Eye on Entrepreneur > Net Worth Statement

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I’ve been filling out a net worth statement ever year beginning shortly after I started my part-time, nighttime, private physical therapy practice. The year was 1980. During the day, I was managing the Haverford Community Hospital Sports Medicine Center that I helped to create. At night, I was building my first business, called Orthopedic and Athletic Rehabilitation (OAR). I oared along three nights a week treating patients with a variety of orthopedic injuries. Then in 1983, I decided to take action on my vision of starting a privately owned sports-medicine company.

Following my due diligence – where I was assured of the support of referring physicians – I resigned from Haverford Community Hospital. Hospital management made my decision difficult, with enticing offers of more money, more equipment, and more space, but none of those points were an issue. I wanted something of my own, something that would fly or fail due to what I did, or didn’t do. I had passion, ambition, and ignition. I had knowledge, experience, and enthusiasm. I had confidence, work ethic, and vision. What I didn’t have was money. But I knew where they kept it.

This sharply dressed banker, Harmon Spolan, the president of Jefferson Bank, listened attentively to my eager and grandiose plans to convert my evening OAR business into what I would call Sports Physical Therapists. It would be a service-oriented business that would blend the sleek look of a fitness center with the pristine sanitation of a hospital while incorporating the techniques and attitude of a professional training room. I had a 1,300 square-foot facility scouted out. It would be modest, but it would be mine. And I needed $40,000.

Harmon thumbed through my basic business plan and then looked up and asked to see my net worth statement. I, in turn, suddenly looked like a little boy with his hand caught in the cookie jar. What statement? I had never heard of a net worth statement. My physical therapy degree at the University of Pittsburgh didn’t include any financial planning tools, and I thought what I had concocted as a business plan was sufficient to garner the support of a bank loan.

Harmon put everything in perspective with one sentence. “I need to know what you’re worth so you can repay our loan in case the business fails.” The idea of failing never crossed the mind of the Prince of Positive Attitude. But quick as a hummingbird, a blank net worth statement crossed the banker’s desk for my immediate attention. I took it home, and after completing the net worth statement and the application process, I had my loan and had realized my dream to start my own business.

Every year since that eye-opening day, I’ve completed a net worth statement. It’s been a convenient tool when applying for future bank loans, a great way to monitor my financial goals, and a mandatory document for demonstrating my worthiness when opportunity knocked. And opportunities do knock; you just have to listen.

The worksheet below is self-explanatory and includes three simple steps. First step, fill out what you own – your assets. List your total amount of cash including the amount in your savings account, checking account, money market fund, and certificates of deposit; post the value of your stocks, bonds, and mutual funds; value any real estate you own; note what your car, truck, and/or motorcycle is worth; record your retirement accounts, 529 college savings plan, and the cash value of your life insurance policies; and lastly, list your personal property, such as jewelry, furniture, and electronics.

Also, if you hold an investment in a business, whether it’s a corporation, partnership, joint venture, or limited liability corporation (abbreviated as an LLC), record the value associated with your ownership percentage.

Second step, fill in what you owe – your liabilities. List all loans including car, student, and home improvement; total credit card balances and your mortgage balance; and note any other account payables.

Third step, subtract the total liabilities from the total assets. This is your total net worth.

So what is your magic number? Don’t feel bad if your net worth number isn’t where you want it to be. That’s why you’re listening to me! Imagine if I was your personal trainer – a role I enjoyed many moons ago – and I was going to initiate a fitness plan for you. I wouldn’t prescribe the first sit-up without gathering all the personal data on your present state of fitness. I’d want to you complete a fitness report card with your weight, waistline measurement, blood lipid levels, resting heart rate, blood pressure, etc., and I’d wager the report card wouldn’t look pretty. But it’s a starting point on which you can measure progress. Well, that’s what today’s net worth number is – a starting point. A starting point for your future success! -- PC

NET WORTH STATEMENT WORKSHEET

ASSETS (what you own)	VALUE

Cash	$
Savings Account	$
Checking Account	$
Money Market Fund	$
Certificate of Deposit	$
Stocks	$
Bonds	$
Mutual Fund	$
Real Estate	$
Automobile (truck, motorcycle, boat)	$
Life Insurance (cash value)	$
Personal Property (jewelry, furniture, electronics)	$
Retirement Accounts	$
529 Savings Plan	$
Business Ownership (LLC, JV, partnership)	$
TOTAL ASSETS	$

LIABILITIES (what you owe)	VALUE

Automobile Loan	$
Home Improvement Loan	$
Student Loan	$
Credit Card Balances	$
Mortgage Balance	$
Other Loans	$
TOTAL LIABILITIES	$