Somewhere right now, a small maker is unpacking a parcel that came back from a customer who never collected it. The product is finished, the shipping was paid twice, and the name painted on the front means nobody else will ever want it. If that sounds familiar, the problem is not the customer. It is the missing step before the work started: you did not ask for prepayment.
That is the blunt point psychologist Petar Petrov made on the Hills of Business podcast, while talking with host Dimitar Dimitrov about why people keep repeating the same expensive mistakes. His version was even shorter. If someone will not pay upfront, they are not a client yet.
The wardrobe crates that kept coming back
Petrov described a short video he had come across. A craftsman made small wooden wardrobes for babies: a simple crate with two rails on top and the child’s name written on the front. In the clip, he stood next to roughly thirty of them. Every one had been ordered, built, shipped across the country and returned because the buyer never picked it up. He was prying the names off so he could try again.
The economics are brutal once you write them down. Each crate cost materials and hours of work. Each one travelled to the customer and back, and the courier charged for both legs. Then the maker paid again in time, removing a personalised detail that had made the item valuable in the first place. Nothing in that loop produced revenue.
Petrov’s diagnosis was not gentle:
“This guy doesn’t have a business. He has a hobby.”
(Petar Petrov, translated from Bulgarian)
He added that if nothing changes, there will be another thirty crates next week, and the maker would need to sell several hundred units just to make it worth taking returns at all. The point was not to mock the craftsman. It was aimed, as he put it, at everyone who shares sad videos about customers not collecting their goods. The video documents a policy failure, not bad luck.
Why “no prepayment” turns a business into a hobby
A hobby is something you do because you enjoy it, and you accept that it may cost you money. A business is something you do on terms that make the money come back. The difference is rarely the craft. The craftsman in the video may make excellent crates. The difference is who carries the risk.
When you build first and get paid later, you carry all of it. You fund materials. You fund labour. You fund shipping. The customer carries nothing but a click. And a commitment that costs nothing is easy to forget, regret or simply ignore when the courier calls.
Asking for money upfront shifts some of that risk back to the person who made the request. It does not need to be the full amount. It needs to be enough that walking away hurts a little more than following through. That small cost changes behaviour on both sides of the deal.
The one-of-a-kind order nobody else will buy
Petrov drew a sharp line between standard products and personalised work. His example was a caricature. If someone asks you to draw a caricature of Ivan, you cannot later sell it to Dragan. It is not interchangeable. If Ivan disappears, the drawing is worth nothing.
“How do you start drawing something that hasn’t been paid for?”
(Petar Petrov, translated from Bulgarian)
This is the heart of the argument, and it applies far beyond woodwork and drawings. Think about what most freelancers and small studios actually sell:
- a logo built around one company’s name
- a website designed for one specific business
- a custom cake with a name and date on it
- engraved jewellery or printed merchandise
- a translation, a report, a video edit made for one client’s material
Every one of these has near-zero resale value. A standard item in a shop can be returned to the shelf and sold again. A personalised item cannot. So the more custom the work, the stronger the case to ask for prepayment, because there is no second buyer waiting to rescue you if the first one vanishes.
A simple test
Before you start any order, ask yourself one question: if this customer disappears tomorrow, can I sell what I have made to someone else at a fair price? If the answer is no, the work should not begin until money has arrived. If the answer is yes, you may have more flexibility, though you still carry costs such as shipping and storage.
Prepayment as a filter, not just a payment
The line from the episode that sums it up best is the one many small business owners need to hear early:
“Ask for prepayment. If the person isn’t ready to pay upfront, they’re not a client. They’re wasting your time.”
(Petar Petrov, translated from Bulgarian)
Read it carefully and you will notice it is not mainly about cash flow. It is about qualification. A deposit sorts enquiries into two groups: people who have decided to buy, and people who are curious, impulsive or simply polite. Both groups send messages. Both say yes. Only one group pays.
Without a deposit, you cannot tell them apart until the moment it is too late, when the product is finished and the parcel comes back. With a deposit, you find out on day one, before you have spent anything.
That filter also protects something more valuable than materials: your calendar. Every unpaid order takes a slot that could have gone to a serious customer. For a solo maker or freelancer, time is the inventory. Giving it away on a promise is the same as shipping goods on credit to strangers.
Validate before you build
Dimitrov extended the idea in the conversation. He pointed out that the same logic applies before a product exists at all. If you plan to write a book, you can test the idea first, then test titles to see if anyone is interested. If you want to be sure, you can take prepayments and put buyers on a waiting list before a single chapter is written.
His observation was that many people starting out do the opposite. They make the thing, then sit next to the caricature of Ivan and wonder whether anyone will buy it.
Petrov brought up Elon Musk as an example of collecting money for a car that did not yet exist, with buyers waiting years for delivery. In his view, what Musk was monetising was his own authority. He then made an important caveat: a small seller without a known name does not have that authority. Nobody will wait years for an unknown maker. That is exactly why prepayment matters more for small businesses, not less. A big brand can rely on reputation to hold the order together. A small one has to rely on a clear agreement and money on the table.
Why small businesses avoid asking
If the case is so clear, why do so many people skip it? A few reasons show up again and again:
- Fear of losing the sale. The worry is that asking for money will scare the customer off. But a customer who leaves because of a reasonable deposit was the customer most likely to leave anyway, just later and more expensively.
- Wanting to seem friendly. Many makers sell to people who found them through social media or word of mouth. Asking for money upfront can feel cold. In practice, clear terms are a sign of a serious operation, not an unfriendly one.
- Hoping it will be different this time. Petrov described this as stepping on the same rake over and over. The returns are not random. They are the predictable result of a rule that allows them.
- Not counting the full cost. If you only look at the price of materials, a lost order seems small. When you add shipping both ways, hours of work and the slot you could have sold to someone else, the picture changes.
How to ask for prepayment without awkwardness
The mechanics are less important than the decision, but a few practical habits make it easier to put into practice.
Make it a policy, not a negotiation
State it as how you work, before the customer has to ask. “Orders are confirmed once the deposit is received” is a sentence about your process. It is not a judgment of the person in front of you. When the rule applies to everyone, nobody needs to take it personally.
Match the deposit to the risk
Fully personalised work deserves full or close to full payment upfront, because nothing can be recovered if the buyer disappears. Work that is partly standard can start with a smaller deposit. The question to ask is how much you would lose if the order collapsed at each stage, and whether the deposit covers it.
Put it in writing
Even a short message summarising what is being made, by when, at what price and with what deposit removes most of the room for misunderstanding. It also gives the customer a clear moment of decision, which is exactly what an informal “sure, go ahead” lacks.
Do not start until the money arrives
This is the step people break most often. They agree on a deposit, then start working while waiting for it to land, out of goodwill or impatience. That brings back the exact risk the policy was meant to remove. The work begins when the payment is confirmed, not when it is promised.
What changes when you ask
The craftsman with thirty returned crates did not need a better product or more followers. He needed one rule applied consistently. With prepayment, the crates that came back would have been paid for, or, more likely, never built for people who were not going to collect them.
For a small business or a freelancer, asking for prepayment does three things at once. It protects cash. It protects time. And it tells you, before you invest anything, who is actually a client. Petrov’s framing makes the choice simple: you can run a business, or you can run a hobby that ships at your own expense. The deposit is the difference between the two.
Source
Episode 3: How wealthy people think — Dimitar Dimitrov in conversation with psychologist Petar Petrov on the Hills of Business podcast. The conversation is in Bulgarian; the quotes in this article are translated.
