turnover
Turnover is the total value of sales a business makes in a period, before any expenses, costs or profit are taken out.
In plain English
Mama Ngozi sells rice and beans by the bag at Mile 12, and when her son asked how business was going, she said proudly, "I moved ₦2 million worth of goods this month." Her son, fresh from his accounting class, asked gently, "Mama, but how much did you actually keep?" She paused, because those were two very different questions.
That ₦2 million is her turnover. It is everything that came through her hands from selling rice and beans, before she pays for the bags she bought from the wholesaler, before she pays the boy who helps her load the truck, before she pays for fuel to move stock, before anything else leaves her pocket.
People mix this up all the time, and it causes real heartbreak. A trader hears her turnover is ₦2 million and feels rich, forgetting that ₦1.7 million of that went straight back out to suppliers and workers. What she actually kept, her profit, might be a much smaller and humbler figure.
It matters just as much for salary earners watching a company from outside. If you hear that a Lagos tech company or a UK retailer had a turnover of ₦500 million or £2 million, that tells you the size of their sales, not whether they are actually making money. A business can have huge turnover and still struggle, if its costs are eating everything.
For someone in London sending money home, understanding turnover helps you ask sharper questions if a relative wants you to invest in their shop or business idea. Ask more than what they sell in a year, but what is left after the dust settles.
Chidi's tailoring shop in Enugu made ₦3.5 million in sales last year, that is his turnover. After fabric, thread, rent and his two apprentices' wages, he was left with ₦900,000 in actual profit, the number that tells him how well the business truly did.
Questions people ask
Is turnover the same as profit?
No, and this confusion costs people peace of mind. Turnover is total sales before any costs are removed, while profit is what remains after paying for goods, staff, rent and everything else the business needed to spend.
Why do businesses talk about turnover if it is not the real profit?
Turnover shows the scale of a business, how much activity and demand it is generating, which matters to banks, investors and suppliers even though it does not show how healthy the business actually is.
Can a business have high turnover but still be in trouble?
Yes, quite easily. A business can sell a lot yet spend even more on costs, rent or debt repayment, leaving little or nothing behind, which is why looking at turnover alone can be misleading.
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