BUSINESS GROWTH
How to know if your business is actually making profit
Profit is revenue minus expenses minus cost of goods sold. If you are not tracking all three separately, every day, you do not know whether your business is making money you only know money came in. TunedBooks calculates this automatically and shows it on your dashboard by day, week, and month.
In this article
Why your shop is busy but you are broke
This is the most common complaint from small business owners across Nigeria, the UK, India, and everywhere else: "Customers are coming. Sales are happening. But at the end of the month there is nothing left."
The problem is almost never that sales are too low. It is that the owner is watching revenue total money in and assuming that number represents earnings. It does not. Revenue is the top line. Profit is what remains after everything else is subtracted, and "everything else" is usually larger than people think.
A market trader in Wuse who sells ₦500,000 of goods in a month feels successful. But if the goods cost ₦420,000, rent was ₦30,000, and transport was ₦25,000, the actual profit was ₦25,000. That is a 5% margin. One bad week wipes it out. An eBay seller in Manchester turning over £3,000 a month might net £400 after platform fees, packaging, postage, and stock costs.
Neither of them knows this unless they are tracking three numbers separately. Most are tracking zero of them.
The profit formula: three numbers, nothing else
That is the entire formula. Three inputs, one output. Everything in business finance is a variation of this line. Here is what each one means in plain language:
Revenue is every naira, pound, or dollar that came in from sales. A POS withdrawal commission, a product sale, a service fee, an online order all revenue. This is the number most business owners already know because it is the one that feels good.
Expenses are the costs of running the business that are not directly tied to a specific sale. Rent, electricity, transport, phone credit, staff wages, marketplace subscription fees, packaging supplies. These happen whether you sell one item or one thousand.
Cost of goods sold (COGS) is what you paid for the specific items you sold. If you bought a shirt for ₦3,000 and sold it for ₦5,000, the COGS is ₦3,000. If you run a restaurant, COGS is the cost of the ingredients in the meals you actually served, not the ingredients sitting in the fridge.
The most common mistake: confusing "money in my account" with profit. Money in the account includes stock you bought, expenses you have not paid yet, and revenue from goods you have not received. Profit is a calculation, not a bank balance.
A worked example with real numbers
A retail shop owner in Lagos records these numbers for one week:
| Category | Amount |
|---|---|
| Total sales (revenue) | ₦185,000 |
| Cost of goods sold | ₦128,000 |
| Rent (weekly share) | ₦12,500 |
| Transport | ₦4,200 |
| Phone and data | ₦1,800 |
| Staff lunch | ₦3,500 |
| Total expenses | ₦22,000 |
| Profit | ₦35,000 |
₦185,000 came in. ₦35,000 was actually earned. That is a 19% margin healthy, but the owner who only checks "how much did I sell today" would think they earned ₦185,000. The gap between the two numbers is where businesses silently fail.
Now imagine COGS rises by 5% because a supplier raised prices. The same revenue produces ₦28,600 profit instead of ₦35,000 an 18% profit drop that the owner would never notice without tracking cost of goods separately. By the time it shows up as "where did my money go?" at month end, four weeks of eroded margin are already gone.
Stop guessing. See the real number.
TunedBooks calculates profit automatically from your sales and expenses.
Why daily matters more than monthly
Checking profit once a month is like checking your speed once per journey. By the time you see the number, the damage is done. A bad supplier price ran for four weeks. An expense category doubled and nobody noticed. A product that sells well on revenue was actually losing money per unit after fees.
Daily profit visibility changes behaviour in three ways:
You catch problems within 24 hours. A supplier raised prices on Tuesday. By Wednesday you see your margin drop. By Thursday you have renegotiated or switched. Without daily tracking, you discover this on the 30th.
You see which days and products are profitable. Saturday might be your highest-revenue day but your lowest-profit day because of weekend staffing costs. A particular product might sell fast but carry a 3% margin after marketplace fees. You cannot fix what you cannot see.
You stop making decisions based on feelings. "Business is good" is a feeling. "I made ₦4,200 profit yesterday, which is below my ₦5,000 daily target" is a fact you can act on.
How to track profit without a spreadsheet
The reason most small business owners do not track profit daily is not laziness it is that the traditional way of doing it requires a spreadsheet, a formula, and fifteen minutes of data entry at the end of each day. For a trader who just spent ten hours serving customers, that is fifteen minutes too many.
TunedBooks does the calculation automatically. You record each sale at the point of sale one tap, under ten seconds. You log expenses as they happen. TunedBooks already knows the cost price of each product from your inventory. It runs the formula in real time and shows the result on your dashboard.
Open the app, and the first thing you see is your profit. By day, by week, by month. No formula to build. No column to remember. No end-of-day reconstruction from memory.
If you sell on Shopify, eBay, Vinted, or Chowdeck, those sales sync in automatically including the platform fees, which go straight into expenses. The profit calculation includes everything, from every channel, without you touching a spreadsheet.
The number that matters is not what came in. It is what stayed.
Free to start. No card required.
Frequently asked questions
What is the difference between revenue and profit?
Revenue is the total money that came in. Profit is what remains after you subtract all expenses and the cost of the goods you sold. A business can have high revenue and zero profit if expenses are equal to or greater than income.
How do I calculate profit for my small business?
Profit equals revenue minus expenses minus cost of goods sold. Revenue is everything you earned from sales. Expenses are rent, transport, salaries, and other operating costs. Cost of goods sold is what you paid for the items you sold. The result is your net profit.
How often should I check my business profit?
Daily. Checking profit once a month is like checking your speed once per journey. By the time you notice a problem, the damage is done. Daily profit visibility lets you catch issues within 24 hours a bad supplier price, a product selling below cost, an expense that spiked.
Can I track profit on my phone?
Yes. TunedBooks calculates profit automatically from your recorded sales and expenses. It shows profit by day, week, and month on the dashboard. It works offline and is free to start with 20 transactions per month.
My shop is busy but I have no money why?
High revenue with no cash usually means one of three things: your margins are too thin and costs eat everything, expenses you are not tracking are draining the account, or you are reinvesting profit into stock without realising it. The fix starts with separating revenue from profit and tracking both daily.