Live Local, Live Small: Local business owner Susan Kadar tells all on the newly launched Cape Fear Barter
Ask and ye shall receive! A couple years ago, I ran several calls for a barter network in the Live Local column. About a month ago, I found out my prayers had been answered!
I was in Your Computer Friends to buy a USB chord and get my computer checked out, while visiting with owner Susan Kadar. She casually mentioned that she had a new project: a barter network. Their website (www.capefearbarter.com) launched on March 15, as a joint venture between Kadar and Christine Divoky. Once I calmed down enough to form coherent sentences, Kadar answered some of my questions.
encore (e): When did you come up with this idea? How did you and Christine hook up to make it happen?
Susan Kadar (SK): As the owner of a small business during a recession, I resolved not to spend any money on anything that did not create revenue or reduce expenses. Unfortunately, things were still needed that didn’t fit nicely into that equation. We desperately needed additional electrical outlets for the technicians, and we really needed to refresh the paint job in the store. These two items did not have a direct impact on revenue but were required expenses for customer and employee satisfaction. I thought surely some other cash-strapped business would be interested in trading computer repair for electrical and painting?
I searched through Craigslist’s barter section, and sure enough I found people willing to do all kinds of things for computer repair. But they were either moonlighting on their bosses or they didn’t have legitimate businesses. Since I was willing to stand behind my reputation—and unwilling to support people cheating on their bosses—I realized what I really needed was another business that would come into the relationship with the same professionalism I had. As I continued my search, I discovered the idea of a professional barter exchange. It was the perfect answer. The next step was to find a business-to-business barter exchange in Wilmington.
I have a habit of just picking up the phone and asking questions to whomever is kind enough to answer. During my dialing spree, I called one of the largest barter exchanges in the country, Barter 21, and was told, no, they didn’t have an exchange in Wilmington—so why didn’t I start one? Try as I might to kick that idea out of my head, it took root.
With a background in finance and business operations, I knew that barter could be a welcome addition to many businesses that were struggling with cash-flow issues during this difficult time. Despite the fact I was in love with this idea, I did not have the necessary time to get it off the ground and run an existing business full-time. I knew I needed a partner.
A barter exchange, to me, is like a big community of businesses that only need a matchmaker. I found my matchmaker, Christine Divoky, while serving on the board of the Cape Fear Literacy Council. I experienced firsthand Christine’s ability to see both sides of the need equation and match them accordingly. And I was right: Christine is a fabulous matchmaker, searching out goods and services for our barter members every week.
e: What sort of response have you received from business owners?
SK: The response has been great. Interestingly enough, many local businesses have been bartering anyway. Those businesses had been bartering one-to-one sometimes, had issues with not needing the other service, not wanting the other service, or not having an immediate need for the other service, which sometimes caused issues. They were very excited to hear that, with a professional barter exchange, all those issues were resolved for them.
Additionally, business owners seem to really love the idea of an alternate payment system to supplement what they already do. With Cape Fear Barter, the business owners have full control over what, how much and when they barter. We bring them customers they wouldn’t otherwise come across, so being a member is a bit like adding to your sales and marketing staff. They like that we’re all about helping local, small business owners to increase their business locally and even help them sell out of state. I’ve been a small business owner here in Wilmington for almost nine years, and I know how important it is to build opportunities.
e: What about the public?
SK: They think it’s a cool idea. Sometimes people want to become members who don’t own or manage a business, but Cape Fear Barter is a business-to-business exchange. It’s not for people who want to clean out their garage or the neighbor who watches your cat for cash under the table.
A barter exchange is for professional businesses only. You must have a tax ID number, and all sales are reported to the IRS via 1099B Barter Revenue reporting. Individuals cannot barter within this type of exchange.
e: Are you part of a larger organization or association?
SK: We are. Cape Fear Barter covers Southport to Hampstead, but we’re also part of a much greater network, Barter 21, which is all around the U.S. and in Canada. Our members have already done business with exchanges in Idaho, Ohio and Georgia. None of those opportunities would have happened had they not been part of Cape Fear Barter.
e: So how does it work?
SK: Businesses decide what services they will offer for barter. Then they put up a description of their business and offerings on our website. If a gift certificate is involved, buyers can print those right from their own computer, and the business owner scans them with a smart phone to accept them. If a custom quote is needed or some special situation, the seller talks with the prospective buyer directly, creates a custom quote and schedules the work—just as he would with a cash-paying customer. Barter rates are the same as regular rates, so there is no coupon discounting of services. This keeps the playing field level for all.
You do business just as you’ve always done business, because you know your business best. The only difference comes with the form of payment. Rather than invoice for a cash sale, the seller posts the sale through the Cape Fear Barter Exchange website and receives barter dollars in compensation. The seller can then take those barter dollars—or credits, if you will—and spend them with any one of our barter members.
For example, we have a web designer who bartered about $600 for a particular job. So far she’s applied about 200 barter dollars toward her deductible with a dentist, and she used another 100 on computer repair. That leaves her about 300 barter dollars to use toward massage, advertising, chiropractic care, auto repair, house-cleaning, travel, window-tinting, or something else. The possibilities are endless, really.
Nearly every restaurant or business who offers a quality service is an ideal candidate for a barter relationship and a Cape Fear Barter membership.
e: Where will the barter network be in five years? Ten years?
SK: Barter networks do best in small towns like ours. Since bartering was around before the dollar, I think Cape Fear Barter should be up to over 1,000 members in five years.
Ten? In order for a barter exchange to remain healthy, it must limit its membership. For example, you wouldn’t want to have all of one industry represented; who would they barter with? As Cape Fear Barter grows, we will be looking closely at the needs of the members and controlling that growth accordingly. Bigger doesn’t always mean better; we will have to wait and see.
e: Do you use it?
SK: I can’t stop using it! I’ve had my company car repaired at Derham’s Alignment, my dog Lucy is being trained by Dog Pros to Go, and I’ve had excellent dental work performed by Dr. Mann. Christine recently had her hair done at Coastal Tranquility Salon & Spa for an event —all on barter.
e: What misconceptions do people have about barter?
SK: People think they can’t barter if the business is new or relatively new. This is actually a perfect time to barter. Since barter is about excess capacity, that is something a new business has a lot of. Additionally, new businesses can trade for marketing that they might not be able to afford otherwise.
Think of it this way: You already have to pay for fixed costs—lights, rent, phone. The variable cost of doing one more job a day on barter is very small for most service and restaurant businesses. Leveraging that small cost for big returns in full value marketing is a very smart thing to do.
Any business that has excess inventory or downtime can be strengthened with a customer they might not otherwise reach. Cape Fear Barter helps young and old businesses alike get the full value of that otherwise unutilized time in the form of goods and services for the business, the business owner, family, and employees.
Occasionally, we run into people who are afraid they are going to be taken advantage of: that 100 people are going to show up at their door and take all their resources from their cash-paying customers. That simply does not happen. There are several controls put into place within our system to make sure that doesn’t happen. At Cape Fear Barter, we put the business owner in the driver’s seat. We make sure that trading through our exchange is a really positive experience.
Kadar mentioned that barter fees are 5 percent of the sale and 5 percent of the buy-in cash ($5 per $100 for both the buyer and seller of the transaction), and 2.5 percent in barter credits. Total barter fees are less than you might pay for sales commissions—and Christine does do a really good job.