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You had a good month. Sales were strong, the shop was busy, you moved NGN800,000 of goods. By any feel, business is working. Then you check your account and there’s almost nothing in it. You sit there trying to do the maths in your head and you can’t make it add up, because the number you’ve been measuring all month was never the number that mattered.
You were measuring revenue. What you needed to know was profit. They are not the same thing, and the gap between them is exactly where your money went.
Revenue is what came in. Profit is what stayed.
Revenue is the total of every sale. It’s the big, satisfying number, the NGN800,000. It feels like success because it’s the number you watch all day at the counter.
Profit is what’s left after the business takes its cut. And the business takes its cut in three places, every single one of which sits between your revenue and your pocket:
- What the goods cost you to buy.
- What it cost to run the shop.
- What customers haven’t actually paid you yet.
Miss any of these and your “profit” is a story you’re telling yourself. Let’s walk through each.
1. What the goods cost you (this is the big one)
This is the number most shop owners skip, and it’s usually the largest. The goods you sold for NGN800,000 weren’t free. You bought them. If they cost you NGN550,000 from your suppliers, then NGN550,000 of that revenue was never yours to keep. It was always going to go back out to restock.
This is called cost of goods sold, and it’s the part a notebook hides from you. When you only track sales, you see NGN800,000 and feel rich. When you track what those specific goods cost, you see that NGN550,000 of it was just passing through.
And it gets sharper than that. If you bought shea butter at NGN3,500/kg in January and NGN4,200/kg in March, your real cost depends on which batch you actually sold. Blend it into an average and you lose the ability to tell which products make you money and which ones quietly lose it. We broke this down in 5 ways Nigerian shop owners lose money without knowing. The point holds: your profit on any sale is only as honest as your knowledge of what that exact stock cost.
2. What it cost to run the shop
After the cost of goods, the running costs. Rent. Staff salaries. Power and fuel for the generator. Transport to pick up stock. Data. The small things you pay without thinking, that add up to real money by month end.
So now: NGN800,000 in revenue, minus NGN550,000 for the goods, leaves NGN250,000. Take out NGN150,000 in running costs and you’re at NGN100,000. That’s your actual profit. Not NGN800,000. Not NGN250,000. One hundred thousand. The same month that felt like NGN800,000 of success kept you NGN100,000. That’s not a failure, it’s a real profit, but it’s an eighth of the number you were celebrating, and you can only make good decisions once you know which one is real.
3. The cash trap: profit you can’t spend yet
Here’s the twist that confuses even careful owners. You can be profitable and still have an empty account, because profit and cash are not the same.
If NGN200,000 of that NGN800,000 was sold on credit, customers walking out with goods and a promise to pay Friday, then that money is profit you’ve earned but cash you don’t have. Your books say you made money. Your account says you’re broke. Both are true. The goods are gone, the profit is real, but the cash is sitting in other people’s pockets.
This is why “I made profit but there’s no money in the account” is one of the most common things shop owners say. It’s not a contradiction. It’s the difference between what you’ve earned and what you’ve collected. And it’s why tracking who owes you and how long they’ve owed it matters as much as tracking sales.
Why you can’t do this in your head
None of this is complicated maths. It’s bookkeeping that updates with every transaction. The problem is volume. To know your real profit, you’d have to subtract the exact cost of every item from every sale, track every expense, and keep a running tally of who’s paid and who hasn’t, across hundreds of transactions a month. By hand, nobody keeps that up. So you fall back on the one number that’s easy to see, revenue, and hope it’s close enough to profit. It isn’t.
What you need is for the cost, the expenses, and the credit to be subtracted automatically as you go, so that at any moment you can see the real number instead of the comforting one.
Know the number that actually matters
Revenue tells you the shop is busy. Profit tells you the shop is working. They’re different questions, and only one of them pays your bills.
Mayloo calculates your real profit from every transaction, taking the actual cost of the goods you sold, your tracked expenses, and what customers still owe, and turning them into a profit and loss figure you can see any day of the month, not a guess you make at the end of it. Your books balance themselves, so you stop wondering where the NGN800,000 went and start knowing exactly what you kept.
Want a quick gut-check first? Our free profit leakage calculator shows you what expired stock, missing goods, and unpaid debts are quietly costing you, no signup needed.