3 Money Mistakes Made by Entrepreneurs


Being the boss of your own business means doing your own financial management and it is not easy. One mistake could lead to profit loss –and even bankruptcy. Let's learn from some mistakes made by these female entrepreneurs:

1. Combining Finances for Business and Personal Use

Surprisingly, some entrepreneurs choose to combine their personal money with their business money. Natalia Kian, 22, is a young entrepreneur who is doing just that. She owns a fashion boutique in Surabaya and has one bank account that holds her personal finance as well as her business finance. Her reason for doing this is because her clothing boutique is her main source of income that will be used to pay for her personal expenses anyway.

“My clothing boutique is my full-time work. From there, I get the salary for my personal expenses. To make it easier to manage, I combine all of my money,” she says.

This method should be avoided so that it will not be easy for you to use personal money for business and vice versa. Ewindha, 28, who has built her online shop gotosovie.com since 2008, is doing the opposite of Natalia. Her experience has taught her to separate personal finances from business finances because the management is so much easier.

“Separating these two accounts makes it easier for me to manage costs for my business,” says Ewindha.

2. Not Having Sufficient Emergency Funds

Another thing that an entrepreneur must have is sufficient emergency funds. Ewindha claims to have an emergency fund five times the amount of her monthly expenditures. Her living expense per month is Rp 5 million, so her emergency fund amounts to Rp 25 million. She says that this emergency fund is very helpful, especially during periods of slow business.

“Being in the bag business means that my monthly income is fluctuating. My emergency fund helps me during periods in which sales are low,” she says.

Ewindha adds that emergency funds should be placed in a bank account on its’ own and that it should not be tampered with. She even suggests placing the money into an account that offers free administration fees and without an ATM card.

“I chose to save my emergency funds in a shariah account that does not apply administration fee and also not to take the ATM card. By doing this, I can maintain the balance in my account.”

3. Miscalculating Cost of Business Development

This is another big mistake entrepreneurs can do. Ewindha has experienced this – when she tried to expand her business from online to offline.

“The money needed to build an offline business, from renting a place to decorating the interior, was a lot. It required so much capital that I decided to postpone the plan and collect more money from my online business,” she says.

Unlike Ewindha, Natalia made an effort to ask for people’s opinions first when thinking of developing her business. Initially, she had intended to expand her store to Jakarta. However, based on the budget she had made, her parents –who are also entrepreneurs– deemed it to be too small and so Natalia was advised to first focus on developing her business in Surabaya.  

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