Improve the Bottom Line
Bob Bagga, CEO of BizXchange, makes a case for the benefits that printers can derive through involvement in trade exchanges.January 2012 By Bob Bagga, BizXchange
For printing and signage companies, keeping the presses running is vital to staying in business and turning a profit. One effective way to increase revenue while decreasing costs is by joining a business trade exchange. Exchanges can serve as a powerful financial tool for printers to reduce downtime, attract new business, and save cash on budgeted business expenses.
For years, businesses have used trade as a strategy to help their companies thrive. However, unlike direct trading where two businesses must have what is called a mutual coincidence of wants (each party has what the other wants at the same time, and both items or services are of roughly the same value), exchanges provide companies with a private form of currency, which allows for significantly more flexibility.
How an exchange works
Exchanges help bring their members new business, use spare capacity, and accumulate the private currency by selling their products or services through the exchange. The recipient can then spend its earned currency with any other business in the exchange.
A trade exchange provides monthly account statements and an account executive who manages each member's sales and purchases. This individual promotes companies throughout the exchange and actively finds jobs matched to these companies' availability. Because a trade exchange offers personalized services, members pay minimal transaction fees when they buy or sell over the network, which are offset through increased cash flow and new business.
Before joining an exchange, however, a business must know its variable costs, such as, ink and paper, since labor and fixed expenses will not increase from extra business earned through an exchange. By knowing his or her variable costs, a business owner can determine the difference between the cost and the price of what is purchased via trade.
Take, for example, a $10,000 ink purchase while assuming a 35 percent variable cost and 12 percent transaction fee from the exchange. If a printer makes this purchase through a trade exchange, the actual cost of making the purchase would be $3,500 and the transaction fees would be $1,200. Therefore, the cost of the exchange purchase would total $4,700, saving the printer $5,300.
Benjamin Dwan of Minuteman Press in Seattle, Wash., felt a little skeptical when he joined BizXchange in 2008. Within months he saw the value that BizXchange provided with the addition of new business. Dwan accepts BizX dollars for printing jobs from other members and these additional jobs help to keep his presses running at all times. As a result, Dwan has been able to remodel his facility using services provided by other exchange members, and he's also increased his cash flow by using BizX to purchase everyday business items.