07.03.2006 — The history books say in 1626 Dutch colonist Peter Minuet received New York’s Manhattan island from the Native Americans in exchange for $24 worth of trinkets. It’s probably the greatest barter deal ever made.

Following in Minuet’s footsteps, Ken Mara of World Wide/GC Alarm & Audio Video Design (World Wide/GC) in Garden City, N.Y., has bartering down to an art form. On a regular basis, Mara trades for just about everything ... advertising, airline tickets, hotel rooms, Broadway theater tickets (for clients), transportation service, pest control service, landscaping service, office machines (printers, faxes, phones, toner cartridges, chairs ... everything but computers), carpet cleaning, construction and painting for the office, uniforms for his technicians, legal services, accounting services, lettering for his fleet of vehicles, graphic design, direct mail and brochures. The result, Mara says, is an estimated increase in the company’s cash flow by 40 percent.

“There is a saying: Think Barter ... Save Cash,” says Mara. “I think barter and it means I am conserving my cash, because you can’t pay utility bills and employees with barter credits. I have to use cash for that.”

The bartering system has allowed the company to preserve cash flow for purchases of other companies, and to maintain a vigilant customer service program.

The business is actually four companies in one: Worldwide Security & Audio Video Design, GC Alarm & Audio Video Design, Telestat Security & Audio Video Design, and Vision Monitoring Services. Mara and his partners, Joe Ingegno and David Young, have migrated the company from a pure alarm company to a $5.5 million low-voltage contractor specializing in the New York metropolitan area.

Add Clients, Save Cash

What the heck is bartering, how does it work and how does it increase cash flow? That’s a question that Mara often has to answer for most of his vendors since he started trading for goods and services 25 years ago.

In essence, it works this way: For every low-voltage installation you perform, you earn trade credits with a “middle-man” barter company that acts as the bank. Your cash flow is boosted by the fact that you are earning trade credits based on the “retail” cost of your goods and services, not based on your actual costs.

“Barter exists to fill excess inventory, capacity or time,” explains Mara. “In my case, if I hire a new installation crew that I can only keep busy three days a week, I will fill the other two days with barter installation jobs. I am still in the black in that scenario because I might do an alarm installation and charge $2,000 in barter credits. My costs for the job are likely only $1,000. Now I take that $2,000 in barter credits and trade it for a printing job for my new brochure with a local printer. I have now purchased $2,000 worth of printing for a real cost of only $1,000.”

Typically, the barter exchange takes a 10 percent cash commission fee for the job, so in Mara’s example his actual costs are $1,200 ... still an $800 savings.

One added benefit to the system is that it allows World Wide/GC to conduct business with someone who they may not have normally garnered as a customer. “I get them as a new client because they are in the same barter group,” says Mara.

Filling excess capacity is an important goal for Mara’s central station monitoring company, called Vision Monitoring. The company is actively seeking out low-voltage alarm dealers willing to use Vision Monitoring as part of a barter exchange.

“After you have built a monitoring center, the incremental costs of adding accounts are small. I want alarm companies all over the country to join a bartering group and use my services,” says Mara. Vision Monitoring currently has 18,000 accounts, but the central station has the capacity to monitor 100,000 or more. “There is a very low incremental cost to add accounts. The unfilled capacity is a lost opportunity for me that is gone forever.”

According to Mara, several other industries, like hotels and airlines, have come to the same conclusion that they need to increase capacity. For example, if the average hotel only has 70 percent occupancy, every night that passes without the hotel rented out fully is “lost money.” But if the hotel barters and fills its rooms, it has earned barter credits it can use to get the carpets cleaned, landscaping, pest control, advertising, linen service, etc. Meanwhile, the hotel only faces some incremental costs for cleaning and utility costs. Airlines are also discovering the power of bartering. If a plane takes off with empty seats, that potential revenue is gone forever. So airlines are bartering to fill the seats, in many cases in exchange for advertising.

Likewise, Broadway theaters are doing it. When a show has been around a few years, often the theater is 25 percent empty. Many of those unsold seats are put into barter exchanges. Mara takes those tickets and gives them as rewards to employees and to clients. “When I run a sales contest, I am able to reward the winner with a limousine into the city, tickets to a Broadway play, dinner and a hotel ... all for trade. It’s a nice package. It gets my staff fired up,” he says.

Recently, a low-voltage company in Connecticut and another one in Pennsylvania switched over all their alarm accounts’ monitoring services to Vision Monitoring. “They are saving thousands of dollars every month. Ultimately, they are boosting their sales and, most importantly, increasing cash flow and bottom line ... that’s the name of the game in the low-voltage industry.