A good marketing idea
Kevin owns a lawn care business. He asks Dave if sending out discounted, pre-pay offers to clients is too similar to borrowing money. Dave says no, and he tells Kevin it's a pretty good idea under the right circumstances.
QUESTION: Kevin is a small-business owner with a lawn care franchise. He asks Dave if sending out discounted pre-pay deals for the upcoming season is too similar to borrowing money from his customers. Dave likes the idea, and encourages Kevin to pursue it — with a few conditions.
ANSWER: Not at all. I definitely would send pre-pay letters. It takes some of the seasonality “ouch” out of your financial equation, and it gives your clients the opportunity to take advantage of a bargain. It’s not a bad plan from a marketing standpoint for your business, either. You might even be able to add some new customers with an offer like this.
Just make sure you’re really secure and confident in your ability to provide the service. Otherwise, you could end up in a really bad situation. Your equipment, staffing and track record in the business will all come into play. But if all this is strong, and you’ve been in the business for a number of years and plan on staying in the business for years to come, then this is something I’d definitely do.