Once you’ve subtracted your liabilities from your total assets, you’ll be able to see what your net worth is. For example, if your total assets amount to R1,5 million, while your total liabilities amount to R750 000, your net worth is R750 000 and it’s up to you to balance how much of that will go towards investing in a franchise (including working capital).
Related: Finding Franchise Financing
Conversely, if your total assets amount to R500 000 and your liabilities are R750 000, your net worth will be -R250 000, which means you’re in debt of R250 000.
Remember, if you’ve bought a property worth R1,5 million but you still owe R1 million on the bond, you don’t have an asset of R1,5 million, rather you have liability of R1 million, and assets will only amount to money recuperated (minus costs) in its sale.
It’s not the end of the world if either your net worth is in the negative. Though an uncomfortable exercise, this will help you change your spending behaviour and reduce your expenses, while working towards your goal of being your own boss.