David Richter
speaker
79 appearances
1 recordings
1 series
first heard Jan 2025
last heard Jan 2025
David Richter’s voice in public audio — every appearance, attributed to the second.
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Appearances
form or version or other book like have you read rich dad poor dad like he says a million times like pay yourself first like we're out hit that book and the rest of his series then there's a bunch of other books that say the same concept like the richest man in babylon a portion of all you have is yours to keep the seven habits of highly effective people says put first things first same thing it's the same concept in profit first it's like if you're running a for-profit business
You need to be thinking about profitability. You should be making money because without it, you won't be able to grow, scale, or have people on the team or give or travel or whatever you want to do with your business. And so he's just like, here, here's a system. That's what I loved about Profit First. It went a step further than all those other books and said, here's a system to actually do that.
And that's what Justin was alluding to with the bank account set up a couple minutes ago. You know, it's like it literally revolves around you being intentional with every dollar, whether you love Dave Ramsey or hate him, he's made the envelope system very popular in the personal finance space of like being intentional with every dollar.
And literally he's telling you, take your dollars out of the bank and put them in envelopes, you know, and earmark them for certain things. But in business, you're not going to do that. You're going to set up bank accounts. And because a lot of people here's the wrong thing.
Here's what I see a lot of people that and just where we were and just where lots of people that I've worked with our they have one big bank account. And that's the big black hole bank account. We call it now. It's like money goes in money gets sucked out to the swirling vortex of doom never to be seen again. And that's when you're asking yourself, where did my money go?
And it's like you have no clarity. And that's where separating out the money into different bank accounts to know where your money is gives you clarity, which gives you control versus the chaos that's just ensuing in that bank account.
And the specific bank accounts, if you're listening to this now, this might be a time to take out your paper and pen and write these down because this is an actual action step you can take from this episode. You can set up the fundamental accounts from Profit First. The first three are the golden trio of bank accounts. I call them the golden trio because I'm a huge nerd.
I love Harry Potter, Star Wars, all the big epic sagas. They've got three main heroes, right? Luke Hanleia, Harry, Ron, Hermione, like making sure good wins along the way. And it's a fun story. And then when you get to the end, good ultimately conquers over evil, right? Your business, though, is so much more important than those. And it can take a lesson from it, too.
Like we need three main heroes in our business, and that's the golden trio. They help you keep more of the money. I'm literally going to give you three bank accounts that will help you focus on the profitability of the business. The first one is profit. The second one. Yeah. Shocker, right? Second one is the owner's comp, which I love just as much. We'll talk about that in a second.
Then the owner's tax account. I love these three bank accounts because they all focus on you, the owner, the difference between all of them. Profit is more of like, why did I start my business? And it's like the big want, like, what do I really want from it? Do I want to take, you know, crazy trips? Do I want to give, you know, a lot of money away?
Do I want to go and be a part of a mastermind that I've never been part of before? Like, you know, like, do I want to jump in with Justin and get mentoring from him? It's like, these are the things of where you get to go out and do the fun things you want from life. And I would do that on a quarterly basis, taking the money out of their owner's cop. Here we go.
This is how we could have solved the 25 deals a month issue. This is how Justin and his business could have solved the 1% or whatever, you know, like the single digit percentage, you know, like making all those seven figures that I see this over and over having an account dedicated to the owner to pay themselves consistently. by a percentage that you decide, that the owner decides.
At first, if you're already in the trenches, you might be like, well, I'm not paying myself and I'm not profitable. I would warn you right now, this is the exact time you need to start implementing something like this because you're not profitable. So let me just put that as a side. The other bank account would be the owner's tax.
When we're recording this, it's right in the thick of tax season, and it's like, good God, do you have your taxes? Do you know them? Are they up to date? Are you going to pay an arm and a leg because you're only an active real estate investor? Well, if you are, this is where an owner's tax account is like a peace of mind account. These are to save from the business.
Like every deal you do, you slice a little bit off, put it into the tax bank account. And then when tax time comes, you don't have to be like hair on fire. Oh, shoot. I got to do four flips right now just to cover this tax bill or like my first six figure tax bill. What do I do?
I actually talk about one of our friends from the groups were a part of just like in the book where he got his first six figure tax bill. And he's like, It took him years to pay that off before he found profit first, and then it took him like a year to get it out the door. And it's like that's a peace of mind account. So those are the first three, profit, owner's comp, owner's tax.
The other two, well, you already have one of them. You already have OPEX. The operational expenses, that was your black hole bank account where all your money flows out. Well, now instead of it being chaos, it's only the outflow. I do separate out income.
That's the fifth one is income would be you get your wires in and now you can see where's my money and how much did I bring in over the last month? That's more of like what you made.
Yeah. And in the book too, like if you ever get money in like from a private lender or something, that's where I'd give another system for that. If you're a real estate investor, I will say though, here's a bonus account. If you are a real estate investor, especially in the active flipping space or active side, if you're getting money from private lenders, we call it OPM, other people's money.
So if you take money from other people, I would highly recommend an account dedicated to their funds. And this is where people ask me, well, what if I have a bunch of lenders or what if I have like five projects going on at a time?
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