Business of Bartering in CNY: Let's Make a Deal!, The

CNY Business Journal (1996+), Sep 01, 2000 by Allen, Paul

SYRACUSE-Twenty-two years ago, when Sandy Giannuzzi was working as a disgruntled decorating consultant at a local wallpaper-and-paint store, she met Bernie Bregman, who was then the marketing director for the Syracuse Trading Exchange-at the time, the only trading exchange in Central New York. Giannuzzi says when Bregman told her about a job opening at STE, and explained to her exactly what the trading exchange was (a third party that helped a network of businesses trade products for services), her first question was, "is this really legal?"

Bregman assured her that trading exchanges were legal and there was, in fact, a large network of Central New York companies that did much of their business through bartering.

Today, Giannuzzi is not only a firm proponent of the bartering system, she is also the trade director of the Central New York regional office of the Reciprocal Trade Exchange. After working for the Syracuse Trading Exchange for 13 years, she took a job at the Rochester-based Reciprocal Trade Exchange (RTE) in 1991, when the company opened a branch in Syracuse.

With more than 1,500 member businesses and an annual trading volume of $10 million, RTE is New York State's largest trade exchange. Founded in Rochester in 1978, RTE has branch offices in Buffalo, Syracuse, and Binghamton. RTE is also a founding member of the International Reciprocal Trade Association (IRTA) and the North American Barter Group.

"There are so many benefits for businesses to get involved in trading exchanges," Giannuzzi says. "The number of potential customers, and sales, increases; trading reduces cash expenditures and improves bottom-line profits; it introduces your business to other regional and national companies; it even makes it possible for companies to convert excess inventory into performing assets."

According to Giannuzzi, RTE acts as a broker, coordinating trades and keeping track of transactions for members who receive and use barter credits. Those credits can be spent at any other RTE member's business. RTE members pay an

initial fee of $500 to join and a $150 annual renewal fee, says Giannuzzi. They also pay a 12-percent commission on each $1 of barter credit earned.

All fees are tax-deductible as a business expense, says Giannuzzi. Barter credits are considered taxable income and are taxed at the same rate as cash transactions. RTE, she says, provides member businesses with complete record-keeping and IRS reporting.

Vicki Besler, co-owner of Shaw and Boehler Florist in Cortland, has been a member of RTE for six years. She says that being a member of RTE has given her and her business opportunities that she wouldn't have had if she weren't a member. "We've enjoyed a lot of things that we probably wouldn't have been able to if we weren't involved with RTE," says Besler, "We've gone out to nice restaurants, used it for hotels, all types of things. It's a great system."

Another long-time member of RTE, Peter Morrissey, president of Peak Performance Management in Syracuse, says being a member of the trading exchange has definitely helped his business. "It has allowed me to get business and clients that I would never get or never know to get. Sandy [Giannuzzi] is great at

promoting and referring member businesses. It's like a bank account. It's money that is put in the bank and taken out when you need it."

Brian Jackson, who manages Fun Junction in Shoppingtown Mall, says that although his business has only been a member of RTE less than a year, he has already had "quite a few" big birthday-party bookings from RTE members.

Petit Jean Goodman, the owner of Sweet on Chocolate, a gourmet chocolate shop in downtown Syracuse, says his business has been involved with RTE for seven "very productive" years. "It's a good alternative for small businesses because it alleviates some of the cashflow problems small businesses have to deal with every day," Goodman says.

Being a member of RTE doesn't guarantee increased business, however. Lori Wyman, owner of the Center for Massage Therapy in Baldwinsville, hasn't seen any new business since joining RTE a year ago. "I think trading exchanges are a great idea, but so far it really hasn't affected my business," Wyman says. "It's been very slow for me."

Stephen Webster, president of RTE, says that the modem barter marketplace

has experienced dramatic growth in recent years, as companies have discovered the benefits of increasing buying power while conserving cash flow. Webster says that, while the RTE has a good mix of both big corporations and small businesses, one of the motivating factors for small businesses to become involved in trading exchanges, he says, is because it can increase the number of customers by widening the geographic area.

According to IRTA statistics, barter transactions represent more than $12 billion in sales in North America alone. There are approximately 500,000 existing retail trade members and corporate barter company trade members around the world, says Webster. Because of the Internet, that number, Webster says, is guaranteed to double and triple in the years to come.