5 Reasons You Close the Month in the Red

After all the headache of finding a trustworthy — and competent — accountant; after jumping through the hoops of Brazilian bureaucracy just to register your trademark (or, at least, get in line to register it in 2 or 3 years) and your company; after interviewing your future employees one by one. After all that, you finally managed to open your own business. Congratulations!

Even so, you just can't turn a profit — not even with courses at Sebrae or Endeavor, reading the Exame news portal, and following the advice of the sharks from Shark Tank. Mesmo recebendo diversas newsletters e seguindo todos os tipos de Bel Pesces e Abilios Dinizes on social media — that light at the end of the tunnel seems to keep getting farther away. And redder.

One of the worst feelings in the world, right?

Well, something is going on, and a thorough analysis will help you understand what it is. Since I can't do that analysis for you, I decided to gather the conclusions you'll probably reach once you take a close look at your business.

You're not selling well enough

It sounds obvious, but this goes way beyond your total sales numbers.

Let's say you own a restaurant, and the dish that leaves the kitchen most often is French fries. Not fries with cheese, not fries with bacon — just plain fries. The relative profit you can make on a dish that simple is low, because nobody's going to pay R$ 20 for a plate of fries (unless it's big enough for the whole table to share).

Try mixing the simplest (and cheapest) ingredients with more sophisticated ones, or explore other recipes using that same ingredient. Potatoes can be scalloped, roasted rustic-style, made into a soufflé, mashed, and so much more. The point is to innovate — or at least keep trying until you find something that fits.

There's no point offering the bare minimum and expecting it to work out, because everyone's already got rice and beans at home!

You don't know your customer

This has A LOT to do with the previous point. If you don't know your customer, there's no way to offer them real value.

Well, actually there is a way, but it would take a long process of trial and error, plus a lot of time and money. In other words, unfeasible for most business owners. If you don't know your customer, you'll never manage to sell them your fish (or switch products, in case they don't like fish, for example!).

In cases like this, to avoid wasting time (and money), the best approach is to start putting ways of understanding your audience into practice. This becomes easy once you have a sign-up process at the entrance of your venue. With commercial automation software, you decide which information you want your staff to collect, and they fill in the fields based on customer data.

If you don't have commercial automation software, we'll spell it out for you! Grab a notebook and pen, and jot down what you need. To start, you'll need some basic information about your audience. Things like: (1) age; (2) gender; (3) date of birth; (4) phone number or email for contact.

With this information, you'll be able to plan small campaigns and promotions to see how well your customers respond to them. The first three data points give you the creative direction for your promotion; with them, you can figure out the references your customers relate to (for example, someone born in the early '90s is more likely to know what the Dragon Balls are — and where to find them). The phone number or email are your channels for reaching your audience. This way, you can run small promotions until you find the right formula for keeping customers coming back consistently!  

You might not fully understand what your audience is looking for from this information alone, but it's a starting point for mapping out a strategy. By researching the consumption habits of different generations, you'll be able to find plenty of material specific to what you're after.

The important thing is to have a direction!

You're paying more taxes than you should

Yes, this is a massively common reality. Whether it's due to an accountant's slip-up, not knowing about the exceptions and special regimes that make life easier for small business owners, or improper charges. The point is: there's always someone paying more than they should.

This shouldn't happen, under any circumstances.

Having the courage and confidence to chase down all the necessary information, do the right research, and consult with experts in the areas involved in starting a business should be accessible to everyone. And these days, all it takes is knowing where to look!

According to Technorati, nearly 3 million new posts are published every day. If just 1% come from reliable sources, that still means there are 30,000 posts you can benefit from. Among 30,000 posts, at least one of them is bound to be relevant to what you're looking for — so just get started!

Either way, the most widely used tax regime for small business owners in Brazil is Simples Nacional. Besides being simplified so you can handle everything from the comfort of home, this framework also offers some of the lowest rates payable to tax authorities, unified in a single portal

Learn more: How Not to Get Sunk by the Taxman

You're losing money due to a lack of organization

That's bad. VERY bad.

This problem is more common than it seems, and more serious than those dealing with it tend to realize. Organizing your finances, setting up sales processes, and defining which card brands get charged on which machines should be as clear to your staff as the waters flowing through the Himalayas.

Just so we're clear: the waters of the Himalayas are crystal clear.

Since the companies behind card machines are usually tied to banks, rates can vary. For machines that aren't linked to the bank your business account is with, the rate charged will probably be higher. This happens to make up for what they don't earn when the money leaves that account. In the other case, rates will be lower, because they already earn something every time money leaves the customer's account — since that customer banks there too!

In other words, in one case the merchant bears all the costs, while in the other, that cost is split between the customer and the business owner.

So, know exactly what rate you're paying, for which card brand, and on which payment machine. This way, you'll avoid the daily “micro-losses” that end up turning into massive holes in your finances over time.

Not to mention there's a big difference between money that comes in through debit and money that comes in through credit. As much as it's “technically” yours, it won't actually land in your account for another month! Depending on the contract you signed with your suppliers, a month can be too long to hold out until your next order or payment.

However, you have the option of using the Integrated Electronic Funds Transfer System — better known as TEF. With it, you can configure which channel each card brand gets charged through. This way, it automatically uses the “code” of the designated machine to secure the lowest rate for that transaction.

This way, you share the costs with the customer instead of taking that hit all by yourself!

You hired more staff than you needed

Now that's tricky. I get that it's better to err on the side of too much than too little, but when humans are part of the equation, that logic flips on its head.

That's because whatever's excess needs to be cut, so it doesn't generate even bigger costs.

Before hiring staff and starting interviews, start researching ways to optimize your team. There are plenty of solutions that end up proving your initial headcount estimate wrong. Between communication systems, dividing roles by department, or even solid training, you can get a single employee to outperform three, cutting costs while still ensuring specialized service.

In other words, “a bird in the hand is worth two in therapy.” When employees aren't well trained and prepared, and when rules and processes aren't clearly defined and communicated, problems tend to crop up. Especialmente se o perfil de algum dos funcionários for mais relaxado do que os outros. 

On the other hand, commercial automation systems can help you in several ways. From not needing someone to carry orders to the kitchen, to having a separate area for closing out tabs, the advantages are wide-ranging. 

Learn more: Everything About Commercial Automation for Bars and Restaurants

These problems are relevant to areas as diverse as the sales process, CRM (Customer Relationship Management ), tax, finance, and operations management. Whether you like it or not, a business touches every one of these areas, and founders are responsible for being the central point connecting all of them. If you don't know what an area is supposed to do, there's no way to know whether it's performing well, or even what to expect from it.

Read as much as you can. Check out every blog, every news portal, and read every ebook you can get your hands on. At the end of the day, the more you know, the better you'll understand what's actually important, and what can wait.

What you can't do is stay stuck in “all talk, no action.” If you're going to jump, jump in headfirst.