Today's Topic: Capital Investment.

I personally started out as small as possible, and when I first started business I went out
and I worked very hard and I took all my money that I started with and I just tried my best to turn it over.

I lived very frugally myself personally, with my family until I got the business going.

So nowadays with the equipment and tools you're going to probably need at least $10,000.
1. Figure out what you need.
You don't need the best of everything, you don't need brand new trucks, and that's what
I'm going to tell you right now, don't buy new vehicles - buy something
7 or 8 years old that you can get around in, buy an older van or an older pickup truck,
whatever your business needs. Anything you buy with a motor is going to lose value the minute you pull off the parking lot, even if it's used it's going to lose value.

So don't spend money on new trucks, don't go buy the expensive tools. Buy the tools that you need
but you can always go back and buy better tools after you start making money. You don't want to go broke.

Most businesses do not fail because they don't know how to do the task, whether plumbing, electrical, air conditioning, etc. They know how to do their skill set, they know how to do their job.

They don't know how to run a business.

The business of the business is what fails people.

2. Investors.
Investors is one of those tricky situations, if you got somebody that will maybe do a small family loan or maybe go to the bank, which is what I end up having to do.

I think I ended up borrowing $2,500 (this was like 30 years ago) to buy some equipment
I needed to do this specific job for.

Get the money and pay it back
as quick as you can but do not let no one in my opinion be a partner in your business.
I firmly believe partnership is not the way to go.

But if you need an investor and somebody will loan you that $5,000 that you need, write it up in a contract, get it signed, notarize the legal documents.

3. Bank Accounts
➡️ Operating account. An operating account is one when the customer writes you a check, you're going to put it in the bank.
When you write someone else a check, it comes out of that account. When you're running credit cards, it goes into that account. Any money's coming in and out of the company regardless
of what it is, if it's one dollar or a thousand dollars, it goes in this operating account, and then you have to balance that account out to make sure you're not overspending, you got to keep track of your money's coming in and coming out.

Four Terms to Learn:
1️⃣ Accounts Payable
2️⃣ Accounts Receivable
3️⃣ Profit & Loss
4️⃣ Balance Sheet

Look at them every week. The balance sheet will help you keep track of money's coming and going, and by doing that, you'll know what you're overspending on.

➡️ Business Savings Account
The business savings account is after you paid all your bills and everything is done... you've taken a salary, (which you want to take as little as possible).

At the end of the month, I would leave a certain amount in my account, and then anything over that amount, I would put into my business savings account. And I'd pull that money in.

Now that's money that hasn't been taxed yet. You still owe the IRS for that money that you're making because we have to pay our taxes every year.

So you want to save that money, so at the end of the year, let's just say you have a $100,000 left over. You pay your taxes on the business savings and then you convert it to retained earnings.
That's your third account.

➡️ Retained Earnings

To me that's the most fun account because now I paid the taxes on this account.
I put this money into my retained earnings account.

Sometimes I left it in my business for a year, or sometimes two years until I found something that I wanted to do with that money.

And then after I got to a certain point and my house was paid off,
I had no car payments, I was debt-free, which we're going to talk about being debt-free.

I bought real estate. I bought investments.

I did my 401K’s I did the Roth’s, but that's what this money is for, it’s for assets.

The 401K's and stuff you'll be paying out of this.

Folks if you have any questions about what bank accounts you need, how you should set up your accounts, what you really should even start with, depending on your business.

Or you want to talk about capital investment a little bit, please leave me a comment.

I'm going to do my best to really help you guys.
I have this passion to get out there and just help society, pay it forward.
That's what I want to do.

If you like this video please share, please subscribe and please comment.

Thank you.
David