What happens if a guest cancels?
Your cancellation terms decide whether their deposit is returned. You have not been paid anything at that point, so the cost to you is the day rather than money.
The earlier a guest cancels the easier the date is to refill, which is why time-based terms are worth setting properly. Close to the date, a cancellation usually means the day is lost.
Guests cancelling for a genuine emergency are worth treating generously. It is a small bay and word travels.