ENTREPRENEURSHIP

BY: GROUP 5

ASRI SEKAR MIRA

IVA OCRI R RAMLI

KHAIRUN NISA

RIZKIYAH NADHIROH

YOGI ILHAM

ENGLISH DEPARTMENT

LANGUAGE AND ART FACULTY

UNIVERSITAS NEGERI PADANG

2019
 TOPIC FIVE

HOW TO GET CAPITAL AND FINANCE SUPPORT

A. Definition of Capital and Finance Support

1. Capital

Capital is the financial assets which are used to pay for the business needs to start-up the
cost of pre-investment, the management of licenses, the cost of fix assets, and the cost of
working capital. The cost of pre-investment includes preparation of building a company, for
example the cost of field survey, licenses, and many more. Then, an entrepreneur will use the
capital to operate a business and as a tool to do some activities. For working capital it
depends on the level of business that will be run. If the business is smaller we will need
smaller working capital. If the business is medium to big the cost will increase. In a general
term, capital is money to run a business. Capital also serves as a support for succeeding a
business. In a more specific way, capital is classified not only as money but as the resources.
The resources can be from the skill resources, the resources of knowledge and willingness.
The resources are the primary sources that an entrepreneur should have before an
entrepreneur runs a business.

Some considerations that are needed if you want to determine some amount of capital:

 The purpose of business

The company needs to think whether the loans can be used for capital investment
or working capital, or whether it can be used for primary capital or additional
capital, or even it can be allocated for urgent needs or not.
 The return of capital period
For the company, the period of returning the loans back to the creditor (bank) is
also vital to be considered to ease up the cash flow of the company.
 The expenses
Because the expenses can influence selling price and the profit, the company
should consider the expenses that have to be spent on, for example: The expenses
being spent on the interest cost, administrative cost, provision fee and tips, and
many more.
 The profit estimation
 The rate of profit that will be gained in the future will determine your decision in
gaining some loans.
2. Finance Support
Financing is the process of providing funds for business activities, making purchases, or
investing. Financial institutions such as banks are in the business of providing capital to
businesses, consumers, and investors to help them achieve their goals. The use of financing is
vital in any economic system because it allows companies to purchase products out of their
immediate reach. There are two main type of financing.
 Debt
Debt is a loan that must be paid back often with interest. It is a common form a
financing for new businesses. It can be from bank loans or more mortgages.
 Equity.
Equity is investing our own money or funds from other stakeholders, in exchange
for partial ownership.

However, both of debt and equity have some of advantages and disadvantages.

Type Advantages Disadvantages

Debt  You retain full control of your  The loan must be paid back
business. within a fixed time period.
 The interest on the loan is tax  Loan repayments will
deductable. commence shortly after the
 The loan can be short or long loan is approved.
term.  The loan is often secured
against collateral which may
include assets of the business
or the owner’s property.
 It can be difficult to grow the
business because of the cash
drain of repaying the loan.

Equity  Less risky than a loan as the  The investor(s) will want some
investment does not need to be ownership or controlling
 paid back immediately.
 You’ll have more cash on hand
as profits do not have to be
used to repay loan.
 The investor(s) can provide
additional credibility and skill
sets to your business.
interest of your business and
will have a say in business
decisions.
 It takes time and effort to find
the right investor for your
business.

B. Types of Capital
1. Willing Capital, Ability, and Knowledge
Someone who succeeded in becoming an entrepreneur was caused by having the
will, ability, and knowledge. There is a will, but it does not have the ability, it will be difficult
to develop and succeed. Conversely, having knowledge and abilities, but not accompanied by
will, it will not materialize as an entrepreneur. To be an entrepreneur, there must be a strong
determination, a high urge to try to do it. Determination, intention, and motivation or called
will is the main capital that must be there for the first time.
Willingness and determination are not enough, but also must be equipped with
abilities (skills), because they face challenges and risks. If the capital is only reckless or
speculative without having the skills to calculate risk, what is faced is failure. Therefore,
there are several entrepreneurial skills that must be possessed, including:
1. Conceptual skills in managing strategies and calculating risks
2. Creative skills in creating added value
3. Reliability in leading and managing
4. Communication and interacting skills
5. Business skills that will be carried out
The level of willingness, ability and knowledge is known as entrepreneurial
competence. This is as stated by Michael Harris (2000: 19)
"Successful entrepreneurs in general are those who have competencies, namely those who
have the knowledge, skills, and individual qualities which include attitudes, motivations,
personal values and behaviors needed to carry out work / activities"
 Thus, knowledge knowledge alone is not enough, but also must be accompanied by
managerial skills, conceptual skills, skills to understand and understand, communication and
related skills, skills in formulating problems and ways of acting, skills in formulating
problems and ways of acting, regulating skills and use time, and other specific technical
skills.

