Getting To Yes With Your Banker – Part 13

This is the 13th in a continuing series of articles from Ron’s newest book, Getting to Yes with Your Banker, which includes 93 secrets you likely didn’t know about dealing with your banker. Presented in a Click and Clack format, from an entrepreneur’s and a lender’s perspective, the book is co-authored by Ron Sturgeon, a serial entrepreneur, and Greg Morse, founder and president of Worthington National Bank, a community bank with four locations throughout Tarrant County.

The book is packed with tips and advice about how to choose and get along with a banker, what your banker wants to see and other valuable tips for both start ups and existing businesses from a banker’s and entrepreneur’s perspective. Today’s article discusses personal financial statements.

Doing a Personal Financial Statement Right

Ron: All bankers have their own little thing that they like or don’t like to see on a personal financial statement. I took my personal financial statement to one banker and it didn’t list any personal belongings. I was wearing about $10,000 worth of jewelry when we met, but I hadn’t put any of that down on my financial statement. It turns out that a guy who had been to see the banker before me had listed all of his belongings, and he put personal items on there like TVs, clothes and jewelry. Now, we all know that we have TVs, clothes and jewelry at home, but we also know that if we’re hit by a bus tomorrow, they aren’t worth a thing. However, this guy had listed (or placed a value on) all his personal belongings along with his real estate and cars. Then, the banker met with me, and I didn’t list any personal belongings on my financial statement. His attitude was that the values on the real estate and everything else that I had listed were probably more realistic than those of the guy who tried to show every dollar on his personal financial statement.

Greg: A lot of the statements that people give me have the appraised value of their property, so I’ll double-check that with the appraisal district numbers. The tax appraisal values better not be too far off from the numbers the customer gave me. If you paid $500,000 for this property a year ago, and now you’re telling me it’s worth $1 million, that’s a red flag for me.

Ron: On my personal financial statement, I show the real estate and any other large assets at cost AND at market. This provides the banker with an acid test. If I paid $500,000 for it and I am saying it’s worth $600,000 five years later in an appreciating market, he believes it’s  right. If I say I paid $500,000 and it’s worth $700, 000 (accompanied by a story about what a great deal it was), he thinks I am likely a dreamer and/or full of crap. Bankers are smart, so don’t waste time trying to fool them. You’re a lot better off having fewer assets but being really credible than having overinflated assets and not being credible at all.

Greg: I don’t want to see that you’ve put your jewelry, your stamp collection or your arrowhead collection on there. It’s much classier to disclose every penny that you owe, but we know you haven’t put down everything you own.

Ron: I always make a statement in my financial statement that the real estate value is conservatively based on my knowledge of market comparables. This won’t work unless you have creditability in this area. For purposes of the math, it’s based on cost. You have to be honest. It goes with letting them in the tent. It’s a lot like doing a deposition: Always just answer the questions you’re asked and don’t try to add more information.

Greg: And again, that is going to speak to the kind of relationship you’ll have with your banker in the future. I want to know that you’re going to give me the information I need, when I need it.

Remember only you can make business great!

Ron Sturgeon, founder of Mr. Mission Possible, small business consulting, combines over 35 years of entrepreneurship with an extensive resume in consulting, speaking and business writing, with seven books published.   A business owner since age 17, Ron sold his chain of salvage yards to Ford Motor Company in 1999, and his innovations in database-driven direct marketing have been profiled in Inc. Magazine. After the repurchase of Greenleaf Auto Recyclers from Ford and sale to Schnitzer Industries, Ron is now owner of the DFW Elite Auto suite of businesses and a successful real estate investor. Ron is a web expert, but he is also an expert in helping all types of small businesses become more successful and more profitable. Ron can be reached at 5940 Eden, Haltom City, TX  76117, 817-834-3625 or by email at