BUSINESSES have been warned against making ‘daily deal’ vouchers a significant part of their marketing.

BUSINESSES have been warned against making ‘daily deal’ vouchers a significant part of their marketing.

A number of businesses across the country have staked their futures on such deals – only to find they fuel cash flow problems, it is claimed.

Julie Palmer, partner at recovery specialist Begbies Traynor, which has an office in Old Christchurch Road, Bournemouth, said such discounts could seriously impact on a company’s viability.

She said: “In recent years, we have seen the rise and rise of the ‘daily deal’ offer where consumers subscribe to sites such as KGB, Groupon and vouchercodes. Such offers may be great for consumers, who lap up the opportunity, for instance of a £60 meal for two for £19, but they can pose a serious health risk to the business.”

She said sales and discounts were an acceptable way to boost business but daily deals and discount vouchers could be risky if used excessively.

“They are fine to boost trade during a quiet period or on quiet days and perhaps even to get the business over a small hiccup but they are not the solution to long-term problems,” she said.

“Effectively, such deals pre-sell a company’s turnover. That means the business receives most if not all of its funding upfront but will still have to meet its overheads in the future.”

Mrs Palmer said hotels, restaurants and some leisure operators were the most vulnerable.

“They receive between 70 per cent and 100 per cent of the pre-payment in advance.

“That is used to offset their overdrafts and then, several weeks later, when their premises are full of guests that have already paid, they have to meet current staffing costs, catering and overheads,” she added.

“Unless they have a robust business, it just doesn’t add up.”

Recent research has shown that nearly 70 per cent of UK adults now go online to find discount vouchers – while millions subscribe to daily deal newsletters.

Mrs Palmer recommends using them tactically to generate “top-up” sales – restricting numbers and not becoming over-reliant on them.
Bournemouth Echo

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