2. Entrepreneurial Employee Capital

In. Entrepreneurship, capital is not always identical to tangible material capital,
such as money and equipment, but also involves intangible capital such as human capital
(Suryana, 2003: 73) which consists of the following:
a. Social Capital
b. Intellectual Capital
c. Mental and Moral Capital
d. Capital Motivation

a. Social Capital
Social capital is the main human capital that a person must have before other
capital. Social capital consists of honesty, trust, and commitment. Honesty, trust, and
commitment (keeping promises) are the main capital that can improve the image. A person
who has high social capital usually has entrepreneurial ethics which includes the following:
1. Honest
2. Have integrity
3. Occupy a promise
4. Loyalty
5. Fairness
6. Likes to help others
7. Respect for others
8. Good and law-abiding citizens
9. Chasing excellence
10. Be responsible
Honesty, integrity, and the accuracy of promises are social capital that can foster
trust from time to time, and can give birth and increase material capital.
b. Intellectual Capital
The second human capital is intellectual capital. According to Stewart T.A (1997),
intellectual capital consists of competence, commitment, ability, responsibility, knowledge,
and skills (abilities) which can be described as follows:

Skiil x Knowledge

Capability x Authority

Competency x Commitment

Intellectual Capitals

c. Mental and Moral Capital

Entrepreneurs must have superior mentality, not mental standards or mentality, as
long as they are available, as long as they are sold, as long as they are money and so on.
However, entrepreneurs must be mentally superior, like better, more valuable, more useful,
easier, more qualified. Mental capital and courage must be balanced with moral capital.
Moral capital is belief and trust.

d. Capital Motivation
Motivational capital is an encouragement or passion for progress. Motivation is
human capital for everyone to continue to live and advance. The success or failure of
entrepreneurship is very dependent on the high or low motivation of entrepreneurs.
Businesses that lack enthusiasm or are full of doubts will make a failure.
Besides being based on sources, capital can also be divided into several types. Such
as the type of capital according to form and also the type of capital based on function. Based
on the nature, capital consists of two types, they are:
1. Concrete Capital (Active Capital)
As the name implies, concrete capital is a type of capital that can be seen directly by
the eye. This type of capital can be in the form of places, raw materials for production,
machinery, or warehouses.

2. Abstract Capital (Passive Capital)

Opponents of concrete capital are abstract capital or invisible capital. But even
though it is not visible, abstract capital is a type of capital that can provide benefits for the
sustainability of the company. Examples of abstract capital are copyright and establishment
rights.
Based on the function, capital also consists of two types, namely individual capital
and social capital. The difference between the two is:
1. Individual Capital
Individual capital is capital owned by someone who functions to facilitate all
activities and provide benefits to the owner. Examples of individual capital are private
homes, homes, deposits, shares and others.
2. Social Capital
In contrast to individual capital, social capital is a type of capital owned by a group
of people where this capital has a function and provides benefits to the community in general
in carrying out production activities. Examples of social capital are markets, highways, ports
and others.
3. Own capital
Definition of own capital is capital obtained from the business owner itself. Capital
consisting of savings, donations, family grants and so on. The excess of own capital is
• There is no ordinary example of interest costs or administrative fees so that it cannot be a
burden on the company.
• It does not depend on other parties, meaning that there are funds from the capital owner's
deposit
• Does not require a requirement that is quite complicated and also takes a relatively long
time.
• There is no obligation to control capital, meaning that the capital invested by the owner will
be embedded for a long time and there is also no problem if the owner of the capital wants to
transfer it to another party.
Lack of own capital is
• The limited number of means for obtaining a certain amount is very dependent on the owner
and also a sufficiently limited amount
• The acquisition of own capital in a certain amount from prospective new owners
(prospective new shareholders) is difficult because they can consider their performance and
business prospects.
• Lack of motivation from the owner, meaning that business owners who can use their own
capital are less motivated when compared to utilizing foreign capital.

