Businesses turn to bartering

George Tsudis took a family vacation to Cancun, Mexico, this year, thanks to business deals he made through a trade exchange, more commonly known as bartering.

Tsudis, whose family operates Tsudis Chocolate Co. in the RIDC Park in O'Hara, got the vacation deal arranged through barter businesses that also are members of the Pittsburgh Trade Alliance of Scott, and its predecessor, The Trading Post.

The cashless trade industry nationwide saw about $2.3 billion worth of goods and services exchanged last year through about 500 companies, according to the International Reciprocal Trade Association in Rochester, N.Y.

Businesses can trade for an endless variety of services, such as advertising and accounting, carpet cleaning and clothing, hot tubs and hauling, and truck repairs and tuxedoes. For a monthly membership fee and individual transaction fee, trade exchange companies broker a deal between members. The value of the goods exchanged are taxable.

Typically, the company receiving a good or service does not repay the seller directly with a product, but with "trade dollars" that the buyer has earned through deals with other members.

"It is excellent from a personal standpoint and for inventory control," Tsudis said.

His family-owned firm had been busy recently filling orders for trade exchange partners, Tsudis said. In return for fulfilling chocolate orders, Tsudis said he has used the trading to take the Cancun vacation, and for snow removal services, cleaning services, his company's Christmas party and holiday hams, all for no cash out of his pocketbook. He estimated that he barters about $25,000 worth of goods and services annually.

"For me, it's worked out perfectly," Tsudis said.

Bartering provides an opportunity to move inventory in return for goods or services, so it saves a company's cash flow for operations such as payroll, said James Gielarowski, president of the Pittsburgh Trade Alliance.

"Trade has an inherent discount," when you take into account the actual cost of a product if obtained with cash, said Gielarowski, who has been involved in bartering for nine years.

The Pittsburgh Trade Alliance was formed last month by a merger of The Trading Post and Barter All in Pittsburgh's Brookline neighborhood. Gielarowski, the founder of The Trading Post; Scott Drudy, vice president and owner of the former Barter All; and Troy Mele, vice president of sales and marketing, own the business equally. Mele and Gielarowski had worked for one of their competitors, Green Apple Barter Services of Ross, before forming their own company.

The Trading Post, founded last year, had a growing staff of brokers with experience in making deals, while Barter All, which was formed four years ago, had a list of more than 1,100 clients, Mele said. Most of the clients are within a 50-mile radius of Pittsburgh, but connections to similar national and international barter associations allows them to make deals throughout the world, he said.

Members of the trade exchange obtain goods and services by contacting a broker, which finds another company in a position to make a deal for what the business owner wants. The trading company keep tab of a member's trade dollars in an account.

The bartering business also is a good way to attract more clientele, some of whom are cash customers, said Greg Jancosko, a member of the Trade Alliance and part owner of Paparazzi Restaurant on Pittsburgh's South Side. Other members of the alliance who "spend" their trade dollars at the Italian restaurant spread the word about it to friends and associates.

"It's a great way to get business you might not have otherwise attracted. Eighty percent of my trade business (partners) were not customers of mine," before they used the trade dollars there, said Jancosko, who owns the business with his brothers, Rick and Jay. The restaurant has exchanged trade dollars for advertising, cleaning and a variety of restaurant services, he said.

The trade exchange was a "great way to do business," said Bill Funovits, who retired this summer as owner of Quintex Co. in Ross, a company that installed aftermarket accessories on vehicles. Funovits said he traded $40,000 to $50,000 worth of goods and services, such as signage and advertising, through the Pittsburgh Trade Alliance's predecessor company.

Among the competing trading companies in the region is Green Apple Barter Services, which has managed more than $400 million in barter activity for more than 1,000 clients since 1991, according to the company's Web site. Michael Krane, Green Apple's president, declined to comment.

Tri-State Trade Associates of Hampton is part of ITEX International Trade Exchange/Barter, a nationwide bartering company that handles more than $1.2 million worth of goods and services daily with more than 26,000 clients, said John Lynch, owner of the Pittsburgh area operation for the past three years. Lynch declined to reveal the number of local members in his trade service.

Additional Information:

Bartering businesses

Here are some tips are for business owners considering joining a commercial trade exchange: