Should Your Business Have 100 or 1,000,000 Shares? How to Buy a Small Business

[@DavidCBarnett]

If you enjoyed this video, please subscribe to the channel and hit the 'bell' so you get notified of new videos!

[@BabakHamedani]

Will explained, thank you

[@cannongregory6311]

@Kevin Ahmir instablaster :)

[@DavidCBarnett]

@Bernard Njathi calls can be arranged at www.callDavidBarnett.com

[@mansamusa3627]

Id love to have this guy as my next door neighbor. I'd be talking to him everyday😂

[@DavidCBarnett]

My neighbour’s name is Brent. I do speak to him most days. Currently, there are no homes for sale on my street, but I’ll let you know.

[@jwbnscacpt]

My brother and I have been running an LLC for a little over 11 years now, and we’re ready to kick it up a notch and start expanding by offering shares to some of our clientele. This information is very helpful. I will study all your work on the subject. Thanks for the info!

[@DavidCBarnett]

That is awesome! You may also check www.investlocalbook.com/ to learn more.

[@nemnemfrooti2393]

David....I really like how simply you brake the information, so every one can understand it. U R the King. keep it up

[@DavidCBarnett]

Thanks for the kind words Nemnem. I'm happy to help.

[@RealEstateRadioTV-SA]

Yes, He is King David

[@ilovejesus9303]

I swear he explained it so nice but still can't understand. I think I will listen to this many times. I want to buy shares a friend is inviting me but I just don't get it how it will profit me

[@Jay_Bless]

Thank you Lord for the internet. Am forever grateful. 🙌😭🙏

[@DavidCBarnett]

I'm a big fan of the internet too.

[@Jay_Bless]

@@DavidCBarnett My business grew and I wanted to register it as a company limited by shares. I literally had no starting point. You have no idea how much enlightenment I got from this video. Keep up the great work sir.

[@magix1056]

Apart from all the other channels, this has the best explaination!

[@DavidCBarnett]

Thanks for the kind words! Be sure to sign up for my email list at www.DavidCBarnett.com if you don't want to miss any new videos.

[@23423rwefsdfc]

Sir, at 5 :24 you answered my question that i have been searching since all day long on internet. Thanks !

[@DavidCBarnett]

Hey Rahul, I'm happy to help. Cheers.

[@DavidCBarnett]

gamers no1 sure. Whatever you want.

[@SkylineWebTech123]

@@DavidCBarnett 2 questions What's the value of the share when you first buy it? And is dividends in the shares per month? Or per year?

[@amandamartinez1732]

I can't listen to you all day! You are an amazing teacher. Thanks for this video! 😊

[@DavidCBarnett]

I'm guessing you mean 'Can?'

[@DavidCBarnett]

Wow, thank you!

[@spilkcore-8205]

Excellent explanation. This precisely answered my question in a very clear way. Please make more videos!

[@DavidCBarnett]

Spilcore. Thank you. To be sure and never miss anything I put out, just subscribe to the list at www.DavidCBarnettList.com Cheers.

[@kevinallen4977]

Hi David, thank you for the clarification. Subscribed! But I have a couple of questions: 1) where does preferred stock 2) common stock 3) stock options for employees come in How does this relate with the current video?

[@DavidCBarnett]

Preferred shares are a form of financing. When we talk about 'company shares' we're almost always referring to common stock. also called 'voting shares.' Options give someone the right to buy something at a pre-determined price. This would be an incentive to allow people to buy in. The more under-market the option price, the larger the incentive.

[@mauricio.montoya]

It's 2020 and still it's the nicest explanation around! Thank you David

[@DavidCBarnett]

Thanks Mauricio!

[@amandamartinez1732]

It's 2023 and STILL the nicest explanation around! Lol

[@sunilkumar-jr8xq]

the way you explained is simply amazing. hope you keep sharing your knowledge to negotiate misconceptions about biz.

[@DavidCBarnett]

Thanks Sunil. I do have a lot of videos. Please give me a hand by liking and sharing when you enjoy them. Cheers.

