5 mistakes that can shut down your restaurant

In lean times, having good planning and control of your business can bring advantages over competitors. Now with the economy recovering, having a business that is profitable is even more essential.

Thinking about it, we’ve selected five mistakes that can shut down your business and tips on how to avoid them!

1. Disregarding the production costs

In every business there are two types of costs, the fixed ones and the variable ones. Fixed costs such as rent or water bill need to be taken into consideration independently of whether the business is generating profit or not. As to variable costs – which change according to production – they are the Achilles’ heel of many entrepreneurs, as they can easily rise without proper planning, bringing the company’s accounts into red.

Tip: always have in your expenditures planning the fixed costs and, according to the estimate for the month, the variable costs, so the chances of you curling up with the numbers decreases!

2. Stocking up beyond what is necessary 

Buying products beyond what is necessary to mount a large stock can be one of the biggest mistakes of those who are starting a business, but as bad as this is to lose sales due to lack of products in stock. In addition to losing money with an excessively large stock, you can also lose customers by the impossibility of producing any course.

Tip: analyzing the flow of your business and building a lean inventory is one of the most intelligent and economic solutions to this problem.

3. Decreasing the quality of the product 

Because of the crisis, some entrepreneurs may opt for a raw material similar to that used normally, impacting the quality of the product served. This decision may not be the most accurate, since customers are ever more demanding in their choices.

Tip: consider whether this is the best area to cut investment, in some cases other specific cuts can be more efficient and will not compromise the customers care and fidelity.

4. Ignoring planning 

Planning can be tiring, but it is essential for the business. Not knowing which way to go is one of the failures of entrepreneurs, and this generates spending often higher than those really necessary. Knowing where you are and where you want to reach is crucial so that you can achieve your goals and sometimes expand the business.

Tip: draw up a business plan and only after this go day to day.

5. Not knowing where to cut spending

The first step to make the right reduction is understanding that costs and expenses are not the same. Cost is related to the activity of your business – salaries of your employees, for example. As to expenses, they are activities that increase your production capacity – such as the purchase of office supplies.

Tip: When there is a need to make a cut, opt for the reduction of expenditure and not of costs.

Linx offers software and services tailored to increase productivity of bars and restaurants! Check out: www.linx.com.br/bars-restaurants