Business Barter Network

A multilateral barter network helps businesses transform their spare production capacity or unused stock into goods and services of other companies. In this blog, we discuss some strategies and tools for implementing and managing a barter network.

Spare capacity

Most businesses suffer from spare capacity, or unused or underutilized resources such as labor, production equipment, inventory, or facilities, that could be deployed with little marginal costs to increase output or meet additional demand.

Some examples of spare capacity are idle machinery or production lines not operating at full capacity. Or what about unused hotel rooms, unbooked tables in restaurants, unsold stock of products ... or employees with available working hours?

Spare capacity reflects a company's potential to scale operations without requiring significant new investments. But it also results in additional costs such as extra publicity, maintenance, insurance, administration, and others. Spare capacity can be transformed into other goods and services in a barter business network.

Barter networks

A barter network for businesses is a platform where companies acquire goods and services without using cash or direct exchange. Instead, the seller receives internal credits or a virtual trade currency, which allows the company to "buy" goods and services from other companies in the network.

Barter networks help companies transform unused production capacity or inventory, preserve cash, increase sales, find new clients, gain more corporate visibility, and build connections and partnerships with other members of the network.

Barter networks have a unique and very challenging business model. They offer a financial service by approving credit lines or loans in internal credits to businesses. They are a marketplace where goods and services are advertised, promoted,  and traded. They act also as a social network where business leaders connect and meet.

Today, business barter networks have also a very high technological component including digital payments, e-commerce, automated administration, and even artificial intelligence (AI). Though the model looks very attractive, it is also a complex business model to set up and run. by a central administrator.

Business network

The first challenge is to find early adopters, willing to participate even when there are few businesses and hence few gains. Early adopters help you to gain experience, improve your model, give your network credibility, and attract new businesses by referrals. 

The next challenge is to start exchanging goods and services between members. When few businesses are participating this is not so easy, and you may need to assist and monitor business transactions closely. Be careful with pressures for complementing credit transfers with cash payments! 

As you grow, be more selective with incorporating more businesses. Make sure they offer goods and services that have a real demand within the network and have a business profile that is favorable for buying within the network. Buy-and-sell is the only success formula of a barter model.

Act firmly and consequently to avoid and correct bad business practices within the network, like price inflation and inferior customer service. They will certainly drive out good businesses or prevent new partners from fully operating. Make sure that you can charge oustanding negative balances in cash if required!

Broker network

Today, there is a lot of technology available to assist in the smooth onboarding of new businesses, facilitate the promotion and trade of goods and services within the network, and transfer trade credits with easy-to-use mobile wallets. 

However, most barter networks still assign brokers or facilitators to onboard new businesses, promote goods and services, assist businesses in buying within the network, resolve trade conflicts, and even transfer trade currencies between members.

You may therefore want to set up a broker network. Brokers will manage a portfolio of businesses and earn a commission fee for successfully onboarding businesses and for the trade volume of their portfolio. They need access to all relevant information and have permissions for advanced user management. 

Consumer network

Consumer businesses such as beauty shops, doctors, hotels, coffee shops, and even restaurants may have plenty of interest in acquiring goods and services within the network. However, since it is a business network, they may have difficulties finding enough customers.  

To balance trade you can incorporate consumers. Businesses can transfer credits to their family members, collaborators, and employees. They can also reward their customers with loyalty points in trade units. 

Managing consumers and smaller transactions requires appropriate technology to keep the network profitable. Onboarding should be kept simple with just a few clicks. Trade should flow from an online marketplace and payments should be secure and very easy to perform. 

Barter administration

We offer premium technology powered by Cyclos for the administration of a business barter network. Our customized Barter solution helps to engage or connect businesses and streamline the exchange of goods and services in the network in a white-label, secure, scalable, and low-cost framework:

• Wizard for onboarding of new businesses
• Financial management of trade credits
• Payments, payment requests and e-vouchers
• Marketplace, e-commerce, and webshop
• Advanced broker management 
• Memberships and transaction fees
• Mailings, notifications, and alerts

You can also complete your business network with a fully decentralized consumer network. Our customizable app and web application is released on the store under your name and brand. 

Our data analytics console provides the network administration with a live transaction wall, powerful statistics and analytics, actionable insights, and complete user management in one place. Integration with third-party software is straightforward. 

Our solution comes with a built-in help desk and messaging tools for users to contact the administration. Documents can be posted and content shared with members (email, SMS, push notifications). 

Takeaways

Barter networks help businesses to transform unused capacity into improved cash, and increased sales and profits. 

The business model is very unique, complete, and challenging. A minimum scale of complementary businesses is required for the network to function properly.  

Connecting your business network to consumers can be very beneficial for both, with extra revenue for consumers and more network trade for businesses.  

As we discussed strategies for implementing and running a business network, it is clear the network requires a dynamic and future-proof software platform.