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00:00 Hi everyone, welcome back. You're still with us here on The C Morning Show.
00:04 It's 20 past 7 in the a.m. and it's time for our morning discussion.
00:07 But first, some numbers to share with you as a SCATA survey has shown that over 80% of 2020 graduates in Indonesia
00:15 are interested in starting their own business. However, only 25% of them actually go through with it.
00:21 One of the cited factors is the unreadiness in mitigating the risk.
00:28 Therefore, every entrepreneur needs to understand how to manage and organize finances
00:33 effectively to ensure good management and the continuous operation of the business.
00:37 So we're going to find out more about this anomaly and to find out more as well about financial
00:46 planning methods for businesses and joining us here in the studio this morning is financial
00:52 planning analyst, Pak Arif Budiman. Good morning, Pak Arif. Thank you for being here today.
00:56 Hello, thank you for having me. Thank you. Good morning. I love the spirit.
01:01 Yes, so again from the stats, we know that it's about 80 plus percent actually there's a lot of
01:07 young entrepreneurs or youth really want to be an entrepreneur but only 25% is working the top.
01:12 So why is this, you know, the disparity of the percentage?
01:15 Yes, okay. So in this case, we know that most of Indonesia is working as an employee
01:24 and the rest is work as a non-formal sector. So in this condition, we said there are
01:31 several conditions. First, just like as an employee and another is a non-formal employee.
01:38 What is a non-formal sector? Okay, non-formal sector just like pedagang
01:43 and then a business owner, a coffee shop and so on. The most people we see along our way from home
01:50 to our office, for example. Okay, so why this like hesitancy? I mean, they've obviously shown
01:57 that they would like to or you know according to surveys, they say that they want to. Why is this,
02:02 why are they hesitant about, you know, making that next step? Okay, thank you. So there are several
02:06 reasons why people hesitate to start their business. First, they feel they are lack of
02:14 knowledge, they are lack of skill and they are lack of experience. This leads the people to
02:21 hesitate to start their business. They feel if they don't have any skill, knowledge, experience,
02:30 they feel they cannot run the business and cannot maintain and sustain the business in the future.
02:36 Fear of failure, obviously, right? Yes, yes. That makes sense. And then besides that, maybe
02:41 lack access to the capital. Yeah. For those maybe have some amount of capital, but for those who
02:48 don't have some amount of capital. Yeah. In this case, for those who doesn't have amount of capital,
02:56 they are afraid to start their business. Maybe they have the capital for the first venture,
03:02 like for the first year, but then the continuous year, they don't know because sometimes they
03:05 don't can't project. Is this going to, you know, but it's going to prevail or not? But
03:09 is it like a youth, you might not have enough savings as well? Yes, definitely. But we know
03:14 that the youths are very creative. Definitely. And we see that there's a lot of young entrepreneurs
03:19 right now because of their creativity. They can be a great businessman or even businesswoman.
03:24 So with that said, what practical financial planning methods that you can share with us,
03:29 especially for the youth? OK, so to start your business, first, you have to set a clear objective
03:36 of the business. Yeah, you can do with a smart method. Smart start with the specific, measurable
03:44 and then achievable and then a timely and also we can take the business. After that, we define
03:55 what kind of business aspect or strategy you would like to do. For example, if you would like to start
04:02 a coffee shop, you have to know what kind of coffee shop, a high level, mid level or low level.
04:09 After that, you have to make in Indonesia, maybe we call as a RAB, Rencana Anggaran Biaya or a
04:17 budget projection. How many cups of coffee you have to sold? How many amount of number you will
04:24 achieve as a revenue? And don't forget, sometimes people forgot to measure their expense so the
04:33 profit can getting lower. Yeah, that's true because a lot of times some of these aspects,
04:39 you know, it seems like small details, but they're important details. For example, like who's your
04:44 market going to be? That's right. Who do you want to sell to? A lot of people want to open up coffee
04:48 shops. Yes. You know, there's markets for all of these things as well. Now, Caroline also mentioned
04:53 a little bit earlier about capital. Capital is quite important. Not everyone has the savings to
04:59 start their own business, even though they want to. So how does one who is still quite young,
05:04 not much work experience, not much savings, how does one achieve sort of financial independence?
05:10 Or do they always have to, you know, look for some sort of investor? Okay, sure. So if someone
05:16 start with the number of capital, it's good. But how about for those who don't have any capital?