[@REALIGNSPHARMACEUTICALSCOLTD]

I appreciate they way you explained the process. Best wishes for you and your team.

[@DavidCBarnett]

Much appreciated!

[@kingdrew5083]

thanks alot i'm learning so much about stocks i love it!

[@DavidCBarnett]

Great to hear!

[@cgdata9213]

Amazing info - something that you don't get taught in school. Thank you, Sir!

[@DavidCBarnett]

Glad it was helpful Cg!

[@tijanapodvinski3680]

Hey David, great explanation, can you explain how the options affect dilution as well as preference stocks?Thanks

[@DavidCBarnett]

Hey, that's a great topic. I'll add it to the list. Subscribe to the channel or my e-mail list at www.DavidCBarnett.com so you're sure not to miss it when it comes out.

[@davetheman2615]

David, thanks a lot, i've just watched a video on start equity share, and was confused on issuing more shares rather than splitting the existing shares, so this has really helped,

[@DavidCBarnett]

Glad it was helpful! I appreciate the comment.

[@theinnercircle9076]

Hey David....Thanks for the Video. Its very Clear

[@DavidCBarnett]

Glad it was helpful!

[@WealthyArmy]

The most decent explanation of the subject ever

[@DavidCBarnett]

Geez! You’re making me blush Army.

[@titirnelsonlongok]

Good job🎉. You nailed it

[@DavidCBarnett]

thanks

[@FootFC_Editz]

Since im going to start a small construction company, how many shares you recommend i have and what should be the par value of each share?

[@iamerickshirima]

Thank you David Barnett

[@DavidCBarnett]

No problem Erick

[@Night_Hawk69]

Holy smokes. This video is fire 🔥🔥🔥🔥😮‍💨😮‍💨😮‍💨😮‍💨😂😂😂🙌🙌🙌 thank you! Great info!

[@DavidCBarnett]

Thanks J!

[@andrew-isac]

thank u for direct ecplanation and time saving and effort

[@DavidCBarnett]

Thanks Andrew

[@irlanderislin3744]

Thank you for the video. It was very educational and I actually have a better understanding of how shares are diluted.

[@DavidCBarnett]

Awesome. If you ever have a specific case that you want to discuss you can always reach me at www.clarity.fm/davidbarnett

[@edanthonysomera1491]

That clears up the question I had in my mind. Thank you David. That was very helpful.

[@DavidCBarnett]

Glad it was helpful!

[@adv.ai4all]

Super useful Info!

[@DavidCBarnett]

Thanks

[@billsaber]

Great video, thank your for your knowledge

[@DavidCBarnett]

Glad it was helpful!

[@himanshumendiratta85]

Very good explanation .. keeping it simple .. thanks

[@DavidCBarnett]

Thanks Himanshu

[@SCARfinancial]

So simple and perfectly explained

[@DavidCBarnett]

Glad you liked it. Thanks for the kind words.

[@davidbasset7557]

7:47 I don't understand this part. Why can't the parents/kids start a couple of new companies that acquire they're parents' old company? Isn't that similar to a M&A deal? Company A is a bicycle shop Company B (new company) is a tire shop Company C (new company) is a gas station Company B and C could make a deal to acquire company A right?

[@DavidCBarnett]

Hi, The corporation in question is involved with long-term contracts with customers. If they created new companies, then they would have to re-qualify with their customers and insurance companies. The example was from an appraisal practice. If it were something like a tire shop then yes, they could just do an asset transfer to a new company, but in this case the entity and its contracts was the thing of value.

[@davidbasset7557]

@@DavidCBarnett I see, thanks for the response. I've been binge watching your channel for a few days now, it's eye opening. I wish I was informed on these matters while in my university business school.

[@DavidCBarnett]

Learn even more by taking the online course at www.BusinessBuyerAdvantage.com Cheers.

[@downloadingmoney4824]

wow this really amazing and clear to understand. thanks alot.

[@DavidCBarnett]

I’m glad you found it clear. It’s always my mission.

[@currieossitee5185]

that last part was funny!

[@DavidCBarnett]

Thanks Currie.

[@motivatedbrands]

Finally someone willing to share knowledge and not try to make it complicated in order to make people feel like they can not do it themselves so they get retained. It makes a business 'more' likely to retain you!

[@DavidCBarnett]

Doh! You figured out my super-secret business strategy!!! ;)

[@erikthered8989]

VERY helpful. Thanks for explaining

[@DavidCBarnett]

You're welcome!

[@VICT0RLAZL0]

Very well explained Thank you

[@DavidCBarnett]

Glad it was helpful!

[@melordinvestments1076]

Hello Sir Barnett. I have a question/observation...basically we would just make a resolution to create these share changes whatever they are right?...is it important that we have these resolutions and proof of the buys and sells and splits recorded in the company's minute book??

[@DavidCBarnett]

Absolutely. That's what the minute book is for. Make sure you know the local rules about corporation governance to be sure you are compliant.

[@jessesoto6150]

Thank you, David! Very straight forward 👍

[@DavidCBarnett]

Thanks Jesse.

[@AvtarDhillon]

Good information about issuing shares

[@DavidCBarnett]

Thanks for liking Avtar.

[@AvtarDhillon]

@@DavidCBarnett I have some questions about this topic and on Plc companies where may I ask you this question sir ? Thank you

[@DavidCBarnett]

I can always be reached at www.clarity.fm/davidbarnett please be sure to indicate your location when requesting a call

[@AvtarDhillon]

@@DavidCBarnett ok thank you I am based in the uk at the moment but my gold mine project will be in the DRC

[@TomorrowGaming99]

Very helpful thanks

[@DavidCBarnett]

Glad it helped

[@stevannox7519]

Wow this is my first time, this is new for me. Thank you

[@DavidCBarnett]

If you’re interested in business and deals, be sure to subscribe to my email newsletter at www.DavidCBarnettList.com

[@TheGolfer29]

What a fantastic way to explain it! I’m in this exact situation and this has helped me greatly!

[@DavidCBarnett]

Glad it was helpful! Don't forget to hit 'like' and subscribe to the channel.

[@omarharms1493]

Great video. Thank you. 1 question though........when adding more shares for a third party to join. Do the founding shareholders need to pay anything? or is it just a agreement on paper stating who owns how much?

[@DavidCBarnett]

There is a record called a share register which keeps track of who owns how many shares. If you add a new investor and sell them newly created shares, you just add this entry to the register.

[@Kawaiigirl4.0]

How are you doing the math on the calculator? I have seen many finance videos and no one has ever told the viewers how exactly they are doing the calculations.

[@anshulb6128]

Hi David, If the company keeps 100 shares and all the three shareholders have 33.33% shares , why should the shareholders increase the number of shares? According to the calculation the profit is anyways divided equally ? How does it make a difference ?

[@DavidCBarnett]

If there were three shareholders and you never wanted to add any more or never wanted to make any of the changes suggested in this video, then why not just have three shares? I have a client with this kind of structure. Three shareholders... three shares. This is the point of the video. The number of shares is completely arbitrary and is driven by the plans for the business.

[@WealthyArmy]

@@DavidCBarnett so the number of shares is more or less just to make accounting easy.

[@adamsofian3358]

this guy is awesome

[@DavidCBarnett]

You should see me in my superhero outfit.

[@uxkiti]

nice but quick question as an ltd startup should i start with 1million shares and if so can i issue more as time goes on or is it better to have 1million but split only a hundred thousand

[@DavidCBarnett]

Depends on the rules you set out when you incorporate as to whether you can make more or not. Also, any shareholder agreements you get into will often talk about who/when/how more can be issued.

[@filmaker256]

The secuartary of state will authorize enough to your Corp so you don't have to keep coming back to file. Now going public , now that can be difficult

[@DavidCBarnett]

Going public is a whole different thing. agreed.

[@filmaker256]

@@DavidCBarnett and very political! Also your stock has to usually maintain a price above a dollar.

[@vytg706]

so easy to understand, thank you!

[@DavidCBarnett]

Glad it was helpful!

[@sarahrussell2447]

Question… do these people who buy the shares have to go on the mortgage? Looking to buy atm and another person wants to become a share holder and put down the deposit. How would this work please?

[@DavidCBarnett]

How the shareholders relate to loan guarantees is based on the bank's policy. And usually it only matters at the point the loan is made. So, answer is... it depends.

[@TrEo2322]

i love buy backs.

[@DavidCBarnett]

If you're into capital gains, it can be awesome.

[@TrEo2322]

@@DavidCBarnett you should teach about having a private company and do buys back with other private company’s to raise value. also teach becoming an accredited investor.

[@talebbagazi1435]

Thank you so much for teaching this point.

[@DavidCBarnett]

Glad it was helpful Taleb!

[@markjaeger5198]

Thanks David. Our current $350K of debt = $4,000/Mo. in debt service. This is the monthly amount that could be put to work for the business instead. Local brewery that is breaking even now . These investors would be helping out, and betting on blue skies more than an immediate big return.

[@DavidCBarnett]

Well, If I was to invest $350k into a local microbrewery I'd be looking for about $105K/year in returns for the risk and then I'd be looking to leverage the position by adding debt... which you already have. Unless you can find a way to sell shares to beer lovers who don't look for any return on investment then you should be looking for other solutions to your problems. Like the fact that you invested $350K plus your own time and money and the business is just breaking even. The problem is not the capital structure. For example, you may need more sales and some amount of money to do a marketing campaign. In this case, you could find an investor to put in a much smaller amount of money to grow the sales and allow you to make more. The debt you have will work to magnify the return on equity. In almost every case, debt is cheaper than equity. Many businesses would be envious of the fact that you've been able to borrow for this business, especially since it's a startup.

[@prorigami2444]

This helped me a lot to understand shares. Thank You!

[@DavidCBarnett]

Glad it was helpful!

[@prorigami2444]

@@DavidCBarnett Can a company issue more shares at a certain price and buy another company in exchange for those shares?

[@akshatsharma4216]

That was helpful 👍👍👍 thanks!

[@DavidCBarnett]

Thanks Akshat.

[@misskairagreamchasser1592]

I enjoyed it so much

[@DavidCBarnett]

Thanks

[@emmanuellegacy7363]

Thank you so much sir

[@DavidCBarnett]

Most welcome

[@doneallionel4472]

I’m just learning about investing and getting into business, but I don’t have a company and I don’t have much money, how can I buy share into the company I’m working for right now?

[@DavidCBarnett]

If it's a publicly traded company, contact a stock broker. If it's private, then the owners would have to sell you some shares. It's not very common that they would do this unless they're running an employee stock program of some kind.

[@rebivri7679]

Thanks for the great video. Just about to start a new tech company that will require several rounds of funding downstream. Is there any advantage to starting with e.g. 1,000,000 shares instead of 100, thereby avoiding share splits? Also, does the number of initially issued shares have any bearing on Capital Gains Tax?

[@DavidCBarnett]

Hi, If you know you'll be issuing lots of shares, then make sure the company can issue an unlimited number. Capital gains are determined by the difference between the price a share is purchased at and the price you sell it at. Not how many are outstanding. As you add rounds of funding, the investors are increasingly going to have a say in how any new shares are created or sold. My advice is to begin with simplicity. If you put in money and time, maybe value the shares at $1 each and issue yourself enough to cover your investments. As soon as you bring investors onto the scene, the value, number, control etc will all start to change subject to your negotiations.

[@cvicapitalgroup6520]

Great Video David

[@DavidCBarnett]

Thanks so much.

[@Ludawig]

Thanks for your content David

[@DavidCBarnett]

No problem Ludwig. Good luck in your business pursuits.

[@suzalkumar823]

Very useful information sir, thanks.

[@DavidCBarnett]

Thanks Suzal

[@vharry822]

Great video! one question though. why are we increasing the number of shares from 100 shares to 50 shares when John decides to drop out. If the company(Sally) buys John shares, why won't the company shares remain as 100 shares with Sally owning 100%?

[@DavidCBarnett]

The company and its owners are separate people. If a company buys back its own stock, the shares are 'torn up' leaving the outstanding shares as the only ones left.

[@CoreyChambersLA]

You can transfer shares by buying and selling shares.

[@DavidCBarnett]

True.

[@ThatLegendRicoKing]

Great information. Thanks David !

[@DavidCBarnett]

Thanks for watching. Be sure not to miss anything new by joining the list at www.DavidCBarnettList.com

[@RealEstateRadioTV-SA]

David thank you for Killing Goliath once again, so that the children of God can rejoice in His name and power once again. You have nailed this tutorial. .thank you thank you and many more thanks. Regards Gaven Malope South Africa / Sandton

[@DavidCBarnett]

Yup, duck and cover if you see me swinging my sling.

[@RealEstateRadioTV-SA]

Thank you@@DavidCBarnett , now i got some of your business anointing let me go kill my Goliath. David , do you know if there is a limit to the authorization of preferred shares . or the authorization limit is for common shares ONLY ?

[@DavidCBarnett]

I'm not sure where you are and what the rules are in your jurisdiction. This would be something regulated by your state or national government. Where I live, corporations can issue whatever number of shares are stated in their incorporation documents, or even 'unlimited' if this is what the charter says. This would go for common, preferred, etc

[@RealEstateRadioTV-SA]

@@DavidCBarnett , You are the Best Indeed . I believe this is a general rule , i needed a sounding board. i am waiting for my commercial attorney's to draft or amend my incorporation documents . so in the meantime i was doing my research to familiarize myself with the language so i can have a meaningful meeting and ask relevant questions to ensure the success of my LLC ( in South Africa we call them PTY) . Thank you once again for thanking the time and writing back to me.

[@andrebritz7729]

David, how do existing shareholders buyout an exiting shareholder?

[@DavidCBarnett]

Well, you either have a mechanism for that in your sharelholder's agreement or you negotiate it. For example, you could offer to buy the shares for a certain amount but maybe also get financing from the seller so you pay over time. Also, the exiting shareholder could sell the shares back to the company for cancellation. This would grow the % ownership of the remaining owners. There are taxation pros/cons to a lot of these options so you'll need advice from a local CPA.

[@misskairagreamchasser1592]

Thank you so much I need more information please

[@DavidCBarnett]

I'm available for people to chat at www.Clarity.fm/davidbarnett if you want to go over your situation.

[@dr.rasheedhadidi266]

I have a new C cor in Colorado, and I need to list it to Stock market and sell the shares, so what you suggest?

[@DavidCBarnett]

I recommend you speak to a securities attorney. I know these guys in Colorado... www.doidacrow.com/

[@Kevinwatches]

This may be stupid or I might not have finished yet lol Say 1 person creates a business issues 100 shares. Later 2 others decide to join in. All are blue collar workers cleaning sidewalks but the first person brung most of the capital. What's the best way to determine the amount of shares they get? Of course if person 1 invested 100$, person 2 invested 50$, but person 3 didn't bring capital but brought knowledge. Would we just issue and divide shares by FMV of what the bylaws think the knowledge brings?

[@danb.3190]

How does this work if you want to incorporate different types of shares (some with and some without voting rights)?

[@DavidCBarnett]

It just depends on what the investors will accept. This stuff is totally open to creativity, as long as the different parties agree.

[@taiwoadeoti8203]

wow! uve just solved my agelong conundrum

[@DavidCBarnett]

Awesome. Glad to help.

[@ayakaterashi1933]

This was GREAT. Thank you

[@DavidCBarnett]

Thanks Ayaka

[@rakeshpk4991]

Thanks for explaining.

[@DavidCBarnett]

Thanks Rakesh

[@twokind7801]

Thanks David

[@DavidCBarnett]

My pleasure Tony

[@samitkumarmandal1318]

Can you please explain me a Real Estate company's shares and how investors get profits mean how much they wanna get and can get

[@DavidCBarnett]

hmmm, there are a lot of pieces missing for me to respond to this. If you want to talk to me and use a specific example, I'd recommend a call. You can arrange it at www.clarity.fm/davidbarnett

[@godsdsipl]

I am in the startup phase of a new c corp. In doing so we started with 1,000,000 shares. I want to make sure that I as the founder always have controlling interest so that a board of directors cannot in time come in and vote me out such as what happened with the founder of Uber. I read how they board of directors tried to do the same with the founder of Facebook but was unable to do so because he owned controlling interest. How do I divide my shares so that I always have controlling interest along with so much preferred stock and so much common stock? Right now, I hold 70% of the preferred stock, I do have a cofounder who holds 25% and another who hold 5%. We would like to add common stock to our portfolio.

[@DavidCBarnett]

You need to give yourself more shares at the same time as you create new ones for new investors. Watch my video about dilution here: kzbin.info/www/bejne/fKXSmIuPjah2Z9U You may also want to investigate different classes of voting shares like the owners of Magna International use. just google that and you'll find articles.

[@hovnanghukasyan5254]

Thank you

[@DavidCBarnett]

You're welcome.. go to www.DavidCBarnett.com and join my mailing list to get new videos like this one each week. -dave

[@theinnercircle9076]

Just One Question: Is it the money invested that determines the share capital? I noticed in the Sarah investment of 75K being translated in to 75k share capital. Kindly clarify for me

[@DavidCBarnett]

In the example, I'm assuming that each share is being valued at $1. This is not always the case and the value can change over time as the business changes and grows.

[@juliechambers8416]

Does the number of shares in the business determines how much dividend one gets paid when on opt to pay oneself dividend vs salary?

[@DavidCBarnett]

No, but generally all the holders of the same class have to receive the same amount of dividends per share owned. This dividend doesn't have to be specified in advance and can change whenever the directors choose. Preferred share classes often do feature a pre-set dividend amount in exchange for not having voting rights for example. Operating and shareholder agreements may be able to affect this though so you would need to have a talk with a local attorney familiar with company setups if you wanted to do something out of the ordinary.

[@MajidVeyseh]

David do you know how to have a share that does not dilute if managers bring in capital?

[@DavidCBarnett]

You can have several classes of share. For example, the new investors could buy 'preferred' or 'class B' stock. Or you could have an agreement such that if new shares are issued, you get a proportionate number of new ones. That's what happened in that movie 'The Social Network.' Zuckerberg did not get diluted, the other guy did.

[@theAffiliateProgram_TAP]

I need help registering my company and making the shares seem appealing etc and hold a serious value

[@theAffiliateProgram_TAP]

Ensuring I never have the option for ppl to take enough % to fuck me over u know

[@theAffiliateProgram_TAP]

Like I see u can group you set rules in various classes and amounts etc

[@theAffiliateProgram_TAP]

Looking into these issues has lead me to you. And I hope I can learn the info from the video. Either way I will learn more about what people think. So win win

[@theAffiliateProgram_TAP]

Id even welcome a partnership for the right advise

[@theAffiliateProgram_TAP]

The sooner someone can help me the better

[@kristiankieffer9284]

Great video, very comprehensive

[@DavidCBarnett]

Glad it was helpful!

[@atefehghasemzadeh9800]

How to do paperwork of transferring 50 shares of 100 of my corporation to my spouse ? Can I do it online ?

[@DavidCBarnett]

It depends on where you are but usually is just done with the minute book and share register. You may have to change something with the government if you're making him a director. My best advice to you is to seek legal counsel locally. This transaction may be scrutinized long into the future for tax or family law issues that you can't necessarily foresee today.

