It can work - but has some disadvantages,...
You can set geographic targeting so your ads are only shown in a specific area,... but the targeting isn't very accurate & I ended up getting calls from as far as 60 miles away.
Also I found a lot of my "impressions" were on forums like this, because it was related to my keywords, so I wasted money asking window cleaners if they wanted their windows cleaned (You can exclude specific sites now I think - but you have to know about them to exclude them), and of course got zero clicks & zero work from that part of my adwords expenditure.
Personally I found it gave a very poor return on investment - - BUT - if you pay a professional to set it up for you those pitfalls should be minimised & you might get a better result. There are a few guys on peopleperhour.com who offer this service...