There's an interesting story going around the Net at the moment about a web-based business called Groupon. This is a business that offers other small and medium sized businesses the chance to attract far more customers in a short space of time than most of those businesses would see in a year or more if they relied on more traditional methods to attract customers.

Basically if you sign up with Groupon you offer a service or some item of merchandise at a vastly reduced price and Groupon publishes a coupon on the Net that people can use to buy that service or item. Instead of clipping the coupon as you would if it appeared in a magazine or newspaper a person who wants to take advantage of the coupon deal buys the coupon online from Groupon.

Groupon collects the money, takes a percentage as their cut and forwards the balance to the business that's offering the deal. It sounds like a pretty simple way of making some short-term cashflow and attracting lots of new customers to your business and in these tough times that must be a very attractive proposition for businesses that are struggling to survive.

It's also very attractive for consumers because they're getting something they want at a huge discount and so it's no wonder that Groupon is not short of people who want to buy the coupons and businesses that want to jump on the Groupon bandwagon.

So if it's such a sweet deal for both sellers and buyers why is it making news ... most of it bad ... on the Net? Well the consumers aren't complaining because they're happy about getting an incredible deal but it seems that quite a few of the small businesses that offered goods or services through Groupon are now wishing they hadn't.

Of course they're getting the cash from Groupon that they wanted but they're also getting something they didn't really expect ... or want. They're getting too many customers.

As far as I can tell when a business signs up for the Groupon deal they have to agree to honoring a certain number of coupons that are offered for a set number of days and there's also a cut-off date after which the coupons can't be redeemed. Once again that sounds ok but when these businesses agreed to offer a certain number of coupons those that are complaining didn't realize just how popular those coupons would be.

While the businesses knew how many coupons would be offered most of them seem to have never stopped to think that all the coupons would be snapped up. Instead of having only a few coupons to honor some of these businesses have had thousands of coupon holders contact them to obtain the goods or services that were offered.

Suddenly what looked like a great idea to generate some much-needed cash flow has turned into a financial disaster for some businesses which are now left with the prospect of losing even more money because, instead of selling a few items at a loss to generate some interest, they're suddenly facing the prospect of selling hundreds and hundreds of items ... items that they don't have in stock ... at less than the wholesale price.

Those who were offering a service are perhaps in an even worse situation. For example if you're a small business that needs to make $100.00 an hour to cover your costs and put food on the table and you offered a service via Groupon you probably would have seen it as a great chance to begin building a strong base of repeat customers.

But if the discount you were offering left you with the equivalent of $50.00 an hour and you were so overwhelmed with coupon holders that your appointment book was filled up for weeks with those discount jobs how are you going to survive?

All to often small business people ... and that includes those of us here adult who are doing everything from running small paysites to doing affiliate marketing ... are confronted with offers that will generate new business and have the potential to turn your trickling cash flow into a raging torrent.

It's hard to turn those sorts of offers down when business is slow and the bills are mounting up. The promise of more money and more customers is just too hard to resist so we grab and run with it without thinking beyond the end of our noses.

If you're really lucky things will work out just the way you want them to but more often than not those great offers can put huge pressures on our business ... pressures that our business can't cope with ... and instead of taking our business to a whole new level they destroy our business completely.

The really sad thing about all this is that if only those people who have been hurt by Groupon had looked beyond the end of their noses ... if only they had thought things through ... they wouldn't have grabbed the deal and they wouldn't be facing the problems they've got now.

And that's the way it can be for you ... when you're hit with the offer of a way to boost your business don't rush in blindly. Step back and think things through before you grab an offer that could do far more harm than good to your business.

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01/02/2012 - What Are You Planning for 2012?

12/27/2011 - Thinking About Marketing - Less is More

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