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I wrote about our experiences of Living Social a few months ago and indicated that I thought it was madness for a new oven cleaning company to use this service as they would end up with lots of jobs that made them no money. A new oven cleaning company in Bristol did just that and sold 300 oven cleans which meant they would have been booked up to the end of March 2012 if they could do 4 oven cleans a day. The amount of money they would have got after VAT and Living Social's bit was taken off would have been approx £7 a clean. So we worked out that they would be doing four ovens a day for £28 a day. Which was madness as no one man band would have been able to substain their business.
Here is my original post: http://www.theovencleaningbusiness.co.uk/2011/11/groupon-and-living-social-oven-cleaning-deals.html
Anyway yesterday someone came into our office and asked us how much our oven cleaning prices were as they had bought a Living Social deal and they had just got an email from Living Social, with a refund, saying the oven cleaning company had gone out of business. She had phoned the company but the mail box was full and the website had been taken down.
So the company had gone out of business. I not sure what Living Social do in these circumstances. I presume they give all the unused voucher holders a refund and then chase the company for the outstanding amount.
So was it the Living Social deal that but them out of business? Well no it wasn't. And it could have been something else entirely different I'm just guessing. But it was a new company owner thinking that this was a good way to get business without really thinking it through. My guess is a lot of the voucher holders didn't phone up to make a booking until maybe a couple of weeks ago and the company would have then been getting overwhelmed with phones call every day to book in the cheap oven cleans. By this time they had spent the money they got from Living Social as part of their deal months ago.
For us there might have been an out clause. They could have extended the Living Social deal. I think Living Social allows you to extend the deal fixed date to accommodate the voucher redemptions if this sort of thing happens. The voucher jobs could have then been spread over another six months or even until the end of the year. This would have kept them in business.