The Void #3 ** Core Episode ** Business Finance Preparation

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[Music]

00:04

hey everybody and welcome to the void a

00:06

show dedicated to filling the void

00:07

between being an employee and becoming

00:09

self-employed

00:11

most people refer to starting your own

00:13

company as taking the leap as if they’re

00:15

blindly jumping off a cliff and into the

00:17

unknown

00:18

this show is here to help you understand

00:20

that it does not have to be that way in

00:23

fact it doesn’t even have to be a leap

00:24

at all it can be as simple as taking a

00:26

few carefully planned steps in the right

00:28

direction

00:30

we’ll work through some common issues

00:32

that are preventing you from starting

00:34

your own company and fulfilling your own

00:35

true potential

00:37

as always if you like what you’re

00:38

hearing on the show please do us a favor

00:40

and help share the void

00:43

with somebody who also might be wanting

00:45

to start their own company

00:46

we’re not professional podcasters we

00:48

just saw an opportunity to help others

00:50

understand that self-employment is well

00:53

within your reach and just as our

00:55

business has grown organically and by

00:57

word of mouth we want this show to grow

00:59

in the same way

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that takes two things to happen

01:02

one is that we have to put out some

01:04

great content and

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you have to help share our valuable

01:08

message

01:09

we know that there many of you out there

01:11

are on different social media platforms

01:14

and in various groups

01:15

surrounding your trades and your skills

01:17

and your crafts

01:18

facebook groups are begging for this

01:20

kind of info virtually every day so if

01:22

you see somebody asking about starting

01:24

your own business or they have questions

01:26

because they’re new in business please

01:28

do us a favor and drop a link to the

01:30

show

01:31

i’m your host mitch smedley and with me

01:33

today as always is

01:36

david hilton david hilton how you doing

01:37

today mitch and also we have our

01:39

producer back there in the back we’ve

01:40

got marcus marcus how’s it going today

01:42

no audio

01:44

sometimes heard never seen yeah

01:46

i’m excited for this episode he’s a

01:48

mythical it’s hard to say that you’re

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excited about you know getting a lot of

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information out there but you know we’ve

01:54

done some prep on this one i i like it

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yeah it will be really good and uh

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you know today’s episode is going to be

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over business finance preparation and

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and a few other subjects and

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preparing your business finances is one

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of the most daunting tasks but also one

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of the most rewarding once you get it

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all done so

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um

02:13

as we’ve discussed in prior episodes uh

02:15

we’ve discussed our six steps that

02:17

you’re going to need to complete prior

02:19

to starting your company and those six

02:20

steps are actually six areas of

02:22

adversity that you’re going to want to

02:24

face and overcome if you realistically

02:26

expect to be successful um dave how

02:29

about you take a minute and kind of go

02:30

over what those yeah so the first uh the

02:32

first two episodes were on personal

02:34

finance preparation you know the why and

02:37

taking care of your own stuff yep uh

02:39

we’re gonna get into the third one today

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which is the second adversity business

02:42

finance preparation third episode third

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second step second step yep exactly and

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that’s gonna be more about um

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your personal stuff is taken care of now

02:54

you’re planning and prepping

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for just the business stuff yeah the

02:58

money where’s it coming from um

03:01

all that kind of stuff

03:03

and then the third preparation adversity

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systems prep which is going to be

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you know

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three episodes we think because there is

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a lot of information and if if you watch

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the last episode we go into what all the

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different systems preps are gonna be

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and then

03:19

like i said in in four five and six

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we’re gonna get into those um and then

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after that it’s the beginning

03:24

adversities after you’ve knocked those

03:25

first three out

03:28

number four community involvement work

03:30

this is this is once you’re up and

03:31

running in business yes you’re in

03:33

business you’re uh you’re being part of

03:36

the chamber yeah you’re doing community

03:38

work uh maybe all the guys are required

03:40

to do

03:41

you know eight hours of community

03:43

service we’re not saying to do that

03:44

we’re just that that’s just an example

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um number five wake up do the work

03:48

repeat you know we talked about this a

03:50

bunch uh guys get their company off the

03:52

ground they feel comfortable and they’re

03:55

like uh maybe wednesday i’ll take off

03:57

right maybe thursday and friday i’ll go

03:59

fishing right you know you’ve got to put

04:01

the work in you’ve done the hard part to

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get it off the ground

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it’s easy to do the work once you’ve

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done the i mean if you don’t you’ve just

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wasted all that time right and then

04:12

evaluate performance make adjustments

04:14

and improve is number six and that is

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self-evaluation business evaluation what

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can we do better right and we talk about

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this all the time and we’re going to

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keep talking about it if you can’t

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evaluate your own performance where

04:27

you’re at how your company’s doing

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i mean you’re a you’re on an uphill

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battle yeah yep yep yep um so yeah in

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the last show we went over uh personal

04:36

pri personal finances in preparation for

04:38

self-employment

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go back and listen to that if you if you

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just are jumping in now right listen to

04:43

this but then go back you’re only two

04:45

behind just go back and listen to those

04:47

two right and catch up real quick and

04:48

and also the

04:50

the the first nine episodes of this

04:52

podcast are all of the core episodes

04:55

that cover the core adversities that you

04:57

need to overcome so you’re no matter

04:59

when you’re jumping into this podcast

05:00

you’re going to want to watch or listen

05:02

to all nine of those in order yeah and

05:05

if we get to episode you know 200 you

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don’t have to go back and listen to all

05:09

200 but you got to go back and listen to

05:10

the first nine for sure right and then

05:12

you can come back to where we’re current

05:13

yep yep unless you just want to i’m not

05:15

going to say you know don’t catch up

05:17

yeah

05:19

in the last episode we also talked about

05:20

side work and how it might be a little

05:22

lucrative but it’s not mentally

05:24

preparing you for self-employment like a

05:26

lot of people think it is a lot of

05:27

people think that it’s it’s uh giving

05:30

them the experience of dealing with

05:31

customers and all of that stuff and

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because it is side work it is not

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helping you in the business sense other

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than providing you a little bit of cash

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yeah so yeah we won’t rehash that go

05:40

back and listen to that there’s a lot of

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good information in there yep yep so um

05:45

today we’re going to be talking about

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some business finance stuff

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you’re going to want to spend quite a

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bit of time

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planning your startup expenses

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it’s common to underestimate how much

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money you’re going to need to get your

05:59

business off the ground and so you this

06:01

usually results in not

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is usually a result of not spending

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enough time

06:07

in this preparation step

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you can be working on so the first step

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of personal finances yes

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some of that might be paying off debt so

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some people if they have debt they’ve

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got to be paying that off

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while they’re paying off debt they can

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be preparing their business budget and

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also preparing to to learn how they’re

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going to fund their business and we’re

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not saying try to pay off personal debt

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and try to pay for start a business

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we’re saying mentally prepare and the

06:39

things that don’t cost money you can do

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those business finance preparation steps

06:43

yes it’s not just all about money it’s

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about

06:45

and we’re going to get into it i don’t

06:46

want to list it all right now and then

06:48

re-go over it you guys are like oh right

06:50

he said that 20 minutes ago yeah but

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the so it can be a slow process but this

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is why we say you can be working on all

06:57

of the preparation steps at the same

06:58

time

06:59

just don’t be doing the starting the

07:01

beginning steps at the same time so yeah

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while you’re paying off debt or while

07:04

you’re getting your personal finances in

07:06

order you can also be budgeting and

07:08

planning your startup stuff so

07:10

um finding uh startup capital can also

07:13

be a little discouraging from time to

07:15

time can be tough um but it’s not as

07:17

scary as you think so one of the things

07:18

that we’re going to talk about is all of

07:20

the different ways that you can actually

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fund the startup of your business once

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you have all of your budgets in place

07:26

yeah and we’re not necessarily going to

07:28

tell you you need to do this you need to

07:30

do that these are ideas yeah things that

07:32

we know work that we’ve seen other

07:34

people do and seeing them be successful

07:37

and we’re sharing those with you yeah

07:39

it’s ultimately up to you to make the

07:41

decisions we’re just we’re just giving

07:43

you information that is not readily

07:45

available yeah yeah we’re going to give

07:46

you a bunch of ideas that you may not

07:48

have known were there

07:50

um you’re going to want to make a list

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of all of the things that you’re going

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to have to acquire in order to start

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your business

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keeping this list organized and flexible

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is key so when when i started my

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business i used an expel excel

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spreadsheet to track

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everything this let me i had a big giant

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column that was like 30 or 40 lines long

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of every single thing i was going to

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need to start

08:17

my business

08:18

every piece of

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everything every piece of everything the

08:22

the the filing costs for my llc

08:25

the insurance costs um the the the

08:28

material that i was going to need to

08:30

start with godaddy fees for your website

08:32

exactly website stuff um

08:34

literally everything i could think of

08:37

that was going to cost money i put into

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this list and you’re not gonna just sit

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down and spend 15 minutes and write that

08:44

list and be like oh i have my list no

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this i mean you’re gonna you’re gonna

08:48

you’re gonna be out working doing

08:49

whatever and be thinking oh yeah you

08:51

know i forgot about that oh i forgot

08:52

about that

08:53

you just continually add to that list

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and the more in depth you can get the