[@nitsdas5869]

Teaching & Explanation level is 100%. 👍 sir, can u teach physics and maths??

[@DavidCBarnett]

Hi there, thanks for your kind words. I'm sure there are a lot of great teachers out there teaching those topics. Maybe I'll look again in a few years as a retirement project.

[@nitsdas5869]

@@DavidCBarnett keep it up sir.. u r doing great.

[@alejandrocarnet9718]

Hey David I would like to know how a business came out with the stock price just at the beginning let say if my business worth 1,000 , meaning that l have the ability to issue 1,000 Share at 1 dollar each one

[@DavidCBarnett]

The people creating it put a price on it. It's up to investors to decide if they'll buy them or not.

[@Quizzone25]

Very helpful, Thanks Mr.David. Say for example after established a service provider company I needed new shareholders to invest to expand the company. It is possible to increase the number shares from 100 to 1000000 if the initial investment was say $10000. Also who has the right to increase or decrease the number of shares if I sell 700000 shares. After your reply I will appreciate if you share links of guidelines or any other useful references. Thanks

[@DavidCBarnett]

The board of directors has to approve the issuance of new shares. When people invest, they will likely want to restrict your ability to do this in order not to be diluted in their ownership position. I don't know where you're located so you'll have to find your own info as this stuff can change from jurisdiction to jurisdiction. An experienced business attorney can help you locally.

[@ma-ansarmiento3032]

Hi! How does a company create shares?

[@DavidCBarnett]

Either at the point of creation of the company, or by an act of the board. Then they're recorded in the corporate minute book.

[@confidenceondatrack76]

Can u do a video explaining equity in a company? I hear it all the time on shark tank but still don't 100% understand what it means. Is it the same as shares? Like when a shark says they want __% equity

[@DavidCBarnett]

Great question. I'll put this on the list and do it as a whiteboard video once the contractor is done in my basement. Happy new year.

[@lovelyboy990]

Hello, Many thanks for your video. Can you please explain how to valuate new startup business idea? And how to calculate or valuate the sweat equity for managers who will contribute with know how for example? Last question, if the new company established by one owner and he got a lettet of intent to sign a service contract with a client with total amount 50K$ for 18 months, and before signing the contract he wanted to sell a part of the company to get some cash to finance the company and increase the works to meet the contract obligations, how should he calculate the percentage and value of the shares that he should sell? Thank you in advance :) Good luck

[@DavidCBarnett]

Wow, those are some pretty specific questions. I've done a video before on pre-revenue start-ups kzbin.info/www/bejne/bqC9eKNnms-ibKc Your sweat equity question and the questions about selling part of the business would need some discussion so that I'm clear on what is going on. I recommend a call. Schedule it at www.clarity.fm/davidbarnett

[@estebancq]

How do you decide how much the shares are worth

[@DavidCBarnett]

It’s the value that’s agreed between the parties. If you’re working on a specific deal and need more precise direction, just book a call with me at www.clarity.fm/davidbarnett

[@markjaeger5198]

I would like to create and then sell shares in our company and then use the funds to pay off business debt. The existing share holders percentage stake would drop - but our company would now have $ to work with that has been going to pay off debt. Any problems with this approach?

[@DavidCBarnett]

YUP! Equity demands a greater rate of return than the cost of debt in most cases. If your investors are smart, they'll be demanding 20%+ rates of return for investing in a risky small business. (now maybe your capital structure is not optimal and your debt costs are too high, there's not enough info here to tell) Watch this video to see what I mean about having too much equity... kzbin.info/www/bejne/rIXWeqqblK6Zbpo Also, to sell shares in a biz you need to be sure to comply with all the local securities regulations. It can be onerous unless you're just going to hit up family and friends.

[@magneticmoneymore]

David, I want to sell shares to raise capital. What are the steps to take?

