Velocity Trade Exchange

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Thousands of organizations nationwide have used their trade exchange membership as a key element in realizing their growth goals. Countless businesses attest to having safely navigated through tough times with the support of a trade exchange in marketing, generating clients, managing cash flow and moving excess inventory.

Does that mean that a Velocity Trade Exchange is right for every business? Of course not. Part of our commitment to our members and the Triad business community as a whole is to help prospective members analyze whether or not VTE membership makes sense for them. The primary factors that we help prospective members consider before accepting their membership application are:

• Gross profit margins: Studies show that in order for a trade exchange member to realize a solid profit with their membership, companies should ideally have an overall gross profit margin of at least 30% (see below for exceptions). Gross profit margins are calculated by taking the total revenues less the cost of goods sold (inventory, supplies, tools, labor, etc.). The gross profit percentage is calculated by dividing the gross profit by the total revenues.

Companies with gross profit margins under the ideal 30% can still have a successful trading experience by analyzing the gross profit margins of each of their products and services. Often, businesses have certain items that are in high demand but due to stiff competition, they are forced to offer those products or services at a low rate of return. By customizing their membership to exclude these items from their trade offerings, they can maximize their return on investment.

• Capacity for New Business: Prospective members should typically have at least a 5% capacity for additional business beyond their current cash customers. Companies that experience fluctuations in capacity can still maximize their membership by temporarily placing trade acceptance restrictions on their account during times of being at or over capacity.

By filling the gaps with additional business (i.e.: selling excess inventory, filling your employees’ time on the job with additional projects) not only brings in additional revenues, but decreases the cost per item or service sold. On average, a 5% increase in sales results in a 10 – 20% increase in profit.

• Customer Base: Prospective members should sell at least 25% of their products and services locally. They also need to have a customer base able to pay them with trade dollars by falling into one of these categories:

• Business to Business focused: At least 50% of their customers are other businesses.

• Business to Consumer focused: Businesses that sell primarily to consumers can have a successful trade exchange experience if they offer products or services that are typically in high demand by business owners (i.e.: business attire retailers, entertainment related products and services, restaurants, dry cleaners, day care centers, spas, contractors, landscapers, cleaning services, auto repair shops, electronics, etc.).

• Other Considerations: VTE also looks at the following additional factors when considering potential members:

• Business Practices: VTE members are expected to demonstrate a strong sense of customer service, business ethics, and integrity.

• Spending Habits: Prospective members whose primary expenses are highly specialized and / or not available locally may not have an effective experience as a member of the trade exchange. During our application interview process, we review ways they might use use their trade dollars and together make the determination as to whether or not the trade exchange will offer them significant value.