Business Sustainability and Financial Management Based on the Economic Entity Concept in Farming Enterprises

Wirda Tul Zanah; Yulfita  Aini; Makmur

doi:10.0000/JMEBIS.v1.i1.a58

Authors

Wirda Tul Zanah Management Study Program, Faculty of Economics, University of Pasir Pengaraian, Indonesia Author
Yulfita Aini Management Study Program, Faculty of Economics, University of Pasir Pengaraian, Indonesia Author
Makmur Management Study Program, Faculty of Economics, University of Pasir Pengaraian, Indonesia Author

DOI:

https://doi.org/10.0000/JMEBIS.v1.i1.a58

Keywords:

Business sustainability, financial management, economic entity concept, farming enterprise

Abstract

This study examines the sustainability of farming enterprises and their financial management practices through the lens of the Economic Entity Concept in Rambah Utara Village, Rokan Hulu Regency, Riau Province, Indonesia. Smallholder rice farmers commonly merge personal and business finances, a practice that obscures financial performance and threatens long-term business viability. Using a descriptive qualitative case-study approach, data were collected through in-depth interviews with 20 farmer informants, direct field observation, and documentation, then analyzed following the interactive model of Miles, Huberman, and Saldana — data reduction, data display, and conclusion drawing — assisted by Atlas.ti software. The findings show that most farmers have not applied the Economic Entity Concept optimally: harvest proceeds are generally used interchangeably for household and farming needs without systematic recording, financial planning remains reactive, and financial reporting and accountability are largely informal. Nevertheless, farmers who practiced even rudimentary separation of funds reported greater ease in controlling expenditure, securing capital for the next planting season, and understanding their farm's financial position. Low financial literacy, entrenched habits, limited and fluctuating harvest income, and the absence of mentoring or simple recording tools were identified as the main barriers to adoption. The study concludes that stronger application of the Economic Entity Concept is positively associated with farm business sustainability, particularly in strengthening risk resilience and long-term planning capacity. The findings support the development of simple bookkeeping tools and targeted financial-literacy training for smallholder farmers, and offer implications for village governments, extension agencies, and academics engaged in agricultural accounting and small-enterprise sustainability research.

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