Running your own business is challenging. It takes a lot of work, commitment and dedication to succeed. And that's not always enough. Sometimes all your effort goes down the drain because you didn't know how to manage the company's finances.
Many people open a bar without mastering the concepts and practices that are essential to keeping the business financially healthy. If you still have questions and want to find out how to manage a bar financially, check out our tips below!
Financial health and business survival
Did you know that only 40.7% of businesses survive after 5 years?
That's the estimate from the study Demographics of Enterprises and Entrepreneurship Statistics 2020, conducted by IBGE (the Brazilian Institute of Geography and Statistics). The analysis considered companies founded in 2015 that were still operating in 2020.
But what leads a company to close its doors in such a short time?
They vary widely: from a personal matter like moving to another city to an economic crisis like the one triggered by the COVID-19 pandemic. Still, poor financial management is without a doubt one of the biggest problems.
In the survey Business Survival 2020, conducted by Sebrae (the Brazilian Micro and Small Business Support Service), financial difficulties appear among the main reasons companies shut down:
- 21.5% – Lack of money / lack of financing / lack of working capital
- 20% – Very low sales / Losses / Lack of customers
- 6.5% – High costs / taxes / fees / high rent
- 3.6% – Very low profit / revenue
The data also indicates that 7.9% of respondents believe that more effective financial management would have prevented the end of the business.
Respondents also cited other factors that would have helped the company stay afloat, among them:
- 34.4% – Easier access to credit
- 24.9% – More customers
- 20.6% – Fewer charges and Taxes
- 17.5% – Business planning
As you can see, no company lasts without financial control. E não é diferente quando estamos falando de bares ou restaurantes. A seguir, confira nossas dicas e veja como administrar um bar financeiramente.
Leia também: 8 Bar Ideas for Building a Successful Business
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5 Tips for Managing a Bar's Finances
Cash flow, COGS (cost of goods sold), cost and expense planning, budgeting, taxation, revenue, working capital…
Learning how to manage a bar financially means getting to know a range of concepts and practices that can be quite challenging. Follow our tips to manage your finances effectively and reach your goals! Shall we?
Leia também: The 5 biggest challenges in managing restaurants, bars and nightclubs
1. Start with yourself: get your personal finances in order
A classic mistake among business owners, especially in family businesses, is mixing up personal finances with the company's finances. E é muito comum que ambas sejam descontroladas.
If you still take money out of the bar's register to pay your household bills, it's time to get better organized! And that starts with you: study personal finance, read the go-to books, learn to manage your own money.
If you don't even know where to start, our tip is the book Como organizar sua vida financeira, by Gustavo Cerbasi.
After that, you can move on to organizing the company's finances. With a solid knowledge base and a clear separation between your personal and business accounts, the chances of success are much higher.
2. Study finance and keep an eye on the market
Personal finances are a great starting point, but running your bar takes more than that. It's hard to imagine a successful entrepreneur who doesn't follow and understand market movements.
Inflation, exchange rates, interest rates… You have to stay on top of what's happening in the financial world. After all, it's these indicators and the market context that steer businesses.
They work like lighthouses, signaling where and when there are opportunities or threats. Rising inflation, for example, directly affects the price of supplies for your bar. If you're not aware of it, you may take too long to revisit your prices and end up losing money
By keeping an eye on the market, you're better prepared to make decisions — and you don't run the risk of simply following the competition's lead or being caught off guard by a crisis.
So get started now! Study the market, read publications from associations such as Abrasel, and follow financial news. This is essential to running a business.
3. Plan your finances from day one
Running a bar without financial planning is a recipe for failure. But it happens all the time. Bar operations take up a lot of time, and sometimes there's none left for planning.
You get so busy managing cash flow that you forget to look at your business goals. You don't track results. You don't make adjustments to hit your targets… This absolutely cannot happen!
You need to know where you're going and what it takes to get there.
Financial planning is one part of your bar's Business Plan (which also includes competitor analysis, a marketing plan, an operations plan, and other elements). It should be done even before you open the doors.
At the start, it's essential to calculate or at least estimate some basics such as:
- Investment required
- Initial costs and expenses
- Working capital required
- Time to reach return on investment
- Revenue and profit targets
Here's the tip: keep in mind that your plan will change as the business evolves. It's a reference point, far more useful for spotting what's working and what isn't than for following to the letter.
As you operate, you'll need to understand the specifics of your cash flow, seasonality, expenses, revenue, and many other indicators.
By watching your history and its variations, you'll gain more and more confidence to make the adjustments needed to reach your goals.
4. Master the trio: costs and expenses, cash flow, and budget
As we've seen, managing a bar's finances involves a whole range of aspects. Getting a handle on all of them from the start can be tough. So take it slow and begin with the three main pillars:
Cost and expense planning
Learn how to calculate fixed, variable, and total costs. A common mistake is to Pricing products considering only the cost of supplies, and not overall expenses.
Knowing how to calculate and plan your expenses is strategic: it keeps you from setting prices based on the competition and helps you spot opportunities in your business, such as promotions you can run to attract more customers.
On top of that, without a cost forecast it's impossible to build a proper budget.
cash flow
O cash flow is the main tool in a bar's financial management. It's how you keep track of the money coming in (from sales) and going out (on costs and expenses). From there, you can tell whether you're turning a profit or a loss.
But you can and should also use cash flow to gain more predictability in your business and plan future actions.
Projecting the next few months' cash flow in advance leaves you better prepared to face problems, come up with tactics to boost sales, or even seek a loan.
In fact, if you do need a loan, you'll be able to demonstrate your business's maturity and stability, making it far easier to get credit at good rates.
Leia também: Restaurant cash control: 3 tools to speed up your management
Orçamento
The budget is an estimate of investments and spending for each period, and it helps you assess how profitable the business is. Tracking budgeted versus actual figures makes for smarter financial management.
By analyzing actual spending against the budget, you'll be able to identify what did and didn't go as planned. From there, you can set targets to improve results.
For example: if sales are flowing and the budget set aside for marketing hasn't been used, you can redirect those funds to other fronts.
5. Make an ERP system your ally
An ERP system — short for Enterprise Resource Planning — is a powerful ally in bar management.
This technology automates administrative and financial processes, centralizing records, data, and reports in one place.
Besides making operations easier by simplifying and speeding up tasks, this tool brings together all the data you need to make strategic decisions. With it, you can, for example:
- Track revenue in real time
- Track table turnover and revenue
- Manage inventory in an automated, integrated way
- Control sales and run analyses, such as order volume and popularity
- Generate reports on customer demographics, dwell time, and average ticket
This way, an ERP takes financial management to another level. By adopting this tool, you gain productivity and free yourself up to analyze the whole operation, understand your business context, and make the best decisions for success.
Count on EPOC for efficient financial management
EPOC is the most complete system on the market for bars and restaurants. Our solution integrates the ERP with PDV, payment methods, KDS, Digital Menu, Self-Service Kiosk and much more!
If you'd like to explore all the features and see how we can help with your bar's financial management, Talk to one of our specialists!
