How to Know if Your Shop Is Making Profit

Your shop is busy. Customers come, money enters the box, and you restock every week. Then rent is due and there is nothing spare. Somewhere between the selling and the paying, the profit disappeared.

Usually the shop is fine. What trips owners up is that "money in the box" and "profit" are two different numbers, and only one of them is yours to keep.

Money and profit are not the same thing

If you sell a bag of rice for ₦1,500 that you bought for ₦1,200, you took ₦1,500 but you earned ₦300. The other ₦1,200 is not yours. It belongs to the next bag of rice you have to buy to keep selling.

This is why a shop can feel busy and still leave you broke. Your cash box fills with money that is already spoken for. Profit is the small part left after the goods are replaced and the bills are paid.

The three numbers you need

You can work out your profit with three things:

1. Cost price. What you paid for one item, not for the carton. If a carton of 12 cost ₦4,560, your cost price is ₦380.
2. Selling price. What you actually sold it for, which is not always the price you meant to sell it for.
3. How many you sold. Not how many you bought. Only what left the shop as a sale.

Most shops know the second and third. The one that goes missing is cost price, and without it no profit figure is possible. Start writing it down at the moment of delivery, on the same line as the quantity.

Work out profit on one item

Take one product and do it by hand once. It makes the rest obvious.

• Cost price: ₦380 per tin
• Selling price: ₦500 per tin
• Profit per tin: ₦120
• Sold today: 14 tins
• Profit from that item today: ₦1,680

Do that for each item you sold and add the results. That total is your gross profit for the day: what the shop earned before rent and the other bills.

Then subtract the costs that only show up monthly

Daily profit still flatters you, because the bills arrive later. Once a month, write down every cost that keeps the shop open:

• Rent for the shop
• Transport to and from the market
• Staff pay
• Fuel, electricity, data
• Repairs, levies, association dues
• What you take out for yourself and your family

Subtract that total from the month's gross profit. What remains is what the shop actually made. Many owners see this number for the first time and understand why the money never seemed to add up.

Five things that quietly eat the difference

When the profit is smaller than the maths says it should be, it is usually one of these:

Selling below your own price. A ₦500 item sold at ₦400 does not lose you ₦100 of sales. It loses you ₦100 of profit, which was only ₦120 in the first place.

Goods that broke, expired or were returned. They cost you money and brought none in. Write them off when they happen so you know what they cost.

Credit that never came back. A sale on credit looks like a sale in your records, but the profit only exists once the customer pays.

Stock that went missing. Every item that leaves without money is pure loss, because you already paid for it. If this is happening in your shop, these are the warning signs.

Money taken from the box during the day. Small amounts for transport, food, or family. It never feels like much, and it never gets written down.

A weekly routine that takes ten minutes

You do not need accounting. You need the same four questions once a week:

1. What did I sell this week, and what did it cost me?
2. What did I collect from people who were owing?
3. What did I spend on the shop, and what did I take for myself?
4. Is there stock missing that nobody can explain?

Write the answers in the same place every week. After a month you will see which items actually carry your shop and which ones just take up space. Usually two or three products make most of the profit, and a few sit there for months tying up money you could be trading with.

Doing it without the arithmetic

Working this out by hand is fine, and plenty of shops do. The arithmetic just has to happen every single day, and that is where it usually stops.

MyShopGuard does the same sums for you. You enter what you paid when stock arrives, record sales as they happen, and the app shows profit for the day next to money taken, so you can see the gap between them. It also flags items sold below your official price, tracks what customers still owe you, and tells you when stock has gone missing and what it cost.

Start here

Pick your five best-selling items and write down what you paid per single unit for each one. That is the number your shop is probably missing, and it takes ten minutes. Next, decide how you will record sales daily, because profit cannot be calculated from memory: how to track daily sales in a Nigerian shop.