Understanding Balance Sheets - 60/101 Entrepreneur Mistakes & Lessons

When you are in the real world; bankers, investors, accountants and business partners, among other people, only care for your balance sheet. Few people care about the grades you got from university or school.This is not to say your schooling was in vein, but you've got to realize what the world's priorities are.When I first started my journey I learnt that some business people, especially in the USA, will mainly care about how many times you've failed in business already. So they can figure out whether you are worth working with or not.One of the most important aspects of a balance sheet is your number of assets, which are things that put money into your pockets. The more of these you have, the richer you become. An asset, really, is anything that puts money into your pocket- you do not want to get income mixed up with capital appreciation, which is the value of something going up. The problem with capital appreciation is that you do not have easy access to that cash from the newly appreciated asset.Liabilities are the opposite to assets: they take  money from your pockets, and you may be able to use capital depreciation as a tax deductible, depending on where you live. But this is another conversation and topic.Your net worth is the collective value of all your stuff. So people will look at our car, your property and other tangible things that you own.I'd prefer to look at income, as opposed to net worth. Because income is cash that you have access to right now. The problem with things like property going up in value is that it is hard to get that cash. What is called illiquid, meaning that to extract the new value of the house you have to sell it, which could be a lengthy and costly process.Rich people invest in, buy and build assets.Middle class people buy liabilities, thinking they are assets. And poor people buy knick knacks.So, you've got to ask yourself: what do you spend your time and money on?Question of the day: what do you understand about balance sheets?There are another 100 mistakes that I made here.