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closer to the actual number right that

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it’s going to take yeah yeah so like i

09:02

had i had a spreadsheet that had on one

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column it was everything i was going to

09:06

have

09:07

on the next column over it was

09:10

the the dollar amount that it was going

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to cost and with excel you can color

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code all of your different cells and so

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i would like i would have something out

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there and i would have no clue what it

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would cost and so i would i would code

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it red like

09:24

you know i think that’s my question red

09:26

was a question yeah like i don’t like i

09:27

think it’s going to cost two grand but i

09:29

i honestly have no clue that’s kind of a

09:31

wild ass guess and so i’d code it red

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and then as i got closer to the number

09:36

and felt a little more confident i would

09:37

code it yellow

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and then as i got an exact number i

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would code it green so like for

09:45

insurance for example mr stoplight

09:46

himself yeah how original

09:49

so as it’s good though it’s easy you

09:52

know what they are you know well and the

09:54

other thing that it does so like let me

09:55

just take for example insurance as i’m

09:57

talking to my insurance agent um he gave

10:00

me some ballpark numbers right and so i

10:02

coded it red because they were ballparks

10:04

yeah then he comes back to me and he

10:06

gives me some real numbers but he said

10:08

he didn’t like them and he was going to

10:09

run them through a different software

10:10

and see if they could pick up some

10:11

different vendors and improve on that

10:13

number but they were they were actually

10:15

legitimate numbers so i coded them

10:16

yellow and then once he had gone through

10:19

a couple of his different vendors and

10:20

got like the best numbers he could now

10:23

they went to green and so as i did that

10:25

with every and some things you just know

10:27

what they cost and it starts green right

10:29

it is what it is right like i know i

10:30

need to buy a laptop and i know that

10:32

laptop’s eight hundred dollars okay

10:33

that’s green got it um yeah some stuff’s

10:36

simple but other other things you’re

10:37

gonna have to call and get that stuff

10:39

hashed out yeah and it’s gonna be

10:41

different for everybody and and so the

10:43

the color coding of those columns helped

10:45

dramatically because as that column

10:48

evolved every every cell in that column

10:49

started evolving into green my budget

10:52

became more shored up and visualization

10:55

i mean everyone this is said all the

10:57

time but men are visual yeah so i mean

10:59

for you that worked great yeah yeah you

11:01

know and not everyone’s going to do that

11:02

but but to be able to just visually

11:05

quickly look at it boom oh i need

11:07

if you saw one that was red oh i can go

11:09

over there you know what i need to i

11:11

need to spend a little time and get that

11:13

figured out yeah so that i know where

11:15

i’m at it it for me it allowed me to

11:17

compartmentalize everything and say okay

11:19

these are green i don’t even have to

11:20

worry about those anymore i gotta go

11:21

knock out these yellows and reds so

11:23

exactly um

11:25

i was starting a plumbing service

11:27

business you know going into customers

11:28

homes and repairing plumbing so real

11:30

quick i’ll run down the list of every

11:32

like this is i still have my budget

11:34

today i started my business two years

11:35

ago is that what this is yeah i’m gonna

11:37

go run down the list that you had this

11:39

is literally my list my exact list of

11:42

everything that was on my budget okay

11:44

good example

11:45

vehicle payment

11:47

vehicle sales tax and registration

11:50

inventory

11:51

vehicle signage and stickers

11:54

my customer relationship management

11:57

system my crm so your software and we’re

11:59

going to get into that yeah we’ll get

12:00

into that later but if you don’t know

12:02

what a crm is that is like the software

12:04

that you use to run your business out of

12:06

so and we’re going to talk about that

12:08

too but lots of people are probably like

12:09

i don’t need that and there are

12:10

businesses you don’t and you might not

12:11

need it right

12:13

we’re gonna go into it anyway so it’s

12:15

it’s a dispatching software is what it

12:17

is so um

12:19

um

12:20

website

12:21

phone

12:22

right monthly monthly expenses on phone

12:26

um phone number like it costs you money

12:29

to get the phone number right and those

12:31

aren’t big numbers and people are

12:32

thinking oh okay it’s five dollars you

12:35

know five dollars times 100 it adds up

12:37

right right and and you you owe it to

12:39

yourself to be incredibly thorough so

12:42

obviously thorough the more accurate you

12:44

are right and and i wasn’t going to use

12:46

my personal phone to start my business

12:47

either no i was i was using i did people

12:50

still call me right right i’m it doesn’t

12:53

matter if you switch over or not i’m big

12:54

on separating personal from business

12:56

people i’m still calling you right um

12:58

other things on my list were like

12:59

marketing door hangers that i would hang

13:01

on people’s doors to start out yeah now

13:04

he’s not talking about

13:05

you know we did that once a month he’s

13:07

talking about to get off the ground to

13:09

get off the ground

13:10

and you could still do you could do them

13:12

for the duration of your business but um

13:14

a tablet for for me to use in the field

13:17

to present pricing and run and you know

13:19

run my invoices and all of that stuff

13:21

a laptop for the office use

13:24

quickbooks online membership

13:26

um insurance down payment

13:29

the business license the actual license

13:30

that you have to get with the city to do

13:32

business um

13:34

the shelving for my truck the divider

13:36

bins to divide all the parts and pieces

13:38

in my truck um all of the hardware that

13:40

it took to build the truck out that was

13:42

not part of shelving

13:44

all of my drain cleaning machines an

13:46

appliance dolly to move water heaters in

13:48

and out the the legal formation uh

13:51

expenses for my business to to you know

13:53

for my llc and all of that um but also

13:56

uh business cards and then stickers that

13:59

we would be placing on garbage disposals

14:01

and water heaters and stuff like that

14:04

you know what i don’t see on there that

14:05

was my full list of everything hand

14:07

tools

14:08

so i already owned hand tools okay so so

14:10

if you already have stuff yeah and you

14:12

and you write it in say you do that in

14:14

your columns and you’re like this this

14:15

and this but i have that just put it

14:17

green well and so for me it was you were

14:20

using the color coding yeah but for me

14:21

it was it was not an expense i needed to

14:23

incur to start the business okay so i

14:25

already owned those it was not something

14:26

i needed to buy extra i like it so um

14:29

again i was starting a plumbing business

14:31

but you’re going to find similarities

14:32

with that with all like any service

14:35

related business you’re starting if

14:36

you’re starting a lawnmower company

14:37

you’re going to list what mowers do i

14:39

want mowers what style trailer trailer

14:41

do i want right i want x amount of weed

14:43

eaters gas cans yeah all that strange

14:46

stuff for your string trimmer

14:47

and advertisement you know if you’re

14:49

going to put stickers on those trucks if

14:50

you think that you’re going to come out

14:51

of the gate and you want to actually

14:53

advertise write that down right you know

14:55

hey i can take an ad out and i’m gonna

14:58

say penny saver even though no one ever

14:59

uses penny savers anymore right right

15:01

but if you wanted to put an ad in the

15:02

penny saver hey new company starting you

15:05

know we’re offering a discount to start

15:07

yeah you know with us you know things

15:08

like that

15:10

put them on the list yeah yeah um

15:13

i planned to run my business out of my

15:16

home

15:16

um

15:18

not all service related businesses can

15:20

do that for instance if you’re gonna do

15:21

hair you’re not gonna you’re probably

15:23

not gonna start a hair salon business

15:25

out of your home people do

15:27

but it’s like it’s nice having being

15:29

right off the curb it’s it’s nice being

15:31

right off the curb also it’s getting

15:33

your men’s barber well and getting your

15:35

hair done is kind of like an experience

15:37

for for men and women and so they don’t

15:39

want to go into somebody’s home to do

15:40

that they kind of want to go to the

15:41

barber shop or go to the salon so um

15:44

so

15:45

um but for my business we were working

15:47

in an out of our home so

15:49

um

15:50

we had very specific intentions like we

15:52

did not want a shop or a retail space or

15:55

like an office space until the business

15:56

grew to a point where it needed that

15:59

well until that business was

16:01

capable of making enough money to supply

16:03

that yeah and that this this was key to

16:06

our early success

16:08

i’ve watched a lot of people start

16:10

service related companies like plumbing

16:12

companies and all of that stuff and in

16:13

their first month in business

16:15

they go out and get a shop right away

16:16

because they think they need it and now

16:19

that’s an early on monthly expense that

16:21

they have to cover that they might not

16:23

have the money yet to cover that yeah

16:25

they don’t have traction in their market

16:26

yet and so that that’s kind of tough and

16:28

if and if you did want to do that and

16:29

you were dead set on that

16:31

um

16:33

you need to bank on not being able to

16:35

make that payment and have that money

16:37

already set aside yeah you know maybe

16:39

maybe in your budgeting you might need

16:41

to have six months of lease payments i

16:43

was gonna say six to eight built into

16:44

your budget okay okay so if we don’t do

16:46

enough to make rent the first two months

16:48

i’ve already got that money sitting here

16:50

right if you start making uh rent in

16:53

month four and five right that other

16:55

money just keep in there yeah if you do

16:57

have a hard time then you’re covered but

16:59

you know so

17:00

