Apaflo Profits Multiplication Table

Almost every week, i'm inundated with people calling me to say David what can I do to make money? Especially with Nigeria going thro...

Almost every week, i'm inundated with people calling me to say David what can I do to make money? Especially with Nigeria going through a recession/depression.

I always start by asking the following questions:

What are you currently doing?
I'd like to know what you have started doing or what you plan to do. Action action action. Preferably I like people who have started doing something at least.

Can what I am doing scale?
Scale is simply about serving more people with little or no increase in costs. On the average almost every business can scale but there are usually limits. I'd do a subsequent post discussing scaling in detail.

How much of scale do I want?
I'd rather rephrase this as how much of profits do I want?
The Apaflo Profits Multiplication Table (APMT) basically shows how profits multiplied by customers gives you money in the bank! Sell an item with a profit of $1 to 10 people, you make $10. Sell an item of $100 to 1,000 people you have $100,000. As simple as this looks or sounds, when I propose this to people it always sounds unbelievable.

I'd give you an example. A popular local makeup manufacturer (For the purpose of this article, lets call the brand Primus) has annual revenues of about N600m and this popped up in a discussion. The first question that was asked was who uses Primus? There and then, I began to break it down.

An average pack of Primus' products costs N10,000

600m annually means 50m monthly

50m monthly means 5,000 people purchasing one pack per month

Considering that make up is an item that is now a necessity for ladies, you can imagine that a lot of the 5,000 that purchased in month one would also purchase the next month. All things being equal a set of 5,000 loyal customers spending a paltry N10,000 monthly would help this business generate N600m in revenues and guess the population of ladies in Nigeria? Over 50m.

Now you see that Primus is serving just about 0.01% of the addressable market!

The APMT for Primus would look like this:

So there you have it. I want you to think through what you currently have in your hands and ask yourself how you can make it available to more people.

The laws of arithmetic never fail.