Simple Bookkeeping Best Practices for Your Nigerian Small Business

Imagine this: You’re driving your trusty Keke Napep (that iconic Lagos tricycle), hustling to get passengers where they need to go. You know how much fuel you bought, how many fares you collected, and maybe even how much you spent on repairs. That’s basic tracking, right?

Now, imagine trying to grow your Keke business. Maybe you want to buy another one, hire a driver, or even expand to a small fleet. Suddenly, just remembering the day’s fares isn’t enough.

You need a clearer picture of your income, your expenses, and whether you’re actually making a profit to achieve those dreams.

That, my friend, is where bookkeeping best practices come in for your small-scale business in Nigeria. Think of good bookkeeping as the well-maintained logbook for your business journey.

It helps you understand where your money is coming from, where it’s going, and if your business is moving in the right direction!

Why Bother with “Bookkeeping Best Practices”? Isn’t Any Record Good Enough?

While scribbling down numbers on a piece of paper might seem convenient, following simple bookkeeping best practices offers HUGE advantages, especially as your business grows:

1. Clear Financial Picture: You’ll know exactly how much money your business is making and spending. No more guessing games!
2. Better Decision-Making: Want to invest in new equipment or hire more staff? Good records help you see if you can actually afford it.
3. Easier Tax Time: When tax season rolls around (remember FIRS!), having organized records makes filing much smoother and less stressful. You can also identify eligible deductions.
4. Spotting Problems Early: Are your expenses suddenly higher? Are customers taking longer to pay? Good bookkeeping helps you see these red flags before they become major issues.
5. Tracking Growth: You can see how your business is performing over time and measure your progress towards your goals.

Think of it like this: A Keke driver who meticulously tracks their fuel costs and fares can quickly see if a particular route is profitable or if they need to adjust their pricing. Without that tracking, they’re driving blind!

Our Simple Illustration: Mama Ada’s Buka

Let’s say you run a small “buka” (local eatery) in Lekki, just like Mama Ada. She serves delicious jollof rice, pepper soup, and other local favorites. Here’s how Mama Ada can apply bookkeeping best practices simply:

1. Keep Business Money Separate from Personal Money:

• The Practice: Have a separate bank account (even a simple one) and a separate mobile money wallet just for your buka. Don’t mix your personal “owo” with the business “owo.”
• Mama Ada’s Way: Mama Ada has a dedicated “buka account” on her phone’s mobile money app. All customer payments go in there, and all business expenses (buying ingredients, paying her helper) come out of it. Her personal money stays separate.
• Why it’s Best Practice: Makes it crystal clear what money belongs to the business and simplifies tracking income and expenses.

2. Record Every Income (Sales!) Immediately:

• The Practice: Every time you make a sale, write it down right away. Include what you sold and how much you earned.
• Mama Ada’s Way: Every time a customer pays for food, Mama Ada (or her helper) jots it down in a simple notebook: “Jollof – ₦500,” “Pepper Soup x2 – ₦1200,” etc. At the end of the day, she totals it up.
• Why it’s Best Practice: Ensures you don’t forget any sales and gives you an accurate picture of how much money your business is bringing in.

3. Track Every Expense (What You Spend):

• The Practice: Keep records of everything you spend on your business, no matter how small. Get receipts whenever possible. Note what you bought and how much it cost.
• Mama Ada’s Way: Mama Ada keeps all her market receipts for rice, tomatoes, meat, spices, etc. She also notes down how much she spends on gas for cooking and the small daily wage she pays her helper.
• Why it’s Best Practice: Helps you see where your money is going and identify areas where you might be able to save. Plus, many business expenses are tax-deductible!

4. Keep Your Records Organized (Simple Systems Work Best):

• The Practice: Don’t just have scattered pieces of paper. Use simple methods to keep your records tidy.
• Mama Ada’s Way: Mama Ada uses:
  • One notebook for recording daily sales.
  • One envelope to keep all her expense receipts organized by week.
  • She even uses a simple spreadsheet on her phone to enter the daily sales totals and major expenses at the end of each week.
• Why it’s Best Practice: Makes it easy to find information when you need it, especially when you’re reviewing your finances or preparing for taxes.

5. Review Your Records Regularly (Don’t Wait Until Year-End!):

• The Practice: Take some time regularly (weekly or at least monthly) to look at your income and expenses.
• Mama Ada’s Way: Every Sunday evening, after the busy week, Mama Ada sits down with her sales notebook and expense envelope. She looks at how much she earned, how much she spent, and if she made a profit that week.
• Why it’s Best Practice: Helps you understand your business’s performance, identify trends, and make necessary adjustments before small issues become big problems.

Simple Tools to Get Started (No Need for Fancy Software Yet!)

You don’t need expensive accounting software right away. Here are some easy-to-use options for Nigerian small businesses:

• Notebook and Pen: The classic and reliable method, just like Mama Ada!
• Simple Spreadsheets (Google Sheets, Microsoft Excel): Great for organizing numbers and calculating totals. Many free templates are available.
• Mobile Apps: Many free bookkeeping apps are available for smartphones that allow you to record income and expenses on the go. Just search “free bookkeeping app.”
• Mobile Money Apps: If you’re using mobile money for transactions, review your transaction history regularly.

The Takeaway: Start Simple, Stay Consistent

Implementing bookkeeping best practices doesn’t have to be complicated. Start with these simple steps, be consistent with your record-keeping, and you’ll gain valuable insights into your business’s financial health.

Just like a well-maintained Keke Napep runs smoothly and helps you reach your destination, good bookkeeping will steer your Nigerian small business towards growth and success.

Need help setting up a simple bookkeeping system or understanding your business finances better?

At Alphajane Solutions, right here in Lekki, Lagos, we’re passionate about empowering small businesses like yours. Contact us today for a chat!