you’ve got that money to take care of it

17:02

yeah a classic example of somebody who

17:04

might need that let’s say you are

17:05

wanting to start a lawn mowing company

17:07

and let’s say currently right now you

17:08

rent an apartment and you don’t have a

17:11

garage right you don’t have a place to

17:13

store those expensive mowers in that

17:15

trailer yeah so you might have to go get

17:17

a contractor’s storage unit

17:20

or just a regular storage unit or

17:21

something or yeah or rent a space from

17:23

your buddy yeah you know he’s got a

17:25

building he’s like hey man you know i’ll

17:26

rent you a spot right you got to you got

17:29

to protect your assets so um you know

17:32

factor all of that in and like dave said

17:36

if you’re gonna have to lease something

17:38

put six or eight months of that lease

17:40

into your startup expenses and have that

17:42

money sitting there because you just

17:45

you just don’t know it’s a little

17:46

unknown in the first few months um

17:48

chances are your first few months are

17:50

going to be okay again if you follow all

17:51

these six steps however

17:53

we’re all about building safety nets

17:55

safety nets give you the courage so um

17:58

some other businesses that might need

17:59

space like a hair salon for instance um

18:02

it needs to be

18:04

somewhere that’s not in your house yeah

18:06

like we just talked about but you don’t

18:07

want to spend more than absolutely

18:10

necessary you don’t yeah you may not

18:12

want to open a huge salon but there are

18:14

booth rental spaces you you could

18:16

possibly booth rent or maybe you can

18:18

find a very very small retail space

18:21

somewhere

18:22

so reasonably priced yeah when when

18:25

you’re looking for your first space one

18:28

of the big mistakes a lot of people do

18:30

is they think

18:31

long term they think this isn’t the

18:33

space i want to end up and so i want to

18:35

avoid it now no and and

18:38

that’s that’s not smart to do you want

18:40

to always move you can always move you

18:42

can always upgrade and you know people

18:44

think uh commercial lease space oh

18:46

they’re gonna want five years right or

18:48

they’re gonna want three but if it’s a

18:49

tiny space

18:51

and they

18:52

tiny spaces are hard to rent anyway

18:54

right because not everybody can do what

18:56

they want to do out of it so

18:58

you can usually get one for a one or two

19:01

and then you can always move well and

19:03

let’s say like a lot of you know a lot

19:05

of commercial businesses are not going

19:06

to want to do anything shorter than like

19:08

a six month lease well six months is

19:09

fine

19:10

right you can you can dominate that

19:12

space for six months and then spend that

19:14

six months kind of planning your next

19:15

move if things are working out yeah and

19:17

the money that you say say you didn’t

19:20

want to do that because you knew you

19:21

were going to get bigger but you went

19:22

ahead and did it right but then you blew

19:24

up well you’re making the money to make

19:26

the move during that six months yeah

19:27

yeah the the key thing we’re looking at

19:29

here is making sure that you’re looking

19:31

for the smallest space that you can

19:33

operate out of to keep your overhead as

19:35

low as possible reasonably right you

19:37

don’t want to handicap yourself by being

19:39

too small but also don’t go jump into

19:41

the big lease because that’s the final

19:43

destination that you’d want to end up

19:45

yeah so a lot of a big warehouse can

19:47

really hurt you yeah i so

19:50

as managing larger plumbing service

19:52

departments in the prior years

19:54

i’ve personally worked for companies

19:55

that had 40 to 60 000 square foot

19:59

facilities

20:00

and i’ve also worked for companies that

20:01

had 2 000 square foot 2 000 square feet

20:04

facilities i can speak from experience

20:07

that the larger shop space does not

20:10

equate to efficiency

20:12

and success

20:15

the larger shop space actually cripples

20:17

the business because they spend so much

20:19

time focusing on how to pay for that

20:21

larger shop space so they have to make

20:24

that much more money every month before

20:26

they even make a dollar of profit yeah

20:27

you have to work unless you have a lot

20:30

of investors coming in you have to work

20:32

to that yeah and a lot of those guys

20:34

they don’t just go in there and say

20:36

okay we’re gonna get this i’m gonna i’m

20:39

gonna buy this 40 000 square foot

20:41

warehouse or rent it yep and we’re just

20:43

going to be big and huge no they

20:45

most of the time not always most of the

20:48

time they started small and then they

20:50

grew and then they bought their building

20:51

they were in yeah and they sold that

20:52

building bought the next building and

20:54

then they moved you know it it maybe it

20:56

took them 10 years maybe it took them 30

20:58

years well and a lot of times you may

21:00

not have even known of that place or

21:02

that that business when they were in

21:03

their tiny shop because it was probably

21:05

in some cheap obscure location across

21:06

town yeah you may not have known them

21:08

when they were in their next shop

21:09

because again it was probably fairly

21:11

obscure and then all of a sudden now

21:13

they’ve made their their second move to

21:15

their third shop

21:17

and now they’re in a prominent place and

21:18

you see that and you’ve never heard of

21:20

them before and your impression is

21:22

they’re somewhat of an overnight success

21:24

oh man these guys just popped on these

21:26

guys are doing it they they weren’t they

21:28

worked to it they worked into that right

21:30

right

21:32

let’s chat about company vehicles again

21:34

not every service related business is

21:36

going to need a vehicle however a lot of

21:38

service-related businesses are doing

21:40

work out in people’s homes or businesses

21:42

and you’re gonna need a vehicle

21:44

so

21:45

um before we dive into like the finances

21:48

of a company vehicle

21:49

let’s talk about the type of vehicle

21:51

that is going to perform the best for

21:54

you

21:54

okay um

21:56

i’m not gonna try to outsmart anybody

21:58

i’m not an expert however i do

22:01

understand

22:02

what customers like to see and what they

22:05

don’t like to see okay don’t get caught

22:08

in the trap

22:09

of buying a vehicle that tells the

22:12

customer you don’t need their money

22:14

because you’re already successful

22:17

so

22:18

what i mean by that don’t roll up in a

22:20

lambo

22:22

to do a sales call doesn’t even mean a

22:23

landlord i’m just i’m i’m going extreme

22:25

here right a platinum f-150 to paint i’m

22:28

trying to you know just paint a picture

22:30

yeah if you’re if you call a plumber

22:33

heating cooling guy electrician whatever

22:35

and the salesman comes out before the

22:37

tech and he’s in a lambo go to the next

22:40

guy yeah yeah

22:42

so um

22:44

you want to buy a newer vehicle

22:46

customers want to see a newer vehicle

22:48

they don’t want to see some old late

22:50

model rusted out jalopy no

22:52

you’re going to want a newer vehicle but

22:54

you’re going to want it in a medium to

22:56

moderate to low-grade trim package

22:59

and you’re going to want it to be

23:01

probably white in color because it’s a

23:03

little neutral unless unless like maybe

23:05

the colors of your business are green or

23:07

red and you want to kind of stick with

23:08

that that’s fine

23:09

but

23:10

um

23:11

don’t get caught in the trap of going

23:12

and buying a brand new denali or

23:14

platinum level truck and and thinking

23:17

that’s going to help you get business

23:18

that’s that’s that’s you showing off

23:20

personally yeah um

23:22

that’s for your personal vehicle right

23:24

stay humble

23:25

and and stay customer focused there

23:28

um customers have

23:30

we’ve said this before customers have a

23:32

great method for detecting and

23:35

their meter is easily

23:37

on a podcast absolutely okay so

23:39

on a podcast you can just say whatever

23:41

we can say whatever we want okay i was

23:43

just marcus in there

23:45

with the beeps yeah he’s late always

23:47

he’s probably taking a damn nap so

23:50

customers

23:51

do not want to see you pull up in that

23:54

exquisite vehicle so

23:56

um

23:58

we’ve

23:59

we’ve all seen

24:00

i don’t know why this happens but we see

24:02

it with framers and roofers and remodel

24:04

guys

24:06

they go out and buy some badass pickup

24:08

truck and this thing’s like a diesel and

24:10

it’s lifted and it’s got some exotic

24:12

stickers on it it’s cool and it’s

24:14

got big rims and tires and everything

24:17

right

24:18

um

24:20

he’ll he’ll go out of business soon like

24:21

he’s showing up to customers houses in

24:23

that

24:24

he’ll probably soon be out of business

24:26

and and not just because of the truck

24:29

not just because of the truck it’s

24:30

because of his mentality yeah and the

24:31

truck says something when we get back to

24:33

that millionaire mindset yeah that we’ve

24:36

talked about and hammered on right right

24:38

um you know it it tells the customers

24:41

that he might not be the best at

24:42

managing money and he might like to show

24:44

off a little bit

24:45

um and and not too many people like a

24:47

show off and even if you even if you are

24:49

a show off we’re not saying a show-off

24:50

is bad but being a show-off is not

24:52

professional it’s not show off all you

24:54

want in your private life yeah don’t

24:56

show off to your customers yeah you’re

24:57

not that is not professional take that

24:59

bad ass truck out on the town every

25:00

night that’s fine don’t drive it to your

25:02

customer’s house yeah so um another

25:06

reason that they’re they’re probably

25:08

going to go out of business soon is

25:09

because the customer is is pretty put

25:11

off when you show up in that big vehicle

25:13

and you know what i i will say not all

25:15

customers but say it’s say it’s 30

25:17

percent of customers are put off that’s

25:19

you’ve already just cut out 30 of yours

25:21

just dropped off yeah sales right out of

25:23

the gate right you know what if that

25:25

number’s 5

25:26

it’s hurting you already yep you know

25:28

what i mean yep and it ain’t helping you

25:29

anywhere no there’s there’s no guys

25:32

there’s a few guys it’s like grading on

25:34

a curve you take off the last five in

25:35

the top five and then you get somewhere

25:37

get everywhere in the middle but it’s

25:38

not a bottom five right i guarantee it’s

25:40

higher than that right right so now

25:42

let’s talk about like how you’re going

25:43

to pay for this vehicle right you’re

25:45

going to pay cash for it or you’re going

25:46

to finance it

25:48

if you’re thinking you’re going to pay

25:49

