48% of small businesses close due to lack of cash control

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 companies close their doors due to problems related to lack of financial planning and lack of cash control. Despite this, many entrepreneurs still underestimate cash flow, a tool that prevents crises and paves the way for the safe expansion of the business. 

For Matheus Beirao, founder of the Daily Burning, platform with exercise programs to do at home, the view on cash flow needs to go beyond the record 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 cashier when money is missing, but the secret is to constantly monitor and plan from this data.This is how we managed to grow, investing at the right time and with more security”, he says.

Why cash flow is crucial

Daily monitoring of entries and exits allows the entrepreneur to notice changes in customer behavior and adjust their strategies. For example, a restaurant may notice that sales fall at the beginning of the month and, with this, plan specific promotions for the period.

This control also helps to deal with fixed and already predictable expenses, such as rent and payroll, and to prepare for extra expenses.Knowing that the company will have to pay the 13th salary at the end of the year allows you to reserve resources in advance.

Matheus Beirao points out that understanding business cycles avoids hasty decisions. According to him, relying only on intuition, without concrete data, makes many entrepreneurs contract debts or reduce teams in moments of temporary downturn.“Cash flow shows that that bad moment can be only fleeting.I have thought of cutting costs, but when looking at the numbers, I realized that it was better to hold, because the movement would improve in the following weeks”, he explains.

Forecast and take advantage of seasonality

Another relevant aspect of cash flow is the seasonal forecast. Clothing stores, for example, usually have greater movement in collection exchanges, while stationeries record peak sales in January, back to school.

Companies that monitor these variations can prepare stocks and teams according to demand. The same goes for those who provide services, such as beauty salons, which need to be better structured near commemorative dates.

Beirao comments that understanding these fluctuations allowed him to optimize investments in his companies. “Ao realize that certain months had more demand for our products, we started to invest more in advertising in these periods, and the results doubled. This reading of the cashier was essential”, he reports.

Strategies to expand without stifling the cashier

Planning expansions using cash flow also reduces risks.Small renovations or equipment purchases can compromise finances if not scheduled. Ideally, install expenses so that benefits fit into the expected revenue.

Another tip is to reinvest part of the profits gradually.A coffee shop that wants to open a second unit, for example, can start by increasing the capacity of the current store and evaluating the financial impact before taking a bigger step.

For Matheus Beirao, it was this care that ensured that the Daily Burn grew steadily. “The desire to expand is great, but if the cash does not sustain growth, the dream becomes a nightmare. I always analyzed whether financial fat slack before taking every step. Thus, we grew without stifling the ACHR operations, he concludes.