I’m a small-business owner with a lawn-care franchise. It’s common in our industry, after the season is over, to send out prepay letters for the upcoming season.
If we send out these letters offering a 5 or 10 percent discount for early payment on next year’s services, is that too similar to borrowing money from our customers at 5 to 10 percent?
Not at all. I definitely would send prepay letters. It takes some of the seasonality “ouch” out of your financial equation, and it gives them 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.
You obviously have to be 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.advice
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.
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