cash for it you might want to reconsider

25:52

financing is still a really good option

25:54

so personally you’ll want to be

25:56

debt-free however debt in business

25:59

is not necessarily a bad thing

26:01

especially when it comes to vehicles um

26:04

financing your vehicle conserves startup

26:06

cost right so let’s say the vehicle you

26:08

need is 35 grand well you can finance

26:10

that thing for like five or six hundred

26:12

bucks a month

26:13

and save yourself the thirty five

26:15

thousand dollars of startup costs right

26:17

um

26:18

and and if you’re thinking well i really

26:20

like to be flush and i like to to to pay

26:23

cash for everything well that’s fine

26:25

finance it to start off and then when

26:26

your business takes off and you it

26:28

proves to yourself that you can pay it

26:29

off you have the liberty to do that yeah

26:32

i still wouldn’t recommend you do it

26:33

however you’ll have the liberty to do

26:35

that if you want

26:36

um and and that’s not a

26:40

line in the sand item

26:42

you know you can go either way you you

26:44

can if you’re disciplined enough

26:47

do whatever’s comfortable and depending

26:49

on how many vehicles you’re gonna

26:50

acquire in your first few months of

26:52

business you might need to do both

26:54

that could be yeah speaking from

26:56

experience yeah i had to do both so

26:59

ultimately when i started my company

27:02

i chose to finance my purse my first

27:04

plumbing ban

27:05

i found it beneficial because i

27:06

conserved that startup capital and i was

27:08

able to

27:09

um keep that in reserve basically

27:13

but it also let me budget a lot better

27:14

too if you keep that money in reserve

27:17

and you have that payment if you do have

27:20

a slow month you can pull from the

27:22

reserve to make that payment yeah yeah

27:24

you totally can yeah so um

27:26

the the other reason i chose to finance

27:28

a vehicle is is more tax related so um

27:33

in any other for any other expense you

27:34

have in business you’re allowed to write

27:36

that expense off of your taxes so you

27:38

don’t have to pay tax on that income

27:41

vehicles are different though because

27:42

the irs understands that a vehicle is a

27:45

large purchase

27:46

but that you’re going to use that

27:48

vehicle over several years and so the

27:50

irs does not like to allow you to write

27:54

that vehicle off that expense off in one

27:58

year you can do it i’m not saying you

27:59

can’t do it however it’s it’s some extra

28:03

stuff that you have to go through so if

28:05

you spend thirty five thousand dollars

28:07

in cash on a vehicle

28:09

the irs is there’s some extra forms you

28:11

gotta file if you wanna write off that

28:13

entire expense in one year and then that

28:15

cuts your ability to write off that

28:17

expense in future years too even though

28:20

that vehicle’s still out in the force i

28:22

can see we haven’t opened the question

28:25

and answer section yet yeah when we do

28:27

this is a question we’re going to get on

28:28

this yeah the question is gonna be

28:31

if i

28:32

i haven’t started my business yet but i

28:35

go ahead and finance

28:37

a truck

28:38

under my personal name because the

28:40

business hasn’t started yet yep and i

28:42

financed that under my personal name but

28:44

it’s a business vehicle yep what am i

28:46

doing so

28:48

again speaking from experience i did

28:50

that

28:51

let’s let’s hear what happened so

28:53

again i was walking away from w-2

28:55

earnings i had no choice but to finance

28:58

that but to finance a vehicle right um i

29:01

no i had choices i could have paid cash

29:02

for it but um i financed it

29:05

but because i was walking away from my

29:07

w-2 earnings i had to finance that

29:09

vehicle before i left my job yeah so

29:12

it’s in your name so it’s in my name

29:13

personally right was it in you and your

29:15

wife’s name or just yours it’s just mine

29:17

just yours just mine right so um then

29:20

we started and we’re going to get into

29:22

llc’s and all of that stuff in the

29:24

future we started an llc and an llc is a

29:27

pass-through entity that all lands back

29:29

on your personal taxes anyway so it

29:32

doesn’t matter if you it’s in your own

29:34

name or the business name if it’s being

29:35

used solely for the business the

29:36

business can pay for everything exactly

29:38

so um

29:40

the reason i chose to finance the first

29:42

one was because i planned on growing

29:45

fairly soon and as a business you’re not

29:47

going to get credit for like two or

29:49

three years and so i knew

29:51

that

29:52

if i needed to buy another vehicle and

29:54

grow and add another plumber to my to my

29:56

business i was gonna have to pay cash

29:59

for his vehicle

30:00

and so

30:01

you know my my logic was

30:04

spend 35 grand on a vehicle and then if

30:07

i had

30:08

good months and and and a string of good

30:11

months together and i had the 35 000 to

30:13

pay the vehicle off rather than paying

30:16

it off i would invest that 35 000 in a

30:19

second vehicle because

30:21

that second vehicle allows me to double

30:24

my revenue

30:26

so

30:26

i can’t i can’t increase my revenue

30:28

unless i increase the number of plumbers

30:30

i have so that second vehicle allows me

30:32

to double my revenue if i spent 35 and

30:34

paid my truck off or my van whatever off

30:38

then i spent 35 and i still only have

30:40

one vehicle exactly so keeping a loan on

30:42

the first one and paying cash for the

30:43

second one i spent the same 35 but now i

30:46

can double my operation so you were so

30:48

you were an llc yep you paid cash for

30:50

the second truck yep the other truck is

30:52

still in your name but you’re an llc so

30:54

it all rolls back to your tax deal do

30:56

you still have a loan on that truck

30:59

uh

31:00

trick question yeah i know are these

31:03

questions are coming that’s why i’m so

31:06

catching you off guard here because

31:07

they’re coming at the date we’re filming

31:09

this episode i actually just traded my

31:11

entire fleet of trucks in this week and

31:14

bought all new trucks all new trucks are

31:16

in the company name prior to doing that

31:19

so did you trade in the truck that was

31:21

in your name yeah and on the company’s

31:23

trucks how did that work out tax wise

31:26

well because it’s a pass-through entity

31:27

it’s fine okay the truck was already

31:29

kind of badged as the company people and

31:32

people are going to have that if they’re

31:33

on the fence of

31:35

just like you are i know i’m going to do

31:36

good yeah but i’m going to finance this

31:38

how is that going to affect me later

31:40

well and and one of the things that

31:41

we’ll be talking about later is finding

31:43

a good accountant

31:44

because i gotta have a good account i’m

31:46

fairly savvy with all of this however

31:48

the gotta have a good dude there’s

31:50

things you

31:51

that’s why they’re cpas yeah so they’re

31:53

just that’s the decision to trade all of

31:56

your vehicles in on new vehicles is not

31:58

an easy decision to make and it’s not

32:00

one that you make out of emotion and you

32:02

make it out of necessity we’ll do that

32:03

and half of the people would not do that

32:05

yeah but we’re not we’re not we’re not

32:07

going to get into that but but

32:08

don’t think that decision didn’t come

32:10

with about seven phone calls to my

32:12

accountant hey dude how does this work

32:13

right

32:14

right because this this also happened

32:16

right at the end of the year yeah and so

32:18

i you know you’re trying to figure out

32:20

where’s the tax liability going to roll

32:21

right does this need to happen next year

32:23

does this need to happen in december or

32:25

january what year’s taxes does this need

32:27

to land on so um and when you i don’t

32:29

know those answers i i let my and when

32:31

you bring into account and handle that

32:33

and when it gets up into those when

32:34

you’re getting up into those big numbers

32:36

and three or four guys are running

32:38

full-time right and you think you’re

32:40

going to be able to do it without an

32:41

account and you’re wrong

32:42

right you just have to have one that’s

32:44

just an expense that you’re going to

32:45

have to have down the road yeah and and

32:47

we’re not i’m not trying to scare

32:49

anybody here but i just knew that was

32:51

going to be a question you know people

32:53

have you can always take care of it

32:55

later is the moral of the story yeah you

32:58

know and whether whether the company

32:59

pays it off

33:00

um and that helps with taxes whether um

33:04

you use your own

33:06

money to pay that off and then sell it

33:08

to the business right there are a lot of

33:10

options there that your accountant is

33:12

gonna

33:13

gonna lay out for you right and and

33:15

we’re never gonna give you like the hard

33:17

advice like the do this or do that right

33:19

no that’s again it all kind of defaults

33:21

onto check with your account right and

33:24

that’s that sounds like a cop out but

33:25

it’s not because every state’s different

33:27

too every state’s different and every

33:29

situation is different

33:31

i’ve so where where money’s coming in

33:33

from and where money’s going to is a big

33:35

difference in my first three years or my

33:38

first year of business i purchased three

33:40

vehicles

33:42

all three of them were several phone

33:43

calls to my accountant and all three of

33:45

them were different strategies and

33:46

different game plans

33:48

each time yeah so well because you’re at

33:50

a different growing point you’re at a

33:52

different point right you know what i

33:53

mean different money is going to

33:55

different things at that time yeah and

33:57

and we’re not i’m not trying to like we

33:58

got into a little bit of ball of

34:00

there but right um i’m not trying to

34:01

scare people off but those are those are

34:03

things to think about

34:05

when you start

34:06

yep

34:07

um

34:08

another another thing i want to touch on

34:10

real quick we hit it a second ago was

34:12

depreciation so basically yeah because

34:14

the irs understands that that’s going to

34:17

uh you’re going to use that vehicle for

34:19

typically like a period of five years

34:21

they’re going to want to set you up on a

34:22

depreciation schedule and so what that

34:25

is is that allows you to write off

34:27

about one-fifth of that vehicle’s cost

34:29

in year one and then the other fifth of

34:31

that vehicle’s cost in year two and so

34:33

on and after the five years you’ve

34:35

written off the entire expense of the

34:36

vehicle

34:38

and so that’s another perk to financing

34:41

those are good deductions yeah that’s

34:42

another perk to financing the vehicle is

34:44

because your actual raw expense of the