4. Loan capital
Foreign capital or loan capital is capital that is often obtained from outside parties
that are generally obtained from loans. The size of the capitalized capital is an unlimited
number, meaning that it is not available in large quantities. Besides that, using loan capital
generally arises from the motivation of the management to work on the business seriously.
Sources of funds from foreign capital that can be obtained from:
• Loans from the banking world, both from private banking and also from the government or
foreign banks
• Loans from financial institutions such as pawnshops, venture capital, leasing insurance,
pension funds, and cooperatives and also about other financial institutions.
• Loans from non-financial companies

The advantages of loan capital are:

• The amount is unlimited, meaning that companies can apply for capital from loans to
various sources. As long as the funds submitted to the company deserve to get funds are not
too difficult. Many parties are trying to offer funds to companies that are considered to have
bright prospects.
• High business motivation. This is the right thing from using your own capital. If using
foreign capital, the motivation of the owner to apply for a business is high, so it can be caused
by the burden on the company to control the loan. In addition, the company can also maintain
the image and also the trust of the companies that give loans so that they are no longer
polluted.
Lack of Loan Capital
• Can be charged for fees such as interest and administrative fees.
• Must be returned in the agreed time period.
• Moral burden. Companies that experience failures or social problems can result in losses
that can impact loans so that they can become a moral burden on debts that have not been
paid or will be paid.

C. Capital Sources

The capital sources are divided into two kinds, they are original financing from inside
(internal) and from outside (external)

 Internal financing from various sources in the company:

1. Profits, immediately made capital in the early years.
2. Selling assets, selling assets that are rarely used.
3. Reduction of working capital
4. Delaying the cost of accounts receivable, depending on the initial years needed, the
investor will not collect money at that time.

 External financing issued from outside the company. External funding sources that are
often used:

1. Yourself
This is the cheapest fund to start a business, besides that your own capital can be
financed from outside, investors or banks. Personal funding sources: savings, life insurance,
cars, homes.

2. Family and friends

Funds obtained from family and friends are relatively easy but there are positives
and negatives. If you hold equity then friends and family have a position in the business and
all rights in that position. That will give negatives to employees, facilities, profits, and sales.
Positive, family and friends are investors who are most patient in asking for help with their
investments.
3. Commercial bank
Funds provided by banks can be in the form of loans. Types of bank loans:

a. Loan Receivables
Receivables are our property which is still in the hands of another person or party, whether in
the form of money or sales that have not been paid in full. Receivables can be a good basis
for loans. If consumers are eligible to get credit, a bank can finance up to 80 percent of the
value of the receivables.

b. Inventory loans
Inventory is another type of asset from the company that is the basis of the loan. Usually the
inventory can be used as collateral for the value of money up to 50% of the original value.

c. Equipment loan
Equipment can be used to get long-term financing, usually 3 to 10 years.

d. Real estate loans

Used in asset based financing. This financing is obtained to change 75% of the factory or
building land into loan funds.

1. Limited partnership in the field of research and development (research and development
limited partnership).
This financing seeks investor protection for taxes. The agreement involves sponsoring
companies that develop technology with funds provided by individual investors and limited
partnerships
 D. The Advantage and the Disadvantage of Capital
Advantages of Personal Capital
 There are no fees such as interest
fees or administrative fees so that
it is not a burden on the company.
 Independent, the acquisition of
funds is obtained from the deposit
of the capital owner
 Without complicated requirement
and long time-consuming
 There is no obligation to repay
the capital, it is means that the
capital invested by the owner will
take a long time and the owner of
the capital can transfer it to other.
The advantages of loan capital
 the number is unlimited
 high business motivation
Disadvantages of Personal Capital
 The limited amount:; a certain
amount depends on the owner and
the amount is limited
 The acquisition of a certain
amount of own capital from
prospective new owners
(prospective new shareholders) is
more difficult because
performance and business
prospects.
 Lack of motivation, meaning that
business owners who use their
own capital are more flexible than
using foreign capital.
The disadvantages of loan capital
 subject to various fees
 loans must be returned
 capital burden
 D. Summary

Capital is something that is needed to finance the company's operations from standing to
operating. Capital consists of money and energy (expertise). Capital in the form of money is
needed to finance all business needs, starting from pre-investment costs, arranging permits,
investment costs for the purchase of fixed assets, up to working capital. while expertise
capital is needed to manage or run a business.

