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What is the best refund policy for a small business that hosts events?

I am co-owner of a small business that hosts weekend get-aways at local hotels to scrapbookers. Every weekend that we host, we seem to have a customer who at the very last minute can't make it due to a family emergency, acute illness etc. We need advanced notice in order to cancel hotel rooms, meals etc. otherwise we lose the money (still need to pay the hotel/catering). We posted a refund policy, but have lost a customer over this issue. Since we are a new business, we currently don't have the financial cushion to support these incidents, but I am willing to hear suggestions from a 3rd party. Thanks for your time!
Tim Berry answered September 12, 2007
When I host events, I have a no refund policy as well. If you have to make the go/no go decision, then that should be implemented for your clients as well. There will always be reasons someone will say they can't come. If you have a very upfront "NO REFUNDS" policy, then the client accepts the risk if their schedule changes. Be consistent and be upfront.
Tim Berry is the president of Palo Alto Software Inc., based in Eugene, Ore., which produces business planning software. He is also the author of 3 Weeks to Startup and The Plan-As-You-Go Business Plan, published by Entrepreneur Press.