By Busola Bamidele
For many small business owners in Nigeria, making money is the goal, but knowing exactly how much you're making is the game-changer.
Profit isn't just about counting cash at the end of the day; it's about understanding your numbers to grow smarter and scale faster. Here's how to calculate your profit in a way that keeps your business thriving.
Step 1: Know Your Total Revenue
This is the total amount your business makes from sales. Whether you sell shoes, foodstuff, or provide services, sum up all the money coming in within a specific period (daily, weekly, or monthly).
Step 2: Track Your Total Costs
Your costs include everything you spend to run the business, raw materials, rent, electricity, internet, transportation, salaries (if you have employees), and even your own salary as the owner. Don't forget hidden expenses like bank charges or POS deductions!
Step 3: Apply the Simple Profit Formula
Profit = Total Revenue – Total Expenses.
For example, if you made ₦500,000 in sales and spent ₦300,000 on expenses, your profit is ₦200,000.
Step 4: Separate Gross Profit from Net Profit
Gross Profit is revenue minus only the direct cost of goods or services.
Net Profit is what remains after subtracting all business expenses.
Why This Matters
Knowing your profit helps you price better, reinvest wisely, and avoid losses disguised as "good sales." Many Nigerian entrepreneurs focus on turnover but forget profit, leading to cash flow problems.
Track your finances, cut unnecessary costs, and watch your business grow profitably!