34:47

the payments and interest on the vehicle

34:49

line up with the depreciation schedule

34:53

so

34:53

um it allows you to write off everything

34:56

that you’ve actually spent exactly um

34:59

we probably spent a little more time on

35:00

that than we thought but yeah yeah and

35:02

we can move on yep

35:04

um

35:05

the

35:06

the last reason i chose to finance my

35:08

vehicle was because

35:10

it was either shell out

35:12

30 grand

35:13

up front

35:14

for the the vehicle or shell out 800 in

35:17

a payment

35:18

and so

35:19

um

35:20

i chose the 30 the 800 payment route uh

35:25

just because it conserved the the

35:26

startup costs so

35:28

um a side note on that if you are going

35:30

to finance your vehicle remember you

35:32

have to have that financing squared away

35:34

and done before you walk away from your

35:35

w-2 earnings yes don’t think you’re

35:37

going to do that after you quit i’m now

35:39

i’m going to go finance it we’ve said it

35:41

before and we’re going to say it again

35:43

once you walk away from your job and you

35:45

go if you were to go to the bank and say

35:47

hey i just started this company they are

35:49

going to laugh at you yep not out loud

35:51

but after you and maybe out loud after

35:54

you leave they are going to be like do

35:55

you believe this guy right because

35:56

they’re not loaning you any money right

35:59

without you having income yep so

36:02

make sure you get that scored away

36:03

before um

36:06

another thing in building your budget is

36:09

um

36:10

your inventory costs now you may have a

36:12

low in like for instance a lawn mowing

36:14

company they don’t really have a lot of

36:16

inventory a lot of pieces and parts and

36:18

we bring up lawnmower a lot because it

36:21

it’s a it’s drastically different yeah

36:23

they’re drastically different and the

36:24

numbers are going to be different and

36:25

people that are listening to this are

36:26

saying oh well i don’t want a plumbing

36:28

company i’m not a plumber i’m not going

36:29

to do that right use that because that

36:31

is an example of

36:33

that’s my real life experience it’s more

36:35

overhead yeah you know what i mean and

36:37

then there are three companies uh

36:40

mechanical companies electricians uh

36:42

hvac guys that are more related to that

36:45

yeah yeah and then the lawnmower is you

36:48

know still has to have stuff he’s got

36:50

equipment but he doesn’t have much he

36:51

doesn’t have a bunch of parts right so

36:53

like my parts list as i was putting

36:55

together my budget for my startup costs

36:56

i had to factor how many parts am i

36:58

going to keep on my truck and i kept a

36:59

very detailed list of everything that i

37:01

was going to have on my truck every

37:02

piece of plumbing repair part that i was

37:04

going to need

37:05

that list came to 500 different parts

37:10

and a total quantity of over 2 000 items

37:14

that we keep on our truck yeah the

37:16

thousands of stuff the value of that

37:18

list the day i started our company the

37:20

value of that list was eleven thousand

37:22

dollars that’s a lot of money now

37:24

pricing has gone up dramatically since

37:27

two years ago and so now we’re not going

37:29

to get into that too much right right

37:31

but yeah but now the value of that is

37:32

even higher you need to be let’s say

37:34

something right there you need to be

37:35

current with what’s happening so if you

37:37

if you’re listening to this and you

37:38

start writing stuff down and then you

37:39

don’t do your company for two years you

37:42

gotta check those numbers yeah you gotta

37:43

go repeat you can’t go oh hey this and

37:45

then

37:47

oh

37:48

that’s up twenty percent right what it

37:50

was you know don’t be surprised try to

37:52

stay current with those things yeah and

37:54

and in this market now hopefully it

37:55

doesn’t stay like this forever but i

37:57

mean there are increases on prices every

37:59

three to six months yeah so you know it

38:00

used to be

38:02

years used to be annually maybe every

38:04

two years yep on big stuff but now i

38:07

mean it is yeah you got to be on top of

38:10

it so and like if you’re starting a

38:12

higher inventory business you might not

38:14

have your inventory on point before you

38:16

start i sure didn’t i had it i thought i

38:19

had it on point but it turns out looking

38:21

back on it i was probably like 80

38:23

accurate as far as like the numbers and

38:25

the quantities and in what items i

38:27

wanted and everything else but 80

38:28

allowed me to serve my customers really

38:30

well yeah so and there’s nothing wrong

38:32

with just as this is an example

38:35

there’s nothing wrong with saying to the

38:36

customer and being honest with them hey

38:38

i don’t have that i don’t have that on

38:39

my truck i gotta go run and grab it i’m

38:40

gonna run and get it right now i will be

38:42

right back i am not going to another

38:44

call i’m gonna go get it i’m coming

38:45

right back here

38:46

thanks for your patience yep there’s a

38:48

and people when you tell people the

38:50

truth this is like the opposite of the

38:52

meter thing right when you tell

38:54

people the truth they know you’re

38:55

telling the truth oh yeah and they love

38:56

me they love the truth

38:58

yeah exactly and i don’t want to get too

39:00

much into that but yep um now let’s talk

39:03

about raising capital raising the money

39:06

that you’re going to need to start the

39:07

business so we’ve gone through the

39:08

budgets

39:09

you’re talking raising the money is in

39:11

i’ve gone through the budget i have what

39:13

i’m going to do with my truck figured

39:14

out i have my inventory figured out we

39:17

know we know what it’s going to cost the

39:18

total the tallied total of all those

39:20

things yep i need to get to that money

39:22

yep and so

39:24

there’s a couple of different options at

39:26

your disposal for raising the money that

39:28

you’re going to need um

39:31

my business

39:32

in full transparency full honesty

39:35

i knew so my budget at the bottom of my

39:37

excel sheet was 30 000

39:40

okay um

39:42

i factored another like as a safety net

39:45

again love safety nets i factored i

39:48

would probably need another possibly

39:50

need another 30 000 because let’s say i

39:54

put 30 000 in my business bank account

39:55

well it’s now zero because i spent it

39:57

all to start the company

39:59

so i factored i could possibly need

40:01

another thirty thousand dollars to

40:03

handle

40:05

the slow first few months and expenses

40:07

that don’t stop once you get this ball

40:10

rolling right

40:11

well fuel vehicle payments um things

40:14

like that might happen to the truck

40:16

right so you ran over a box and nails

40:17

and you had to buy three new tires i had

40:18

to go buy three new tires right so

40:19

you’re out

40:21

um also my pay right my salary i needed

40:24

to be able to cover my own pay so um

40:28

your budget can be a little fluid and

40:30

that’s fine

40:32

the

40:33

options at your disposal let’s talk

40:35

about the scariest one first

40:37

and that is borrowing or cashing out

40:40

from your 401k

40:42

if you’ve worked in the corporate world

40:44

or worked for somebody else and you have

40:46

some money in your 401k

40:48

that is an option at your disposal

40:52

it’s your money it’s your money there

40:54

are penalties and there are things

40:56

that you have to get around but it’s

40:57

your money yes and depending on how

40:59

vested you are

41:01

sometimes you might not be able to have

41:02

access to all of that money sometimes

41:04

your employer is going to keep some of

41:05

that back if you’re not fully vested

41:07

yeah and everything else but

41:10

the reason we don’t like that option as

41:12

much as the others that we’re going to

41:14

talk about is because that’s one of the

41:15

more expensive options your 401k is

41:18

pre-tax savings and so when you go to

41:21

withdraw it you’re going to have to pay

41:23

a 10 penalty for withdrawing it before

41:26

your retirement age but then you’re

41:28

going to have to pay tax on all of that

41:30

money before you withdraw it so

41:33

um it comes out to being a very

41:36

expensive way to start your company so

41:39

um we’ll circle back to this a little

41:41

bit later but

41:43

it is an option but let’s talk about

41:45

some of the others first because they

41:46

may be better options for you yeah and

41:49

you want to just

41:51

i love finance i like reading about

41:53

finance

41:55

if you’re younger and you have put that

41:57

money in there

41:58

and then you stop putting money in there

42:00

it doesn’t matter that money’s gonna

42:02

grow yeah say you’re

42:05

say your company does really well later

42:07

and you uh start and we’re gonna talk

42:10

about all this as well but say you start

42:13

retirement for yourself and for your

42:14

guys which is the right thing to do

42:17

okay

42:18

um

42:19

and then that goes down the road well

42:21

that money that you had in there if you

42:22

were able to not touch it

42:25

still growing say it triples say it

42:26

doubles say when you hit 55 you’re like

42:29

man i don’t want to pull it out because

42:30

i’m gonna have to pay that penalty

42:32

you know i’m gonna have to pay taxes on

42:34

it oh wait i had that other 401k and

42:36

that’s now covering my taxes right on

42:38

that other money right you know and you

42:40

can pull out of that one that’s lower

42:42

than your other one it just it gives you

42:45

compound interest is a great thing yeah

42:47

young men or women that are that that

42:50

got to get in on a program a privileged

42:52

program like that right if you can keep

42:54

that money in there you need to do that

42:57

okay

43:00

another option at your disposal

43:02

is business loans

43:04

um

43:05

they can be a little tricky to get

43:07

actually um so what’s funny about banks

43:10

is they like loaning people money that

43:13

they know are going to pay the money

43:14

back exactly and so that’s how they make

43:17

money that’s how they make money right

43:18

and so

43:19

how what they use to determine that is

43:21

going to be you know credit scores your

43:23

credit history

43:24

um power your purchasing income and all

43:27

of this stuff so keep in mind if you’re

43:30

leaving w-2 earnings to go start your

43:32

own company your income is now off the

43:34

table because it’s unknown

43:36

you could have the best credit score in

43:37

the world but you might not have the

43:41

income purchasing power right

43:43

and so

43:44

um another thing with uh business loans

43:47

is

43:48

um

43:49

they are

43:52

there’s a there’s this aura about them

43:53

like oh you want to start a company just

43:55

go get a business loan it doesn’t work

43:56

