Actor and business mogul Williams Uchemba has relayed a crucial message to owners of small and medium enterprises.
He clarified the distinction between cash flow and profit.
In an Instagram video posted on Tuesday, Uchemba emphasized that investing money in a business does not equate to making a profit until the initial capital is completely recouped.
“If you put one million naira into a business, you haven’t really started earning until that one million naira is returned by customers,” he articulated.
He went on to say that many business owners mix up managing cash with achieving profit, a misunderstanding that often results in tapping into their initial investment and ultimately running out of resources to replenish inventory.
“This is why keeping accurate financial records is vital,” he continued. “If you purchase something for ₦2,000 and sell it for ₦2,300, you need to take out that ₦2,000 because it’s not profit. Your real gain is ₦300. Don’t be tempted to spend the ₦2,000 thinking it’s profit,” he cautioned.
He noted that, in the Igbo language, this principle is called ‘Isiego’, which signifies the separation of capital from profit.
Uchemba, who also operates Prosthesis Entertainment and the Williams Uchemba Foundation, emphasized that poor financial stewardship and neglecting proper bookkeeping are significant reasons why many small businesses fail in a brief span.