05:22 Right. Yeah, actually, we can start a business maybe with a low or minimal budget. How? Yeah,
05:28 maybe they can offer their skill, their knowledge for with someone who have their own business or
05:35 their sustained business. They offer what is our skill, maybe I have a skill in marketing,
05:42 maybe I have a skill in a brand building and so on. Yeah, after we got the confidence or we got
05:50 the reputation from the business owner, so we can get a small of business. After that, after we get
05:58 a small amount of business, we can start. After we start the business, we can keep our income,
06:05 our revenue or our profit. Yeah, to invest in small amount of investment instrument. But sometimes
06:14 people forgot when their business is getting higher, when the revenue is getting higher,
06:20 they start to upgrade their standard of living. Oh, like personal. Correct. Oh, new cars, new
06:29 everything. But that's coming from their business revenue. Okay. Yeah. Sometimes they cannot divide
06:40 between their personal money and business money. Yeah. So, they feel they got a good cash flow from
06:46 the business. They used to higher their standard of living, but they forgot to watch their business
06:54 sustainability. Right. So, then how can we prepare ourselves, especially for the youth? How can they
06:59 prepare themselves, especially when they're young? They have that urge of, okay, I felt like after
07:04 one year, I'm very successful. Then I want to kind of flex myself to kind of, you know, maybe to target
07:09 more investors. And how can we just be more preserved and be more grounded? Okay. In your
07:15 point. Sure. So, if we get bigger or a better revenue, start to invest in your another instrument.
07:24 For example, separate from the business. For example, you can put your money into the
07:31 financial instrument. After that, you separate the business and I mean, you separate the revenue
07:39 to the financial instrument. And then they are getting bigger or better. But in your business,
07:47 don't forget to identify what aspect or area or kind of business that will develop your business.
07:56 For example, in coffee shop, maybe your coffee is famous or well-known. Identify what kind of coffee,
08:04 what kind of product that generate your revenue. Make focus on that important aspect, so the revenue
08:12 can generate higher. Sometimes people forget to get the famous information or well-known product
08:21 that is by the customer. If condition that happens, so the owner can focus on the business,
08:32 on that product. Yeah. And then of course, if I can just have a follow-up question, sometimes people
08:37 felt like they're already very confident in their product, but they don't remember that there are
08:41 other people that's doing the same business as them. So, research and development has to be
08:46 thorough. And sometimes you just forget about that, right? Correct. Research and development
08:52 currently play an important role. For example, when we start a business, we can invest a small
08:58 amount of money on research and development. What kind of that? Maybe we can put our money
09:05 to the famous coffee shop in our area. We research and analyze what business strategy they did.
09:14 For example, oh, maybe the layout is good. Maybe the variety of product is good. Maybe the variety
09:21 of the service is good. That can be implemented into our business. What are they doing that is
09:28 key to their successes as well? Maybe try to emulate. Okay. Let's use me for an example and
09:33 pretend I'm really young, even though I'm very, I'm not. You're still young, by the way. So,
09:36 I'm a young guy. I have some capital. I have some savings of my own and my parents have also given
09:42 me some money as well. So, now I have this kind of nest egg for me to start. Now, we mentioned a lot
09:47 of things that we can do, right? We can invest in the business itself, research and development.
09:52 But I'm a little bit lost on how to allocate all of this. So, take us through it. Now that I have
09:57 kind of a small chunk of capital, how do we allocate? How much should we allocate for
10:03 all of these different important things? And how do we manage this allocation?
10:06 Oh, in this condition, you have a privilege, right?
10:09 Yes, I'm slightly privileged. Yes, correct.
10:12 You must be a lucky person.
10:13 I must be from South Jakarta.
10:14 Okay. To do the initial business, we have to know what kind of business we would like to build.
10:23 We divide into two. First, business related to service. As we know, in Xpand, we have a capital
10:31 expenditure and also operational expenditure. For the service-related business, the OPEX or
10:40 the operational Xpand can be greater than the capital expense. For example, you build a travel,
10:47 you build a consultant, you only spend a small amount of money to buy just like a table,
10:55 office, but you spend a greater amount of money to build just like brand image, marketing, and so on.
11:03 Meanwhile, on the other hand, for the non-business-related,
11:07 the CAPEX can be greater than the OPEX. Why? Because you should buy a table, you should
11:16 upgrade your business promise, you should buy some coffee machine, you should buy some
11:24 just like sugar, chocolate, and so on. Inventory. Correct.
11:31 All right, that makes sense. Yeah, it's right there.
11:33 Seeing that. And when we're managing it, let's say I'm in my first year now, do we keep that
11:39 sort of ratio going at the same time? Like just continue to put, for example, if I have a coffee
11:43 shop, then I should kind of continue to manage my expenses in that way. Just put more in my
11:48 inventory, upgrade my machines when I need to and things of that sort, right?
11:52 Yes, sure. Because we have to make our business sustain. We upgrade our service,
12:00 our product, our variety range of product, coffee, and so on.
12:04 Okay, makes sense. And definitely that's what we see.
12:06 There's a lot of businesses that close less than a year. Sometimes it's like it's happening only in
12:12 three months or one quarter. Sometimes it's good stuff. Like I see like, oh, this is a cool
12:16 restaurant or food service that I kind of like and then suddenly it disappears in about less than a
12:21 year. That means it's not that it's not a good product or service, it's just badly managed.
