Nollywood actor and entrepreneur Williams Uchemba, has urged owners of small and medium-sized businesses to distinguish between actual profit and cash flow.
In a video posted on Instagram on Tuesday, Uchemba emphasized that money invested in a business does not become profit until the initial capital has been recovered.
“If you invest one million naira into a business, you’ve not started making money until that one million naira has returned from customers,” he said.
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He pointed out that many business owners confuse having cash on hand with generating profit.
He noted that this misconception can lead to using up the original capital, leaving them unable to restock their goods.
“That is why bookkeeping is important,” Uchemba added. “If you buy something for ₦2,000 and sell it for ₦2,300, you bring out that ₦2,000 because it’s not your own. Your money there is ₦300. Don’t go and start eating the ₦2,000 thinking you’re making money.”
Uchemba explained that in Igbo, this method is referred to as ‘Isiego’, which teaches entrepreneurs to keep capital and profit separate.
He further noted that poor financial management and failure to keep proper records are major reasons many small businesses fail shortly after starting.
