My Gift to Small Business Owners Across Africa from the USA – A Lesson from the Goldman Sachs 10,000 Small Businesses Program
Something I learned about profitability during the Goldman Sachs 10,000 Small Businesses Program, USA, got me thinking about how we run our businesses in Nigeria. I decided to bring this lesson back to 9Gains and share it with our business partners. Many of us know the products customers buy the most. We even know the ones that finish quickly in our shops. But do we really know which products make us the most profit? Poor record keeping and lack of sales analysis can make us lose money without knowing it.
When Customers Keep Buying, We Assume the Business Is Growing
Let us use a provision shop as an example. Every week, customers rush to buy a particular carton of goods. The shop owner keeps ordering more because it sells fast. Sometimes, the supplier increases the price, but the owner cannot increase the selling price because customers may complain or buy elsewhere. So, the owner continues selling, happy that money is entering into the account every day.
You Sold It for ₦48,000, But How Much Did You Really Make?
Imagine the owner buys each carton for ₦45,000 and sells it for ₦48,000. That looks like ₦3,000 profit. But transport costs ₦1,500, loading and other expenses take another ₦1,000, and sometimes customers get discounts. What is left? Maybe ₦500, or even a loss. Yet, the owner keeps buying more because that product is always moving. Sales are increasing, but the money left in the business is not growing.
The Product You Ignore May Be the One Making You Money
Meanwhile, another product sits on the shelf for days. Nobody talks about it because it does not sell quickly. But each time someone buys it, the business makes ₦4,000 after expenses. Sell just ten, and that is ₦40,000 profit. The owner may be spending more money and effort chasing the popular product while paying little attention to the one bringing better returns.
From Restaurants to Fashion Shops, Hidden Costs Are Eating Profits
A restaurant may sell plenty of rice every afternoon but make little profit after buying ingredients, cooking gas, packaging and paying delivery riders. A fashion seller may celebrate selling 50 outfits without checking alterations, returns and discounts. Without proper records, how will you know which products are helping your business and which ones are taking away your profit?
Before You Restock This Week, Check These Five Products
Pick your five best-selling products. Check your sales records, buying costs, discounts and other expenses. Calculate what you made from each product. Then compare them with five products that sell less often. This simple analysis may show you where your real profit comes from and where your money is going. Remember, some low-profit products also attract customers who buy other things.
Good Records Show the Problem. Good Analysis Helps You Fix It.
At 9Gains, we want business owners to move beyond guessing and start using their business records to make better decisions. Good record keeping helps you see what happens. Good analysis helps you understand why it happened and what to do next. Do not stop selling a product simply because its profit is small, and do not ignore another because it sells slowly. Know your numbers, protect your profit and grow with better decisions.
“Because when our business partners win, we win too.”
