Edward L. Silverstein, 65, has traded the haircuts, perms and dye jobs given at his Shear Success beauty salon in Newington, Conn., for many goodies over the years.
In the salon itself, he has traded them for a new tile floor, carpeting, upholstery, electrical work, coffee, a water cooler and the service of cleaners who come twice a month. At home, he has traded hair care to have his car repaired, his lawn mowed and his driveway plowed. In his leisure time, he has traded for a trip with his wife to the Poconos, a white-water rafting expedition in Maine with a grandson and a hot-air balloon trip with another grandson.
And three years ago, he traded his services for most of a $20,000 addition to his home. The root-canal surgery? One of his more painful trades. Mr. Silverstein barters his way to just about anything he needs as a member of a local barter network, also known as a retail trade exchange. He earns credits known as trade dollars whenever he trims the bangs or polishes the nails of an exchange member, and he uses the credits to buy services - from accounting to vacations - from other exchange members. He is not apologetic about it, either.
"There was a time when people thought barter meant your business was in bad shape," said Mr. Silverstein, who has been doing it for more than a decade. "Now, a lot of people are saying their business is doing good, but they say ‘I can get 10 percent more business through barter.’ "
With its stigma as a poor man’s business tool largely disappearing and the slow economy of the last few years attracting many new adherents, retail barter has been expanding by about 6 percent annually, according to the National Association of Trade Exchanges in Mentor, Ohio. There is plenty of room for more growth; California, Florida and Arizona have active exchanges, but major cities like Cincinnati, Newark and Richmond do not. "There is not a market in this country that has enough trade exchanges," said Tom McDowell, the association’s executive director.
The retail segment of the barter industry that entrepreneurs engage in is aiming for the same recognition that corporate barter has achieved among multimillion-dollar companies. Unlike a retail exchange, a corporate barter company will buy a manufacturer’s unsold inventory, usually at wholesale value, in exchange for trade credits. Corporate barter has been an accepted business tool for more than 40 years, with an estimated 65 percent of Fortune 500 companies using it, according to the International Reciprocal Trade Association in Rochester, N.Y.
As retail trade gains favor with more small businesses, the quality of products being exchanged has improved, people in the industry say. Debbie Lombardi, president of Barter Business Unlimited, a retail trade exchange in Newington, Conn., is the host of an expo every year for members to show off their stuff, and a walk among the booths at the 2003 show in late October revealed an uncanny assortment of ventures, including pizzerias, art importers, photographers, florists, dog trainers, hotels, colleges, interior decorators and business consultants. For tax purposes, barter income is treated like cash, and trade exchanges are legally required to report the barter income of each client to the Internal Revenue Service.
"Ten years ago, you would have been happy to get anything on barter," Ms. Lombardi said. "Now it’s choices, it’s options." Health care services are in particularly high demand as small-business owners struggle to cope with the rising price of health plans for themselves and their employees. (Chiropractors, eye doctors and dentists were in attendance at the October expo.) Legal services and hotel rooms are also big items these days.