that way no there there’s almost no

43:58

banks out there want to lend you money

44:00

unless you’re successful at starting

44:03

businesses yeah if you’ve got a proven

44:05

track record of starting multiple you

44:07

want to do something else they’re like

44:08

oh let us jump on board right so for

44:10

instance in a few years if i went to my

44:13

bank and said hey i want to start this

44:15

other business they’re going to look at

44:17

all my financial they know all my

44:18

finances right and they’re going to be

44:20

like how much do you want yeah right

44:22

we’re going to loan you up to this

44:23

amount however like at all if this is

44:25

the first business you’re starting small

44:27

right right they’re going to want to

44:28

loan me more

44:29

proven yeah you have no traction right

44:32

so

44:33

um a business loan wasn’t really an

44:35

option for me it may be an option for

44:37

you i don’t know it wasn’t an option and

44:39

like we’ve said everyone’s circumstance

44:41

is different yeah you know a guy a vice

44:43

president at a bank and he knows you and

44:45

knows you personally sometimes it’s

44:47

about who you know it may be really easy

44:49

for you to secure that loan yeah and and

44:51

maybe if you have like that might be a

44:52

larger savings at that bank or or maybe

44:55

if if you can use some of your other

44:57

assets as collateral you might be able

44:59

to work something out that’s tough i do

45:01

i hate always when people say i put my

45:03

house up

45:05

you know it’s kind of tough like i mean

45:07

i always cringe a little bit

45:09

some people don’t bat an eye yeah and it

45:11

works out and it’s a great option yep

45:13

you know but and that’s why you know we

45:15

haven’t said it a lot but you need to do

45:17

what is what also

45:19

makes you comfortable with what you’re

45:22

doing because if you get involved and

45:24

you’re not comfortable and you’re

45:25

nervous and you’re worried it’s going to

45:27

reflect that’s a red in the work that

45:29

you do

45:31

another option at your disposal is

45:32

tapping into your savings if you have a

45:34

bunch of money saved up in the bank so

45:36

and this will obviously be the lowest

45:38

cost option at your disposal um because

45:40

it’s already your money right so now if

45:42

that’s money’s in a high interest

45:44

account or something like that you might

45:45

want to factor that in

45:47

but um

45:49

let’s talk about can i say something

45:50

about it

45:51

say

45:52

say you’re listening to this and you’re

45:53

like you know what i was thinking i was

45:55

going to stay at my job for the next

45:57

three to five years because my wife is

45:59

doing x or it just fits us that way but

46:03

i do want to do something start saving

46:05

now yeah yeah go ahead you know what

46:07

we’re not we’re not trying to get you on

46:08

the facts the fast track right if you

46:11

have four or five years and you can put

46:12

that money away on your own yeah

46:15

do it dude then you’re not in the hole

46:16

you’re i mean that’s your money you do

46:18

whatever the hell you want to do with it

46:19

and worst case scenario if you decide

46:21

not to start the business you still got

46:22

some money in there you got your money

46:23

nest egg and you’re like you know what

46:24

i’m gonna go get me a new bass boat

46:26

right you know you’re gonna do something

46:27

fun with it right you know save that

46:29

money if you think you can get there

46:31

don’t borrow money just because you

46:32

think you need to borrow money if you

46:34

think you can save it save the money if

46:36

you do use your own personal investment

46:38

to start the the company

46:40

do yourself the favor and write an

46:42

agreement from the business to yourself

46:44

exactly put down some terms that you’re

46:46

going to hold your business accountable

46:48

to repay that money back to you and you

46:51

can do that with interest you could do

46:53

it with interest if you want to own your

46:55

your business money at an interest rate

46:57

you could so if and your accountant if

47:00

you have a

47:01

smart accountant he’s he’s going to know

47:03

that if you say hey i want to loan

47:05

myself a hundred thousand dollars at a

47:08

four percent just a round number math

47:10

easy a four percent number he’s going to

47:12

say oh yeah we can do that yeah we can

47:14

do that on x y and z

47:16

you’re gonna make personal money off of

47:17

that now you will have to pay taxes on

47:19

that but it’s gonna be a tax deduction

47:21

for the business and that will work in

47:23

certain scenarios yeah better than other

47:25

things that all helps provide

47:28

a really good platform for like the

47:30

behaviors that you’re going to want to

47:32

bring on to keep your business finances

47:34

separated from your personal finances

47:36

yeah so um don’t think that you’re being

47:39

a little overkill or like oh this seems

47:40

kind of tacky to write a loan to myself

47:42

or whatever no that’s that’s smart like

47:45

when i it’s very smart yeah that’s what

47:47

millionaire and guys with lots of money

47:49

that’s what they do right they’re making

47:51

money on interest

47:54

from money that they already had right

47:56

only fools intermix their business

47:58

finances and their personal finances and

48:00

those same fools find themselves in

48:02

heaps of financial trouble later when

48:04

the auditor is questioning every

48:06

financial move that business has ever

48:08

made since it started so we just said

48:10

that and people are thinking mitch you

48:12

just said loan yourself money yes but

48:14

you have to keep those two things

48:16

they’re separate even though it’s the

48:17

same they’re you’re not operating to

48:20

have the agreement you’re not operating

48:21

your business out of your personal

48:23

account you’re taking money out of your

48:24

personal savings and you’re going to go

48:25

deposit it into a separate bank where

48:27

you hold your business bank yes and

48:29

people are thinking what okay so when i

48:31

write myself a check a paycheck

48:35

like when i first started out i pulled

48:36

the checkbook out and in my ledger i

48:39

wrote

48:40

paycheck yeah david hilton yeah owner

48:43

draw okay i didn’t do i didn’t do mine

48:45

that well it did that in the

48:47

in the gl coded software but just so i

48:49

wrote david hilton on the top and then

48:51

you know paid to the order of david

48:52

hilton and then i signed my name then i

48:54

flipped the check over and signed the

48:55

back

48:56

that’s how that works yeah okay you’re

48:58

writing a check from yourself to

48:59

yourself just because you’re the

49:01

business didn’t buy any groceries the

49:02

business isn’t paying your gas no the

49:04

business is paying you a paycheck and

49:06

then you deposit that paycheck and your

49:08

personal banking people get confused

49:09

there that’s why i brought it up they

49:10

get confused oh how do i write myself a

49:12

check that’s how you write yourself a

49:14

check right just because you’re the lead

49:15

on both accounts doesn’t mean those

49:18

accounts intermingle right you have to

49:20

still have a paper trail from one to the

49:22

other yep always

49:24

um another option at your disposal to

49:28

start your uh to fund your startup is a

49:31

home equity line of credit okay i got a

49:33

little off track

49:34

you’re fine you’re fine i got you okay

49:36

so a home equity line of credit is going

49:38

to be

49:39

um an option like we discussed home

49:42

equity lines of credit in the prior

49:43

episode on setting up your personal

49:45

finances we were saying heloc loan yep

49:47

that’s what that is

49:48

h-e-l-o-c

49:50

so

49:51

um if you don’t have a savings and you

49:54

do have a mortgage and you are sitting

49:56

very pretty on your mortgage

49:58

let’s talk about right now a lot of

49:59

people are yeah yeah right as as the day

50:02

this podcast is airing home values are

50:04

through the roof time less timeless but

50:06

right now

50:07

right you could do it yeah um uh the the

50:11

home equity line of credit is a pretty

50:13

solid option it’s actually the option

50:15

that i chose to start ours and they know

50:18

that yeah the the reason why

50:22

is

50:23

the neat thing with the home equity line

50:25

of credit is it’s rhea static it’s like

50:27

a dial so

50:29

just using round numbers let’s say you

50:31

have a 75 000 home equity line of credit

50:34

and i pull 5 000 out today it’s a line

50:37

of credit it’s potential use right it’s

50:40

like a credit card but not a credit card

50:42

yeah so let’s say i pull 5 000 out today

50:44

to go buy something i’m now paying back

50:47

that 5 000 in interest on the 5 000. yes

50:50

so let’s say

50:51

like let’s use real world examples i

50:54

knew i needed guaranteed thirty thousand

50:56

dollars to start my company however i

50:58

thought i might have to go up to sixty

51:00

in the first few months that i just

51:01

didn’t know where it was gonna go

51:03

well i was able to take thirty thousand

51:05

out of my heloc so about a month and a

51:07

half before i opened our doors

51:09

um i took out 15 000 and started buying

51:12

some of the things that we’re going to

51:13

take some time to put together and then

51:14

about three three weeks before i opened

51:16

our doors i spent another 15 000 on

51:19

getting all the small parts and pieces

51:20

and everything else put together your

51:21

inventory my inventory and all that time

51:23

so so now i’ve borrowed 30 000 from my

51:27

home equity it’s not

51:29

it’s not i like not the business

51:31

borrowed from the home equity line of

51:32

credit

51:33

personally i withdrew money from my home

51:35

equity line of credit personally i made

51:38

a personal investment into my business

51:40

and then the business spent that money

51:42

again separation of personal and

51:44

business and so

51:46

but that left me room on my home equity

51:49

line of credit

51:50

should the business need that money in

51:52

the future so what that allowed me to do

51:54

was charge into my first few months with

51:56

confidence because

51:58

all of my startups like i paid for

52:01

everything but i still had reserved but

52:03

i’m not paying interest on it you had

52:05

cushion but right exactly it wasn’t a

52:06

loan sitting in a bank that you were

52:08

paying interest on right it was just

52:10

if a loan that you could get immediately

52:13

if you needed it yeah so like if i would

52:15

have gotten a business loan to start my

52:16

company

52:17

i would have had to get a loan for 60

52:18

because i can’t go get a loan for 30 and

52:20

then go ask for 30 more no right so i

52:22

mean you could maybe you could but i

52:25

would have had to get a loan for 60 well

52:26

now i’m paying i got to pay back 60.