Capital requirements for doing business consist of two types, they are:

1. Investment capital
2. Working capital

Investment capital is used for long and repetitive periods and it is usually more than one
year old. The use of investment capital for the long term is used to buy fixed assets, such as
land, buildings, machinery, equipment, vehicles, and other inventories. On the other hand,
working capital is capital used to finance the company's operations when the company is
operating.

Types of capital seen from the source are as follows:

1. own capital, consisting of:

 capital deposit (shares)
 profit reserve
 profit that has not been shared
 donation capital
 grant
2. foreign capital (loans), consisting of:
 loan from banks
 loans from other financial institutions
 loans from non-financial companies
The advantages and disadvantages of each capital are as follows:

1. the advantages of personal capital are:

 no fee
 not dependent on other parties
 does not require complicated requirements
 there is no obligation to return capital
2. the disadvantages of personal capital are:
 the number of those who were seized
 the acquisition of own capital in a certain amount is difficult
 lack of owner motivation
3. The advantages of loan capital are:
 the number is unlimited
 high business motivation
4. the disadvantages of loan capital are:
 subject to various fees
 loans must be returned
 capital burden
 Topics for discussion

1. What is working capital?

2. What is investment capital?
3. Which is better, having a debt or sharing equity?
4. Which is cheaper, debt or equity?
5. What does negative working capital mean?
Judul : Wawancara lapangan

Date : February 19th 2019

Address : Jl. Belibis, Ait Tawar Barat, Padang Utara, Padang, Indonesia

Telp Number : 082385551817

Group five had done a visit field to JUWITA GALLERY’s shop, located in Belibis St.
So, our group went to the shop and met to the owner named Rahmi Juwita who still young
and has her own clothing business. Our group did an interview to the entrepreneur by asking
some questions related to our topic, which is about “HOW TO GET CAPITAL AND
FINANCE SUPPORT “.

As a result from doing an interview with Rahmi Juwita, the owner of a clothing store
named Juwita galerry. She started a business since she was in college, with strong intentions
and beliefs, she is able to run a business that starts from scratch, until her shop has many
customers like now. Initially, she only did business through online, from social media such as
BBM, Instagram, Facebook, Line, etc. until finally he was determined to open his own
clothing store in the UNP campus area.

Talking about capital, to open a store is not an easy thing, starting from convincing
her parents, looking for a strategic place to start her business, capital and financial support,
and many other things.

In establishing her business, she obtained financial support from his family, borrowed
money from his father and brother. She did not borrow through banks or other shares. "The
time has entered its third year, and progress from sales has increased every month," she said.
She doesn't have enough investment capital, but he has a large working capital. Therefore he
was able to survive until now. Working capital in running a business is very important,
because without the working capital the business we run will be in vain. In addition, Rahmi
Juwita is a businesswoman who has a strong working capital.
Lampiran 2

Documentations
 RESOURCES

Hisrich, R. D., 2013. Entrepreneurship. New York: McGraw-ahill.

Hisrich, R. D., Peters, M. P., & Shepherd, D. A. 2008. Entrepreneurship Kewirausahaan

Edisi 7. Jakarta: Salemba Empat.

Ireland, R. Duane and Barringer. 2015. Entrepreneurship: Successfully Launching New

Ventures. US: Pearson.

Kasmir. 2002. Kewirausahaan-Edisi Revisi. Jakarta: PT. Raja Grafindo Persada.

M, M. Hendro., Ir. 2011. Dasar-Dasar Kewirausahaan. Jakarta: Erlangga.

Suryana. 2014. Kewirausahaan Kiat dan Proses Menuju Sukses. Jakarta: Salemba Empat.