Williams Uchemba, the Nollywood actor and entrepreneur, has offered business advice to small and medium-scale entrepreneurs on the importance of effective financial management.
In a video he posted on Instagram on Tuesday, Uchemba explained that many business owners often confuse cash flow with profit. According to him, this mistake has caused many small businesses to fail because the owners unknowingly spend their capital, leaving nothing to reinvest.
The actor, who is also the founder of Prosthesis Entertainment and the Williams Uchemba Foundation, noted that investing money into a business does not automatically mean profit. He said profit only begins after the money initially invested in the business, known as capital, has been fully recovered.
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Using an example, he stated, “If you invest one million naira into a business, you’ve not started making profit until that one million naira has returned from customers. Anything you make before then is still part of your capital.”
He further explained that proper bookkeeping helps entrepreneurs to track their cash flow and identify the difference between capital and profit. Uchemba warned that many people run into financial trouble because they use all the money from sales without setting aside their capital.
He illustrated with another example, “If you buy something for ₦2,000 and sell it for ₦2,300, you are expected to separate that ₦2,000 because it is still your capital. The actual money you made from the transaction is ₦300. Don’t go and start spending the ₦2,000 thinking it is profit.”
Uchemba added that in the Igbo language, this practice is known as “Isiego”, which means separating capital from profit. He stressed that ignoring this principle is one of the major reasons small-scale businesses collapse in Nigeria.
The actor urged business owners to take record-keeping seriously and learn how to manage their money properly, as this would help them sustain and grow their businesses over time.