52:28

yeah and now i’m paying interest on 60

52:30

even though i’m only using 30. yeah so

52:32

the the home equity line of credit is

52:34

great the other cool thing with the home

52:35

equity line of credit is i could pull

52:36

all of that money out transfer it from

52:38

personal to business and do all that i

52:40

could put it in the business i could pay

52:41

it all back off the next month and then

52:43

i could pull it all back out again yeah

52:45

two months later if i needed to the

52:46

flexibility is and that’s not going to

52:49

be for everybody but the flexibility of

52:51

that is

52:52

i mean it’s for for my scenario so

52:55

helpful right for my scenario and how i

52:57

was standing so like i don’t have a

52:58

large savings account because i don’t

53:00

like savings account to me it’s just

53:01

kind of wasted money sitting there

53:02

that’s not doing anything for you so my

53:04

money is either locked up into

53:06

retirement accounts that’s you know

53:08

earning great interest and all of that

53:10

or it was into my home and so um you

53:13

know for me the home equity line of

53:14

credit was was a great option i’m not

53:16

saying it’s the best option for you no

53:18

it’s just and everyone’s different yeah

53:19

i like to have savings right you know

53:22

so that

53:23

i feel i just sleep better at night yeah

53:26

you know what i mean and everybody’s

53:27

different that’s why we’re giving you

53:29

all these different scenarios that you

53:31

can go over and if you talk to an

53:33

accountant about the option at your

53:34

disposal too because they’re going to

53:35

help you out and even if you don’t have

53:37

an accountant

53:38

say you haven’t started your company

53:40

you can still go to accountant and if

53:42

he’s a good accountant and you sit down

53:43

and say can i have an appointment with

53:45

you he probably won’t even charge you

53:47

just for you to go in there and ask

53:48

questions right and say

53:50

and if he gives you the answers that

53:52

you’re looking for and he’s a good guy

53:54

he’s probably the guy to start with

53:56

right once you do get rolling right

53:58

right um

53:59

there’s no exact formula for success

54:01

when you start your company all of these

54:03

options we’ve talked about excuse me

54:04

again

54:06

different things are going to work for

54:07

different people so you’ll soon learn

54:09

that your ability to listen to as many

54:12

good ideas as you can and then picking

54:14

the idea that works best for you is

54:16

usually going to result in the most

54:17

success

54:19

once you start discussing your new

54:21

venture with your close network of

54:23

friends you’ll soon find how much

54:26

they’re going to open up to you with

54:27

tons of advice

54:30

successful people want to see other

54:32

people become successful and so they’re

54:34

going to be happy to help you out um

54:38

have you ever heard the saying that um

54:41

you you are the sum of your five closest

54:43

friends

54:44

and

54:45

yes i mean yes for sure i have so so

54:48

ultimately what that is is like if you

54:50

have five millionaire friends chances

54:52

are you’re going to be the sixth

54:55

you know what and even if you’re not

54:56

you’re the 800 000 guy right it’s okay

54:59

you might not be quite a millionaire

55:01

right well if you’ve got five loser

55:03

friends

55:04

chances are you’re going to be the sixth

55:06

right so that gets back to the

55:08

millionaire mindset too it does you know

55:10

what i mean you have to

55:12

i don’t want to say subconsciously you

55:13

have to consciously

55:15

think about where you’re at in your

55:17

situation and decide i want to be

55:19

successful what does that take i might

55:21

need to separate myself

55:23

from these people yeah i might need to

55:26

man you might have family members that

55:28

are like you’re an idiot for doing this

55:29

yeah you need to separate yourself you

55:31

have a vision

55:34

to be successful

55:35

you probably need to get away from those

55:37

people yeah and now i know i’m not

55:39

saying cut them out of your life i’m

55:41

just saying spend less time limit time

55:44

and cut out that bad

55:46

mojo right that they’re trying to put on

55:48

you you’ve got to pick your friends

55:50

wisely

55:51

yes so now right now is a great time to

55:54

take inventory of your friends and see

55:57

which of them is

55:59

is worthy of your time and attention and

56:02

not just inventory of your friends but

56:03

when you’re going to make a big step

56:05

like this you have to take inventory of

56:06

everything yeah yeah everything as as

56:09

you start to do all of this

56:11

um

56:13

you’re going to find your friend some

56:14

friends are going to encourage you some

56:16

friends are going to discourage you

56:19

look at their heart and look at their

56:20

intention as they’re doing that because

56:23

that’s going to change a little bit

56:25

about how they are

56:28

how they are helping you or hindering

56:30

you so just because somebody is

56:31

discouraging you if they’re discouraging

56:33

you but they’re coming from a good place

56:35

that’s not necessarily hindering you um

56:38

you’re gonna have friends say something

56:39

like don’t you know how risky a business

56:40

is or doesn’t your job take great care

56:42

of you why would you start why would you

56:44

leave that or don’t they don’t they

56:46

provide really good benefits

56:48

stay in tune for that because you’re

56:50

going to hear that i can guarantee

56:52

you’re going to hear it and we’ve talked

56:53

about that before but it’s important

56:55

because

56:57

surrounding yourself

56:58

with

56:59

positive people right

57:01

is really

57:03

it’s not just good for your life and

57:04

your business i mean it’s good for

57:05

everything yeah the you got to keep in

57:07

mind when you’re hearing that that’s

57:09

coming from a good place they’re looking

57:10

out for your best interest sometimes it

57:12

is sometimes it’s jealousy yeah they

57:14

they want the best for you they just

57:16

don’t have your vision they don’t

57:17

understand what you understand and they

57:19

can’t see what you see

57:21

and so um

57:23

they they’re gonna have a hard time

57:24

seeing success where you see success

57:26

because they don’t know all of the

57:28

things that you know

57:32

use these moments to give you a gut

57:33

check and and to make yourself

57:36

you know double check with yourself and

57:38

see this is exactly where i want to be

57:40

yeah when you start looking around

57:42

if you don’t think you can make that

57:44

that’s the gut check right oh man i

57:46

don’t know if i can i don’t know if i

57:48

can you know get rid of those friends or

57:50

or or say something to my family members

57:52

who aren’t there yeah you know that’s a

57:54

self-evaluation moment i’ll give you a

57:56

real life example you know my dad

57:58

is as i’m talking to him about this can

58:01

i say his name no we don’t need to we

58:03

okay leave him out but but

58:06

i love him yeah

58:07

he’s a great guy he

58:09

he was he was you know giving me some of

58:11

those gut jack opportunities you know oh

58:13

well aren’t you doing so well at all

58:15

that you know you every every company

58:16

you’ve worked at you’ve done really well

58:18

are you sure you want to do this and all

58:19

that and again he’s not discouraging me

58:21

it’s a gut check moment yeah it’s it’s

58:23

it’s coming from a place of love he

58:24

wants to see me the most successful and

58:26

he knows i’m successful

58:28

right right so even my spouse is you

58:31

know what are we going to do about

58:32

insurance what are we going to do about

58:33

your 401k what are we going to do about

58:35

all this and and again it’s she’s not

58:37

hating on me she’s not discouraging me

58:40

it’s a gut check moment right now listen

58:42

and if your wife isn’t saying those

58:44

things to you

58:45

that might be a problem that might that

58:46

might be a different problem you know

58:48

janine’s always right i shouldn’t say

58:49

her name janine it’s okay my wife’s name

58:51

is janine she’s on me all the time yeah

58:53

so as you get closer okay as you get

58:55

closer to that business you’re going to

58:57

find yourself either getting more

58:58

excited or more scared and and you’ve

59:00

got to stop and go back through those

59:01

adversities we discussed because if

59:03

you’re getting more scared there’s a

59:04

problem and you need to you need to

59:06

pause and figure that out yeah you need

59:08

to make sure it’s right for you right if

59:10

you’re having a lot of doubts

59:11

i mean

59:13

doubts drive you to be good and to make

59:15

the right decisions right um

59:17

