Businesses rarely die of small profits. They die of running out of cash: money is owed to them, stock is sitting on shelves, and the rent is due today. Financial management is the set of habits that stops that from happening, and it needs a notebook and an hour a week far more than it needs an accountant.
This course covers the difference between profit and cash, the numbers worth knowing by heart, and a weekly routine that keeps you in control.
Why this matters
A business can be profitable on paper and dead in practice. If you sell on credit, buy stock in advance, or pay rent yearly, your money spends long stretches locked up where it cannot pay bills. Founders who track cash see the squeeze coming weeks ahead and act; founders who track only sales meet it as a surprise.
Clean records are also the language funders and banks speak. When Kyros or any backer asks how the business is doing, "here is the sheet" is a different conversation from "business is moving."
The core ideas
- Cash flow versus profit
- Profit is what remains after costs, on paper, eventually. Cash flow is what actually entered and left your account this week. You pay suppliers, staff, and rent with cash, not with profit. Watch both; trust cash.
- Margin
- What is left from each sale after the direct cost of making it. If a bag sells for 5,000 and costs 3,500 in materials and delivery, the margin is 1,500, and that 1,500 must carry every other cost. Know this number for every product you sell.
- The cash conversion cycle
- The number of days between paying for stock and getting paid for the sale. Buy fabric today, sew for a week, wait three weeks for the customer to pay: your money was locked up for a month. Shortening that gap, faster collection, smaller stock, longer supplier terms, is often worth more than more sales.
- Owner's pay
- Pay yourself a fixed, modest amount on a fixed day. Dipping into the till whenever you need money makes the business impossible to read and slowly bleeds it.
The weekly money hour
One hour, same day every week. The structure borrows the separation discipline from Mike Michalowicz's Profit First: give every naira a home before it can wander.
Record everything
Every sale and every expense from the week goes into your book or sheet: date, what, amount. Ten minutes if you do it weekly, a nightmare if you save it for year end.
Split the money
Move money into its homes: operating costs, tax and compliance, your own pay, and a reserve, even a thin one. Separate accounts are ideal; separate columns in a sheet are an acceptable start.
Check the two lifelines
Who owes you, and what do you owe? Chase the oldest debt owed to you with one polite message. Note the bills coming in the next two weeks against the cash you actually have.
Read one number
Each week, look at one number in context: cash in hand versus the same week last month, or margin on your best seller. Trends tell you what a single week's figure cannot.
What this looks like in practice
Take a small provisions shop that restocks monthly. Sales look healthy, but the owner is always broke the week rent is due. The weekly hour reveals why: too much cash is sitting in slow-moving stock, and two regular customers owe a month of credit purchases.
The fixes are unglamorous. She restocks the slow items every two months instead of monthly, caps customer credit at a week, and asks her main supplier for fourteen days to pay, which he grants because she has never defaulted. Nothing about sales changed, but the cash gap closed, because the cycle between paying and being paid got shorter on both ends.
Common mistakes
Running business and personal money through one account. Neither can be understood afterwards.
Selling on credit with no limit and no list. Unwritten debts are donations.
Copying a competitor's price without knowing your own costs. You may be matching someone who is quietly losing money.
Spending the tax and levy money because it is just sitting there. It was never yours.
Treating a loan or grant as income. It is fuel with a purpose, and in a loan's case, it is going back.
Your action steps
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Key takeaway
Watch cash, not just sales. One honest hour a week with your numbers will catch almost every problem while it is still small, and it makes you the kind of founder banks and backers can say yes to.
