Right here is one of the most informative and valuable exercises you can do before investing in a franchise. By filling out this personal balance sheet, you’ll be able to determine your net worth which is an important step in the process of becoming a business owner.
Why? You’ll discover what assets are available to you for investment in your business, and it will also help you get a clearer picture of whether a bank will be likely to finance you or not.
When the numbers don’t balance
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.
Conversely, if your total assets amount to R500 000 and your liabilities amount to R750 000, your net worth will be –R250 000 aka, you’re in debt of R250 000.
It’s not the end of the world if your net worth is in the red. Though an uncomfortable exercise, it will help you change your spending behaviour and reduce your expenses, while working towards your goal of being your own boss.