so i’m not going to say they’re bad but

59:19

if you get too many and you get to the

59:20

point where the anxiety and the

59:22

nervousness and everything is so much

59:24

that you can’t handle it right it may

59:25

not be for you yeah self-employment

59:27

takes a person who can stand courageous

59:30

when faced with unknowns um they know

59:32

that their their prior successes will

59:35

help them overcome the unknown

59:37

challenges that they’re gonna face

59:39

tomorrow or next week or next month so

59:41

if you don’t like that environment then

59:43

this might not be for you

59:46

as as you work through the process of

59:48

bringing your business into existence

59:50

you’re going to learn that it’s going to

59:52

take time away from your family and

59:53

friends

59:54

building budgets and mapping everything

59:56

out takes a lot of time and that work is

59:58

most likely going to be done on nights

60:00

and weekends when you’re usually

60:02

spending that time with your family and

60:03

friends

60:04

so get ready for questions from your

60:06

family and friends and have answers

60:08

prepared

60:09

i personally only told my closest

60:12

friends what i was doing and what i was

60:14

planning

60:15

and i’m not kidding either like i only

60:16

told like 10 people

60:19

my rules for who i would tell and who i

60:22

wasn’t wouldn’t tell

60:24

were i would only tell the people that

60:26

needed to know so i could get their

60:27

insight

60:28

or i would tell people that needed to

60:31

know because like they were my wife and

60:32

kids or my parents right again needed

60:35

their inside support system yeah support

60:37

system

60:38

um

60:39

there’s a lot of people who start

60:41

putting the plans together to start a

60:43

business but they want to brag about it

60:44

already as if they’re already in

60:46

business or as if they’re already

60:47

successful and so they start telling

60:49

everybody yeah and and it’s not brag

60:51

worthy at all so there’s no better time

60:54

to start learning how to shut your mouth

60:56

and stay silent with your intentions and

60:59

let your future results do the talking

61:01

for you

61:02

it’s time to learn the value of

61:05

discretion you’ll be a better person for

61:07

that

61:09

if you do encounter friends who seem to

61:12

be prying into you and they want to know

61:14

why you’re not out on friday night and

61:15

all of that stuff have some answers

61:17

ready for them but then be ready to ask

61:19

them to respect that that you’re working

61:22

on something respect your wishes to to

61:24

work silently and and just give them a

61:26

promise you’re going to let them know

61:27

soon you’re just working on something

61:28

you can’t quite talk about yet and

61:29

listen this isn’t

61:32

that’s good advice and and being humble

61:34

is is maybe the best advice you know in

61:37

that statement

61:38

that’s not going to be a problem for

61:39

everybody it’s not having friends and

61:41

everything all over you but we just want

61:43

to give you

61:44

that bit of encouragement yeah and

61:48

a little bit of knowledge of what to do

61:51

if doubts are being thrown your way

61:53

right you know this that that that in

61:55

part that’s not for everybody no but you

61:57

know you’re gonna need encouragement

61:59

you’re gonna need self-encouragement um

62:02

and when those doubts do start creeping

62:04

in just just be prepared for them yeah

62:08

who’s going to who’s going to take the

62:09

most piece of advice from that last

62:10

little bit is going to be the guy who

62:12

realized

62:14

i’ve got to make some decisions with my

62:16

friends i checked my inventory of

62:17

friends and i don’t have the greatest of

62:19

friends right

62:20

those are the friends that are going to

62:21

be putting you under a bunch of pressure

62:23

the the the losers or or the you know

62:25

and we’ve all had them we’ve all had

62:27

friends that was like i kind of got to

62:28

separate away from that guy if i wanted

62:30

to let’s talk about friends real just

62:32

real quick

62:33

um when he says loser friends he doesn’t

62:36

mean i’m not bad i’m not bad no he’s not

62:38

saying poor buddy down the road he’s

62:40

when he says loser friends he’s talking

62:43

about friends that are dragging you down

62:44

yeah you know we’re not talking about a

62:47

a good friend to someone that’s rich

62:49

and a loser friend is someone that’s

62:51

poor there’s there’s a bad thing that’s

62:53

not what we mean by that there’s a bad

62:54

mentality out there like blood’s thicker

62:56

than water right like we were friends in

62:58

high school and we’re never not going to

62:59

be friends anymore well guess what if

63:01

that guy’s a and he’s constantly

63:04

getting in trouble and he’s no good

63:06

right you need to separate away from

63:08

that guy if you ever want to be

63:09

successful in business and you don’t and

63:11

when mitch says separate that doesn’t

63:13

mean necessarily kick the guy to the

63:15

curb and cut them all the way off you

63:16

just fade out you might have to fade or

63:18

you might have to just have sometimes

63:20

you know what people need is a realistic

63:22

conversation yeah dude you’re

63:25

don’t say stuff like that right i’m

63:27

gonna be successful and if you want to

63:29

be you know i’m i’m part of it not part

63:32

of the business but part of you know us

63:34

being friends yeah maybe you knocked

63:36

that off yeah i’m done partying

63:38

every weekend i’m done wondering if

63:39

we’re going to get pulled over because

63:40

we’re driving home drunk yeah and these

63:42

aren’t

63:42

and we’re not trying to life lesson down

63:44

your throat but but you have to be

63:46

prepared

63:47

to be successful yeah

63:49

so

63:50

all of this that we’ve talked about is

63:52

some great stuff again we’re gonna have

63:54

some question and answer stuff coming up

63:55

in the future episodes where we’re gonna

63:57

we’re gonna be able to give you guys

63:58

like an email address where you can

63:59

email in questions and everything so

64:02

as you’re going through these feel free

64:04

to kind of keep those in mind maybe

64:05

write them down and again we’re gonna

64:07

drop that later

64:08

um

64:09

this pretty much wraps up our show today

64:11

on business finance prep and and and how

64:13

your friends kind of intermingle with

64:15

that

64:16

remember if you like what you’re hearing

64:18

please do us a favor and share the void

64:21

with anybody who might want to be

64:22

starting their own company again we

64:24

aren’t professionals at this we don’t

64:26

pay to advertise this show we want to

64:29

grow this show we’re making money off

64:30

this show no no okay we’re just doing

64:32

this show because one to be honest it’s

64:35

more fun than i thought yeah two there’s

64:37

a lot of really good information that

64:39

you know once mitch asked me

64:41

and i thought about it and then we

64:43

started talking about it i mean it’s

64:45

just good information that can be out

64:47

there and when you have something to

64:48

give to the community it it benefits

64:51

your soul to do it right right right so

64:53

um

64:55

this show grows

64:57

based off of your ability to help share

64:59

this show with others so as you’re

65:00

seeing people on social media asking

65:02

questions about starting business or you

65:03

have a friend feel free to text them a

65:05

link to the show or make a comment when

65:07

that person on social media asks about

65:09

any business related questions drop a

65:12

link to the show on there um that is

65:14

that is huge in helping us get this

65:15

message in front of a bunch of people um

65:18

we’ve had private conversations off air

65:20

about

65:21

like what are our intentions with this

65:23

show and none of them um have have much

65:27

to do with money they more have to do

65:28

with

65:29

getting

65:30

this message to as many people that need

65:33

it because there are a boatload of

65:34

people out there who want to start their

65:36

own companies but they just don’t have

65:37

the courage and they just don’t have

65:39

some good concrete info

65:41

other than from stuff where people are

65:43

trying to sell them stuff so

65:45

we really appreciate you guys helping

65:47

getting this message out in front of

65:48

everybody else so until the next show

65:50

we’ll see you again and

65:51

have a great week everybody love you

65:53

guys

66:18

you

The Void #3 Core Episode Business Finance Preparation – Jan 22, 2021

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The Void #3 ** Core Episode ** Business Finance Preparation – Jan 22, 2021

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The Void #3 Core Episode Business Finance Preparation – Jan 22, 2021