Using Trade for Limo Service

Jim Luff
Posted on June 18, 2014

While working on a recent story for an upcoming print edition, I got into a lively discussion with several operators about the use of trade. While the conversation was specific to trading for advertising, I trade all sorts of products and services and view it as a very good investment — one where I am literally paying pennies on the dollar for the value received. Perhaps I am all washed up in my thinking as some operators flatly refuse to engage in trade.

I trade with vendors directly and I also trade through a broker house (ITEX Corporation) that allows me to purchase a wider variety of goods and services beyond the people we do everyday business with.

In a small example of working through a trade broker, I do all of our oil changes through trade. The total cost for lube, oil and filters is $41.89. I have to pay ITEX a fee of $6.28 (15%) and I have a monthly fee of $10 to be an ITEX member. I had four transactions in the past month. Spread equally, that’s $2.50 per sale. Those cash fees amount to $8.78. Let’s hold on to that number for a minute.

I did a trip for an ITEX member last week that earned $560 ITEX dollars in my trade account. To deliver that service cost me $124.43 in cash payroll expense. I paid $42.18 in cash for fuel. Adding those two expenses plus the $8.78 ITEX fees, the trip cost $175.39 in cash. It cost me $175.39 to earn a value of $560. That $560 will buy me 13 oil changes. That breaks down to $13.49 per oil change. How is this not a fantastic deal? Am I missing something?

Related Topics: bartering, business deals, business management, cost savings, saving money

Jim Luff General Manager
Comments ( 4 )
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  • Chuck Cotton

     | about 6 years ago

    Bartering, trading or swapping is a great way to obtain goods and services at your cost. However, all transactions are taxable and reportable to the IRS on a dollar for dollar basis. A suggestion is do not trade more than 15% of your volume because you could develop a cash flow problem. YOU CONTROL WHEN YOU TRADE LIMO TIME. The main factor is you must have "blackout" periods apply, Don't give much cash time for trade. Usually Sun-Thur is the best trade time. These type transactions are to help your cash flow and not harm it. I have been trading for 35 years and operated a trade exchange before the I enter the limo business. For those of you who trade professionally that helps your limo business, I will share the economic formula for extra cash on your bottom line. CASH CONVERT/LEVERAGE/CASH CONVERT/LEVERAGE.( It works as I put two daughters through college) Examples are to trade a block of limo time to a media outlet 3 to 1 value and take a portion and sell off half for cash at a 40% discount from MV. Eating/entertainment establishments, hotels, printers, lawyers, chiropractors love to trade script or certificates direct with limo companies as they have a lot of empty space and time. Then you leverage the script 2 to 1 or three to one for more goods and services you are paying cash for. Print on trade your own script in various denominations and play the shrinkage factor. Always have a expiration date like Nov 30 (not 12/31). Watch getting slammed with ITEX DOLLARS that you can't spend for goods and services for your business. As you build your trade inventory(put good resaleable items from your household you no longer want-better than a garage sale along with your company script) and when you need extra cash, sell off at discounts. Always keep records in case of IRS audit. You don't want to get hammered for unreported income. You can deduct trade expenses dollar for dollar. Please contact me if you need consultation. Professional traders can average 25-35% m

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