be willing to pay with their products or services. If their products or services are acceptable to MBE, we will sell them or purchase them in an amount equal to the amount owed. You can then use that credit to obtain goods and services you need.
If you have accumulated more trade than you need, you may wish to purchase goods which you can easily sell for cash.
Not usually. Sellers are well within their rights to refuse to trade with cash customers. They are free to say “no.” MBE does a terrific job of helping businesses grow and generate trade dollars, but we don’t want to decrease a business’ cash flow.
Just like a bank, we encourage businesses to apply for a barter line of credit. If you qualify, you can begin purchasing immediately.
Trade exchanges participate in worldwide reciprocal trade relationships with other exchanges offering a multitude of additional barter opportunities. We fulfill our members’ travel requests via our vast Global Network. We also help businesses looking to open new markets by using the distribution channels available nationwide. In turn, we receive products from across the nation that are made available to our local membership.
According to our trade rules, any client who quits MBE will be given a reasonable period of time to spend their trade credit. After that time MBE scrip, along with a directory of members who generally accept the scrip, will be sent to the member in order to clear the trade credit balance. Cash fees owed to MBE typically must be paid within 30 days and the account will be closed. Extensions will be granted for clients with large trade credit balances.
At the end of the year, MBE will electronically submit your total trade sales to the IRS on form 1099B. This information will be reported to you on your December MBE statement.
Yes. You should only trade what you want to trade. The idea of trade is to move excess inventory or that inventory that give you an advantageous profit margin.
No, not usually, unless you are using an MBE special offer coupon. If in doubt, ask the MBE seller.
Generally, the marketplace determines pricing just as it would for cash. Where the seller has sufficient margin, he or she is expected to trade goods and services for barter at the same price as cash transactions. Where margins are tight, a seller is allowed to set the price at manufacturer’s list price. But a seller should not radically depart from the list price on goods. If the barter price is set unusually high, you may want to seek another MBE member selling the same goods or services. Or simply calculate how much you actually have invested for the trade credit you generate.
It will often be less expensive to pay full retail price with trade than to get the same item for a discount for cash. For example, if your variable costs for your merchandise is about 40% including your commission to MBE when you spend, then $5,000 worth of trade credit actually costs you about $2,000. If an item has a cash price of $4,000 and a trade price of $5,000, you have two choices. You can purchase the item for $4,000 cash or for $5,000 trade dollars which cost you $2,000 in cash variable costs. If your business is a service related one, your trade credit may only represent your idle time with no variable cash cost at all. Always remember that you are using your goods and services when making purchases with trade credit, not your cash. Seasoned traders are always aware of this difference and use it to their advantage.
However, if a member overprices products and services beyond a reasonable limit, do not trade with them and contact MBE to report “irrational exuberance.”
When you are ready to barter, an MBE staff member will talk with you to discuss what you have to trade and what you would like to barter for. We will help you walk through your first trade sales and purchases, help train your employees, be available to answer your questions, or help you to spend your trade dollars. We will also help you market your company’s goods and services. We want your trading to be a satisfying and financially rewarding experience. If you have questions, problems, or complaints, please call us at (269) 344-8800 or message us via our contact form. If you’re unhappy, tell us so we can work it out. If you’re happy, tell others. If your business friends join MBE, we will pay you $100 in trade dollars when they’re qualified and $200 if it’s a restaurant. If you would like to trade with other companies, tell them about us. Certainly, there are other MBE members who would like to trade with them, too. We want to keep you happy.