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  • Bartering for New Business

    Flowers and Profits®

    In a suburb of Rochester, New York, Neal Albright and her staff at Neal's Floral Design have discovered that joining a local barter organization has garnered business that the shop otherwise wouldn't have received.

    How I Started

    At the recommendation of a business friend, Neal began to investigate bartering about three years ago. She learned that through well-organized, legitimate barter organizations, called "trade exchanges," member florists can trade their products for other products or services the company needs. During these trades, no cash changes hands. Instead, the trade exchange issues "trade credits" to the selling florist, who in turn can spend those credits with any other member firm. Neal found that there were trade exchanges nationwide, as well as one right in her neighborhood. The local exchange boasted approximately 1,200 local members and a total of 1,800 across the state.

    Barter Bonus

    Since Neal joined the exchange, she has adopted a strategy to use her barter contacts as much as possible. As a result, she has seen both her barter and cash business grow.

    Exchange members send flowers frequently to people who don't know the shop, explains Neal. "So, anytime flowers are delivered to a new customer, we establish a new referral source and make a new contact — much like wire-in business." The average barter arrangement that Neal sells retails from $30 to $40.

    Solid Benefits

    Since exchange members are all businesses, she also has increased her exposure to corporate customers she wouldn't have otherwise targeted.

    Two years ago, Neal's Floral Design provided Christmas flowers, plants and decorations to a prominent area hotel, which was a trade member. The following year, the hotel asked Neal to supply all of their Christmas dÿcor. Without her trade exchange connection, Neal would never have had the opportunity to be considered. While the hotel account is quite profitable on its own, Neal considers the exposure to other potential corporate and business clientele at the hotel just as important.

    By increasing the amount of business she transacts through her trade relationships, Neal has increased the volume of fresh flowers her shop uses. In turn, this has increased her buying power and lowered her costs for supplies.

    Spending Trade Dollars

    Neal spends some of her trade earnings on business expenses that would have otherwise required cash, such as payroll processing, shop repairs and signage. She has also used barter dollars to purchase a few nice employee perks — including a night on the town after the Christmas rush.

    To use up the remaining barter dollars, Neal has contracted some personal projects, such as redoing her kitchen floor and services such as snowplowing and catering. She points out, though that any money spent on personal expenses must be claimed as personal income for tax purposes.

    While barter has many benefits, Neal points out that there are some downsides to the non-cash business. Getting full value from the barter credits the shop earns is one challenge. Some trade members, for example, inflate their prices to cover the cost of the fee paid to the trade exchange, despite the fact that exchange policy prohibits this. Sometimes this puts Neal, who does not differentiate between trade and cash customers, at a disadvantage.

    Another downside is that trade merchants don't always have the product she needs. "I wanted printed enclosure cards and none of the member printers had a printing press that could produce them." And none of the members carry floral supplies. "None of my floral suppliers are trade members, so I still have to pay cash for the bulk of what I use on a daily basis," she said.

    The Bottom Line

    On the whole, Neal considers her trade exchange membership to be beneficial. Since becoming a trade member, she has increased her prospect base and boosted her business clientele. Both her trade and cash business continue to grow through referrals by the trade brokers and simply by being listed in the member directory.

    The group also hosts networking events which allows Neal's Floral Design to remain in the forefront of fellow trade members' minds.


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