— My mom owns a two family home but lately her tenant just can't seem to find the money to pay all the rent.
He's a residential contractor but times have been tough. His wife ran a small dance studio, but the economy put a crimp on her business too and she had to shut it down last year.
It's a tough situation for all involved, including my mom who loves her tenants but also needs the rent money.
This became even more apparent when the toilet in my mom's home overflowed causing major damage to the bathroom and the ceiling below. She needed the rent money to repair the damage.
What to do?
You guessed it. Barter.
The tenant agreed to do the repairs in exchange for some rent reprieve.
This isn't a new concept. Bartering has been around, well, forever.
I'll do this for you. You do this for me. Makes perfect sense.
And it makes even more sense in this economy where credit is tight and small businesses are struggling to stay afloat. They need new and creative ways to pay the bills.
It seems like many firms are getting the message.
According to the bartering industry group, the International Reciprocal Trade Association, bartering is up about 25 percent in just the last three to five months, and barter exchange companies are reporting membership records, according to the organization's Executive Director Ron Whitney.
Frank Moskowitz, the publisher of Buckeye Sports Bulletin, in Columbus, Ohio, has been part of a bartering network called International Monetary Systems since the early 1990s, and he recommends it for any small business.
He does direct bartering with a trophy company that exchanges their trophies for ad space in Moskowitz' publication. But what he loves most about being part of a bartering network is he can get services from firms that he has no direct exchange ties with.
"If someone wants to trade for ads in our paper and they sell toilet seats, and I don't need those, I get credit I can use to get my dry cleaning done, for example," he explained.
Frank Hoster, owner of Advance Printing & Graphics and also an IMS member, has been bartering for 18 years and barters with Moskowitz.
On the plus side, he notes, "you get business you normally wouldn't have gotten and you get great profit margins."
He's able to save $25,000 a year because he uses a courier service for his business through the network.
But on the down side, "you can't pay your taxes with it. You can't pay your employees with it, and you rarely can buy your raw materials with it," he said.
And "the IRS treats it like real dollars," he added.
What's your take on bartering? Have you ever tried it? How did it work out?