Thursday, June 30, 2016

You can only cut so much

When the economy tanked in 2007-8 it finished off a small business we had owned for 15 years. Sales had been down for a couple of years before the economy went south, but the recession finished it off. I do not blame the economy. A poor economy only points out the problems that exist in an organization that a strong economy hides. I have written an e-book that I believe will benefit any small business owner who wants to avoid the mistakes that can cost him or her the business they've worked so hard to build. The name of the book is Mistakes: Avoiding the Wrong Decisions That Will Close Your Small Business. It's a bargain at only $4.99, especially when you consider that it can save you thousands of dollars if your business folds.

One of the lessons I learned through that painful process is that you can only cut costs so much. We had reduced expenses as far as we could and remain open. While reducing expenses in a down economy is often necessary, it's not enough to sustain the business. You also have to find ways to increase income.

It can be tough trying to find a way to increase sales in a slow economy and it's not always possible to maximize profits. In fact, to get the sale you may have to reduce your profit margin. The one thing you can't do is ignore cash flow. Cash flow is always important, but when money is tight it is king. When you're out of cash, you're out. Believe me, I know!

What does all this have to do with churches? Many churches have not seen their giving improve since the recession. Although I'm retired now from my judicatory role I still talk to numerous church leaders. Some report their giving is strong, but the majority has seen a steady decline in giving since 2007-8. Many of them have cut their budgets almost every year since then, and they are still not reaching their budget requirement.

In most smaller churches the biggest component of the budget is the pastor's salary and benefits. Some pastors have been forced to become bivocational if they wanted to remain at the church. Others are trying to support families on salaries that have been reduced. There is only so much that can be cut from the pastor's salary and benefits if the church wants a quality pastor.

Larger churches can cut staff and reduce programs. Smaller churches do not have the ability. Many of them have minimal funding for their ministries, and if they cut those they eliminate the limited ministry they are offering. If a church offers no ministry, how does it justify its existence?

By the way, denominations are struggling with reduced funding as well. Many have significantly reduced staff, cut back on missions work, and offer reduced resources to their churches. Some have restructured their financial systems to reduce the amounts going to regional ministries and increased the amount going to the national denomination.

Churches and denominations need to realize they can only cut costs so far. Cutting costs alone will not enable some of these organizations to survive long-term. They have to find ways to increase revenue if they want to continue to have productive ministries.

Increased funding will come when the church does a better job of teaching sound biblical stewardship principles. Casting a vision for ministries that capture the passion of the people will also result in increased giving. We are far removed from the time when people gave just to keep the denominational wheels greased. They will give to a vision for ministry for which they feel some passion. They will be generous towards ministries that are making a difference in people's lives.

It's time church and denominational leaders stop avoiding the elephant in the room and realize the current financial reality many of them are facing. It's time they begin to address this reality and take the necessary steps that will result in increased giving. In fact, it's long past time.

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