“My experience leads me to the belief that Australians generally are not risk takers. There is a very strong conservative culture within those that have the financial ability to provide loans, take up equity, or fund commercial ventures based on new, unproven products. It begs the question of where would Bill Gates of Microsoft or Steve Jobs Apple, be today if they had been Australians!”
Trevor Andrews
Marketing Manager of CIMA, a division of RMIT's Technisearch
Australian small businesses has traditionally been financed by bank lending. Banking relationships have been critical for small business. After the heavy losses of the 1980’s this finance has virtually dried up with access to overdrafts and bank loans for new businesses being almost impossible to obtain. Regardless of the business plan banks now want bricks and mortar security and the greater the perceived risk, the higher the interest rate and the margins. Dynamic firms need more capital. Ultimately they must accept an equity injection or compromise their growth potential. .
By taking investment in the form of barter-credits an investor can diversify their portfolio with little risk and an investor may find access to previously difficult to find capital.
The objectives of a non-cash barter investment program are to:
Provide a spending outlet for trade credits earned by business members
Provide an immediate base of quality products and services to the barter exchange marketplace
Increase the overall amount of businesses in the barter exchanges membership base (New, service-oriented businesses often have a large amount of spare-time on their hands. Through earning Trade Credits they are able to acquire new references, expand their portfolio and lower their overall cash outflow)
Accelerate business spending on barter
Encourage more creative thinking in the use of trade credits
Benefits for Recipients
According to the Australia Venture Capital Association (AVCAL) only 5% of funds raised by venture capital firms are invested as seed capital in start up enterprises. In recent years, the industry has been directing most financing support to existing, well established companies which are seeking to expand. As AVCAL puts it, "this supports the perception that the industry in Australia has attempted to lower the risk profile by investing in companies with a longer track record". It is also telling that the majority of venture capital funds (60%) are being directed into general industrial and service enterprises rather than hi-tech businesses. The barter exchange service offers new enterprises the ability to access seed capital in a less competitive, more supportive environment.
Large market of potential investors
No cash fees for the first 6 months
Those who can creatively utilise trade credits are often the business owners
Investment comes from those already operating successful businesses
Recipients receive knowledge, expertise and contacts
Potentially larger investments available as access by investors to cash is no longer a barrier to investing
Benefits for Investors
Low-cost to invest compared with investing traditional cash
Provides an outlet for spending significant amounts of trade credits
Trade credits, unlike invested cash, is more difficult to “mis-spend”
Ability to get involved in the business
Adds more businesses to the pool of potential sellers in the barter marketplace
Trade credits invested come back in the form of new business to the investor
Copying and distributing this article
Ormita provides free updates about the generic benefits of barter to those interested in local currency, community currency, countertrade, reciprocal trade, barter exchange, time dollars, hours and other forms of community trade vehicles.
You may freely copy and distribute this article provided that you attribute the author and/ or source as the Ormita Commerce Network.
About Ormita
The Ormita Commerce Network spans 5 continents, with direct representation in more than 17 countries plus additional partnerships in a further 59 countries. The business allows companies to exchange goods and services on a reciprocal trade arrangement.
Some of our Websites
Ormita Commerce Network Australia – www.ormita.com.au
Ormita Commerce Network Canada – www.ormita.ca
Ormita Commerce Network India – www.ormita.co.in
Ormita Commerce Network Mexico – www.ormita.com.mx
Ormita Commerce Network New Zealand – www.ormita.co.nz
Ormita Commerce Network United Kingdom – www.ormita.co.uk
Ormita Commerce Network United States of America (USA) – www.ormita.com
For Licensee, Franchise and Partnership Enquiries please visit : www.ormitacorporate.com