12:24 There's that factors that you really need to enhance, especially if we see the micro,
12:28 small, medium enterprises outside of Jakarta, they can sustain for a long time. You know,
12:33 like those ibu-ibu in the rural areas, they could make just chips for 15, 20 years and they're still
12:41 doing it very conventionally. So we can see that also as an example for them.
12:48 Well, that's because a lot of them face risks that they might not foresee. So let's talk a
12:52 little bit about financial risks. What are some of the biggest financial risks that
12:56 entrepreneurs are facing? Okay, so continue from your opinion. So if we see the data, mostly
13:04 only three years one business can be sustained. If they did not maintain, so in the starting
13:13 year of work, their business will be declined. Mostly, average three years the business.
13:19 And connecting to your question, so how we do that? So we have to do the risk management.
13:25 So we identify what kind of risk in our business from internal and also from the external. From
13:33 the internal side, for example, employee quality of our product, pricing and so on.
13:41 And also for the external factor, we see how many competitors around our area. For example,
13:47 for the UMKM condition, maybe if someone who gets a famous product or well-known product,
13:54 not long after that, so many kinds of products. It will kill another business. Sometimes they get a
14:04 business not in good condition. So one business grow, getting eaten by another business. This is
14:12 actually not good. Why is this happening so much? Because this is a long time trend. It's not new,
14:16 by the way. If you go to Puncak, I always make this joke. I always say, if you see one person
14:22 selling Tisang Goreng, fried cassavas, you would see 20 of them in a row. Why doesn't somebody
14:28 just sell a drink instead? Why is this happening? Why do people all follow trends so quickly?
14:35 Yes, sometimes people don't see the effort. They just only see the result.
14:41 Correct. This business is good. This business is famous. How can we do the same business?
14:47 They start to lower the price and then the competition is very hard.
14:53 But as of right now, when we're in an era where everything is here, right? What else can you
14:58 kind of try to make? Like something new. So usually what you're trying to do is what we found
15:04 right now when we're trying to make it into ourselves or evolve into something that's,
15:08 you know, make it your own brand and whatnot. So with that said, you were mentioning before
15:13 that you really have to be very diligent in seeing everything internally and externally.
15:17 So let's say there's this one brand or one product and for this one year, it seems that
15:22 it's just been very, everything is just very consistently average and you want to enhance that.
15:28 Is it okay for, let's say, a company trying to sell a product and maybe they, you know, make the
15:33 pricing more higher or maybe more cheaper? Is that something like a good plan also?
15:39 Yeah. Okay. For this condition, we can see from many kinds of aspects. So we are not only
15:46 focusing on the pricing. Maybe the pricing will be the same, but how about our services we give?
15:52 How about another service? Maybe if you buy some coffee, you can open your laptop, free Wi-Fi,
16:00 free electricity, and so on. But this is also should be managed. Don't be one person,
16:07 buy only one coffee, maybe it's only 10,000 rupiah, but they take a long.
16:14 You're getting three hours of free Wi-Fi.
16:15 Yeah. Well, the thing is, I think the most important thing right now for business is
16:18 marketing strategy. Marketing, especially with social media and whatnot, you have to utilize
16:22 that.
16:22 Definitely.
16:23 Correct. Correct.
16:24 So what advice would you have from a financial perspective for potential
16:29 youthpreneurs out there that are not quite ready to make the next steps just because
16:34 they have financial concerns? What advice would you have for them?
16:36 Okay. Sure. Actually, for this condition, we can capital our business from internally and
16:44 externally. Internally, maybe we can do a saving first for amount of business, or we get the
16:51 source from external, just like crowdfunding, just like angel investor, or just like bank
16:58 loans. But for this, remember, we have to pay some amount of money as a payment.
17:05 Yeah.
17:06 Yeah. So we should calculate the amount we should pay and the amount we will have as
17:13 revenue from our business.
17:14 Right.
17:15 Yeah. Sometimes they have a full of energy, but they forgot to pay their bank loan.
17:22 You're talking directly to me right now.
17:23 Not everyone has a rich dad like me, right?
17:26 Yeah. You have to know about the gain and the risk, definitely.
17:31 Mas Arif, thank you so much for being with us here.
17:33 Thank you. Thank you.
17:33 And kind of breaking this down a little further, because we do know there's so much
17:37 potential, and there's such a huge growing youth. Basically, the number of young people
17:42 in Indonesia, from the last election, you can already tell how many people are now
17:46 voting age. So we hope that a lot of these people can now grow their own businesses as
17:50 well.
17:50 There's always a lot of cake to share, by the way.
17:53 That's right.
17:54 A piece of cake to share. Now we're going to set for another commercial break. When
17:57 we return, we'll bring you the world headlines. So stay tuned right here on The
18:00 C Mooney Show, only on C Today.
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