Posts Tagged ‘Barter Network’

How to choose the right trade network

Sunday, April 12th, 2009

Trade can be a valuable tool for any business however the value of any trade credit is only as good as the company managing it. Research shows that almost 86% of new exchanges fail within their first few years.

Many exchange owners “steal from the bank” by operating inflation-causing, trade-slowing, deficit accounts which they use to fund their own purchases but have no way to repay. Be sure to ask questions, do your research and never hand over money until you know that you have a way (and a plan) to spend as well as earn.

Ask to see their Corporate Profile

  • This will detail who their directors are, provide you with information on their business structure and allow you to assess their credibility.
  • Also ask for a copy of their Mission Statement and Statement of Values.
  • Chances are if they do not have these important documents then they are not a serious organization.

Do an Internet search on the Company, its Management and its Owners

If the business is mentioned only once on the Internet then it may be relatively new. If you cannot find any information on the founders then they may have little or no experience in this area.

Ask to see their marketing materials

A solid exchange will have a reasonable amount of high quality sales literature focusing on the different aspects of its business. Remember: your name is at risk if you are dealing a less than professional company.

Find out about the financial management skills and qualifications of the owners

Are the owners or operators accountants, bankers or economists? Do they come from a financial background? Are they capable of safeguarding your assets? Does the organization have sound fiscal management policies?
Assess the integrity of other members

Check to see what other businesses participate in the network. Are they businesses with whom you’ll want to trade?

Find out if there is anything to buy

Make a list of all the products and services you purchase regularly and check to see that the exchange offers these on an ongoing basis. If they are unable to meet at least some of your normal purchasing requests then they are probably not going to be very useful for your business. A good exchange will always provide you with a plan to spend as well as a plan to earn. They will list your regular and upcoming purchases and find you suppliers to meet these needs.

Ask if they charge a fee when you buy, sell, or both

Don’t get caught. Many exchanges charge the same fee twice! Once when you buy, and again when you sell! Your total fees (buy plus sell) should be less than 10%. If they are more than this try and negotiate the price down.

Have the exchange explain their credit management policies

A trade exchange is similar to a bank. It issues credit, produces statements, records transactions and manages accounts. If the exchange does not have solid accounting procedures, or has a tendency to lend (or spend) without any accountability, then it may not be in business for very long.

Request a copy of their policy on ‘deficit accounts’

Would you go to a bank where the CEO wildly spent money that he did not own? The same rule applies for a trade exchange. Have the owners and managers put something in writing that they do not, and will not, operate a deficit account.

Make sure you can sell, but also that your income won’t exceed your ability to purchase.

Find out how to perform transactions

Can you post sales and transfer funds online? Do they offer telephone banking? How do you record transactions manually? What kind of telephone support do they offer?

Investigate their accessibility and office hours

A good exchange should be available at least 10 hours a day. Why? Because not everyone starts and finishes work at the same time. If you need an after-hours vet, to buy a present, change your travel plans or make a last-minute purchase then you should not have to wait until the next morning to find suitable suppliers and settle the transaction.

Find out if you are allowed to sell in part cash to cover your Sales Taxes and non-fixed overheads.

The more percentage trade you accept the more customers you will have, but you probably do not want to sell your car or a high-end, highly desirable product for full trade if you cannot replace it with at least some cash. A good exchange should be willing to negotiate with you, especially if you are providing them with hard-to-find, high quality products.

THE ORMITA DIFFERENCE

Know What There Is To Buy In Advance

By working together to understand your purchasing habits we can find you other businesses who will guarantee to sell to you.

They, in turn, use the credit they earn to make purchases from other businesses within the Ormita system.

This “Buying Schedule” process may take anywhere from 15 – 60 days to complete and it ensures that you always receive quality goods and services at real market prices.

No Monthly or Annual Fees

Purchase and supply agreements are generally set for a minimum of 6 – 12 months in advance.

Provided you stick to the agreed arrangements with these regular buyers and sellers there is no monthly fee and no annual fee.

Buyers Pay No Fees

Ormita does not charge a transaction fee to those wishing to buy.

The only exception to this rule is where a business wishes to purchase advertising from our members. In these cases we charge an advertising booking fee of 7% to the buyer.

As part of this arrangement advertising outlets themselves pay no fees to Ormita at all.

Receive Some Cash When You Make a Sale

  • Depending on your industry you may be eligible to trade on a percentage cash basis.
  • This means that every time you sell you will receive some cash to offset your Sales Tax/GST/VAT costs.

Sellers Fees Are Paid For Them

You pay your fees to Ormita out of the cash you receive when someone buys your product or service.

Lowest Overall Fees in The Industry

Ormita only deals with quality businesses. These businesses make a minimum commitment to trade and benefit from an equity program that does not sacrifice their cash-flow.

We guarantee you a certain amount of savings every month and, as a result, we can better forecast our own income.

Our advanced technology, centralized structure and independent sales and brokerage service allows us the opportunity to have a low overall price and expenses which are directly linked to new sales.

We grow the business as we acquire new customers – not the other way around.

Securing Our Members Assets

  • Ormita is a member of its own exchange and occasionally makes purchases in its own right.
  • Unlike our competitors we fund these costs from sales of goods or services we have purchased for cash and resold to our own merchants.
  • We never operate a trade-deficit and aim to be effective asset managers.
  • Credit lines are based on your ability to guarantee repayment out of new sales within a fixed amount of time.
  • Unrecoverable deficit amounts are accounted for and balanced out with new credits brought into the system from sales we generate ourselves.

A Solid Business
We offer sound fiscal management and help to contribute to the liquidity of the Ormita Commerce Network.

Ormita is the evolution of an idea.
Done better – done right.

Do you want to know more about the Ormita Commerce Network or become a member, joint venture partner or barter exchange franchise owner?  Visit our website at www.ormita.com or www.ormitacorporate.com.