First-year losses
Almost every business loses money at the start. It is not failure: it is normal. What kills a business is not having planned for it.
What the first year usually looks like
1Months 1–3Few customers. You lose money every month.
2Months 4–6People come back and recommend you. You lose less.
3Months 7–12If you do it well, you approach break-even.
4Year 2You start earning and recovering your investment.
Barbershop example with €2,000 fixed costs:
Month 1: 3 customers/day × 22 days × €13.80 = €911 → you lose €1,089
Month 3: 5 customers/day → €1,518 → you lose €482
Month 6: 8 customers/day → €2,429 → you make €429 (still no wage)
Month 12: 12 customers/day → €3,643 → you make €1,643
In the first months you can lose a few thousand euros, and that is without paying yourself anything.
Month 1: 3 customers/day × 22 days × €13.80 = €911 → you lose €1,089
Month 3: 5 customers/day → €1,518 → you lose €482
Month 6: 8 customers/day → €2,429 → you make €429 (still no wage)
Month 12: 12 customers/day → €3,643 → you make €1,643
In the first months you can lose a few thousand euros, and that is without paying yourself anything.
The mistakes that cost the most
- Spending too much on the fit-out and having no money left to survive.
- Mixing business money with your own. Open an account just for the business.
- Not setting aside taxes: the quarter’s VAT and income tax arrive all at once. Set aside part of every sale.
- Hiring too early.
- Cutting prices out of desperation: you attract customers who only want cheap.
- Not looking at the numbers every month.
When to close
Decide before opening what your limit is: “if in 12 months I don’t reach X customers a day or I have lost €Y, I close or change”. Knowing when to stop is also part of being a good businessperson. What you can’t do is keep borrowing to cover losses.