The lack of control over finances is one of the main causes of small business closures in Brazil. According to a survey by Sebrae, 48% of micro and small businesses close their doors due to issues related to lack of financial planning and cash flow mismanagement. Despite that, many entrepreneurs still underestimate cash flow, tool that prevents crises and paves the way for the safe expansion of the business.
ToMatheus Beirão, founder entrepreneur ofDaily Burn, platform with exercise programs to do at home, the view on cash flow needs to go beyond the recording of daily inflows and outflows. According to him, this control serves as a radar to identify periods of low sales and anticipate moments of high, allowing safer decisions.
"Many entrepreneurs only look at the cash when there is a lack of money", but the secret is to constantly monitor and plan based on this data. That's how we managed to grow, investing at the right time and with more security, affirms
Why cash flow is crucial
Monitoring daily inflows and outflows allows the entrepreneur to notice changes in customer behavior and adjust their strategies. For example, a restaurant may notice that sales drop at the beginning of the month and, with that, plan specific promotions for the period
This control also helps to manage fixed and already predictable expenses, such as rent and payroll, and to prepare for extra expenses. Knowing that the company will have to bear the 13th salary at the end of the year allows for reserving resources in advance
Matheus Beirão emphasizes that understanding the business cycles prevents hasty decisions. According to him, to rely only on intuition, without concrete data, causes many entrepreneurs to incur debts or reduce teams during times of temporary downturn. The cash flow shows that that bad moment may just be temporary. I have already thought about cutting costs, but when looking at the numbers, I realized it was better to hold on, for the movement would improve in the following weeks, explain
Predict and take advantage of seasonality
Another relevant aspect of cash flow is the forecast of seasonality. Clothing stores, for example, they usually have more activity during collection changes, while stationery stores record a sales peak in January, back to school
Companies that monitor these variations can prepare stocks and teams according to demand. The same applies to those who provide services, like beauty salons, that need to be better structured around commemorative dates
Beirão comments that understanding these fluctuations allowed him to optimize investments in his companies. "Upon realizing that certain months had more demand for our products", we started to invest more in advertising during these periods, and the results doubled. "This cash reading was essential", relates
Strategies to expand without suffocating cash flow
Planning expansions using cash flow also reduces risks. Small renovations or equipment purchases can compromise finances if not planned. The ideal is to spread expenses in a way that the installments fit within the expected revenue
Another tip is to gradually reinvest part of the profits. A coffee shop that wants to open a second location, for example, you can start by increasing the capacity of the current store and assessing the financial impact before taking a bigger step
For Matheus Beirão, it was this care that ensured that the Daily Burn grew steadily. The desire to expand is great, but if the cash flow does not sustain the growth, the dream turns into a nightmare. I have always analyzed if there is financial cushion before taking each step. Thus, "we grow without suffocating operations", concludes