[@DavidCBarnett]

Find out all the rules where you live. Selling shares in a business is highly regulated everywhere.

[@magneticmoneymore]

@@DavidCBarnett, ok I'm in Georgia, does that help? I have a viable brand and need to get it to market. I don't have the tangible like business credit or credit cards to float the business. Do I have to pay the state to declare stock?

[@DavidCBarnett]

@@magneticmoneymore I did a quick Google search and found something called the Invest Georgia Exemption. You should do research on this, seems like the state has a lot online about it. Good luck.

[@wolfganggermain7175]

Thanks sir.

[@DavidCBarnett]

Most welcome

[@marcelinojr.deperalta3735]

Great Content

[@DavidCBarnett]

Thanks, glad it was helpful.

[@SomenathChakraborty]

Why you keep the price of shared fixed? It is oversimplified and sometimes do not get the correct value change as share price is always dynamic in nature.

[@DavidCBarnett]

The video demonstrates the issuance and cancellations of shares for admitting and removing shareholders. The value of the shares is addressed in other videos.

[@SomenathChakraborty]

@@DavidCBarnett Great, please make some advance real scenario analysis by which people really get great help rather than the simple concept. Overall, I appreciate your videos and subscribe your channel, like it too.

[@David-mr9cm]

Thank you David for your video on this. I had one question if you don't mind. Why even bother with shares, and not just deal with percent ownership? So when "Sarah" for example wants to buy into the company, the company adds her 75,000 shares to the total share bank, giving her 6%. My question is - why can't Sarah just offer the company money for 6%? Why can't she just tell Sally and John that she will give them x amount of dollars for 6% of the company. What is the point of issuing shares as a whole? Why is there a word for it, isn't it just equity?

[@DavidCBarnett]

I work really hard to have small business people not think in terms of percentages. It actually causes blocks in how you think about the business and capital structure mentally. Nobody talks about their percentage ownership of Coca-Cola, for example. It's because the shares outstanding are always changing as they issue equity or do buybacks. In your question above, 'Why can't she just pay x for 6%?' That works fine if she's buying their equity and giving the money to the other owners. But what if the idea is that the money needs to go into the company? If she put her money into the company for 6 new percentage points of ownership, then now the company has 106% of owners interest. Which is actually fine. Watch the video again. Cheers.

[@David-mr9cm]

@@DavidCBarnett Thank you for your explanataion

[@osmprojects]

One question, when you issue new shares from 100 to 1000000 , do you record it as paid up capital?

[@DavidCBarnett]

Only if you issued them in exchange for money and new money went into the business. If you’re splitting existing shares, then the amount of capital didn’t change. This action would be taking place in the share register of the minute book.

[@osmprojects]

David Barnett thanks!! Does any of your book discuss this video topic, i.e different ways of issuing shares, pros and cons etc.. thanks

[@Sam-ue4rv]

Can you recommend where to buy shares? I'm new and searching is a Broker like HL Aj Bell Admiral the best? I seem the charges and I'm sceptical the fees are like £10 everytime I trade.. and also they have a fee.. I want a Mutual Fund in an index BUT want to trade individual shares.. what would u recommended

[@DavidCBarnett]

Sorry, I don't offer opinions on publicly traded shares or investments. If you want to know what I think of public stock markets, check out my 2014 best-seller; Invest Local. Available from Amazon.co.uk

[@mishackmadubandlela9522]

So, what if when the company was registered at an Intellectual property commission, it was given either 100 or 1000 shares? Does that mean it can't issue out more than that 100 shares‽

[@DavidCBarnett]

Depends on how it was registered and the rules in the jurisdiction. In some places, you have to specify the number of shares the company can issue, in other places you can simply say 'an unlimited number of common shares' or list out the classes of shares. There is usually a method to adjust it after with some other kind of filing. Best to talk to an attorney in your jurisdiction who does corporate affairs.

[@mishackmadubandlela9522]

@@DavidCBarnett so, which kind of shares do the owners of the company have... Common or preferred‽