Five areas where money may be leaking from your business, according to Leonardo Bastos

A company can increase sales, expand its team and achieve record turnover without necessarily raising its profit. Poor pricing, insufficient cost monitoring, inefficient processes and tax decisions are among the factors that can undermine financial performance. The issue is becoming increasingly relevant given the growing number of entrepreneurs in the country: according to Sebrae, almost 5 million small businesses were launched in Brazil in 2025.

For Leonardo Bastos, entrepreneur and founder of Magnus Club, a business-development community, monitoring turnover alone can give a misleading impression of a company’s health. “Selling more is important, but the entrepreneur needs to know how much of that revenue actually remains in the business. Margins, costs, taxes and expenses need to receive the same level of attention as sales,” he says.

From working with entrepreneurs at different stages of growth, Leonardo Bastos has found that many financial losses do not necessarily stem from one major wrong decision. They can emerge in day-to-day operations: prices set without accounting for every variable, expenses added to the budget without being reviewed, or processes that worked in a smaller operation but began to create costs as the business expanded.

According to the entrepreneur, this assessment becomes even more important once a company starts to scale. Higher sales usually bring additional hires, suppliers, systems and financial responsibilities, requiring more detailed management of the figures. At this point, looking solely at revenue can conceal issues involving margins, productivity and cash generation.

Below, Leonardo Bastos highlights five areas that deserve attention when identifying where money may be leaking from the operation. Take a look.

1. Pricing without accounting for every cost

Setting prices based only on what competitors charge can leave important expenses out of the calculation. Taxes, commissions, logistics, technology, labour and administrative costs all need to be included to understand how much profit each sale actually delivers.

The risk is greater when a business sells high volumes of products or services with narrow margins. In these circumstances, more sales can increase turnover without producing proportional profit growth.

2. Costs that rise alongside sales

Growth often requires additional staff, systems, suppliers, premises and operational investment. The issue arises when these expenses increase faster than the company’s ability to generate profit.

For this reason, fixed and variable costs should be regularly measured against revenue, margin and cash generation. This comparison makes it possible to identify expenses that have risen without delivering a proportional productivity improvement or financial return.

3. No tax review

Tax management can also have a direct effect on profitability. An unsuitable tax classification, a lack of planning and insufficient monitoring of tax rules can increase the amount paid out by a company.

Any review should take account of the operation’s characteristics, turnover, margin, type of activity and the options provided for in legislation. The aim is not simply to pay less tax, but to avoid decisions that damage cash flow or create tax risks.

4. Processes that create waste

Rework, recurring errors, excess stock, low productivity and activities that continually depend on the owner’s approval can all result in losses that are difficult to spot in isolation.

“There is not always one single expense showing where a company is losing money. Often, it is a series of small inefficiencies building up over the months. That is why monitoring indicators and reviewing processes helps reveal issues that turnover alone does not show,” Leonardo Bastos explains.

Mapping repetitive tasks, delays, waste and bottlenecks can help pinpoint where resources and working hours are being used without generating a return.

5. Growth without a management structure

A further concern emerges when sales move ahead faster than the internal organisation. Hiring people, increasing expenditure and taking on new financial commitments before establishing controls, leadership and processes can raise operating costs.

At this stage, indicators such as profit margin, profitability by product or service, cash generation, productivity, stock levels and fixed costs help determine whether expansion is delivering financial results or merely making the business more complex.

Before setting new sales targets, Leonardo Bastos advises reviewing how the company currently operates. “Before asking how much turnover they want to achieve next year, the entrepreneur should identify where they are leaving money on the table today. In many cases, improving results begins with correcting what is already consuming profit within the operation itself,” he points out.

By Carolina Lara