It is a common practice to treat finances only to survive. By survive, I mean to focus and address the short-term and urgent only. We often live or manage in this manner due to impulse, emotion, a lack of patience, and blind faith.
- the average household that’s carrying credit card debt has a balance of $15,654. 1
- 29% (of small businesses) failed because they ran out of capital. 2
- only 35% of people have a plan to save for emergencies. 3
- about 73% of American churches are in debt. The average debt load for those churches is north of $4 million—and that’s just the average. The largest churches carry an average of more than $15 million in debt, with the highest at $28 million. 4
Operating long enough in this framework will lead to a ceiling on your personal finances or organization, and potentially . . . failure.
So what should we do?
- gain clarity on our income and expenses
- develop a plan to thrive, not just to survive
- change our thinking from spending to investing
- be wise about leveraging resources
- do not be unwise nor afraid of liabilities and/or debt
- make investments to yield results
A strategic budget allocates resources where long-term results will be realized and sustained. They maximize short and long-term opportunities.
For example, a large church’s attendance was aging and decreasing. Several factors contributed to this reality, but a major contributor was poor services for young families. Therefore, this church re-allocated over the course of 3 years, significant financial resources to address the problem. This re-allocation meant that other areas of church ministry resourcing were decreased. However, health and investment in young families yielded significant growth not only in this area but others as well.
Another example is if a universities football or basketball team do well, other sports will be funded well too. Let’s face it, rifle or skiing do not bring in sustaining money.
It is also common for churches and business to decrease budgets across the board by a designated percentage. This may sound “fair,” but it is not wise nor strategic. A car cannot run without gas no matter how supercharged the engine is. Coke cannot produce sodas without water. An organization is not sustainable without strategic budgeting.
- Do you have a strategic budget?
- Do you understand your income streams?
- Do you care for your customers or donors?
- What technologies can help you monitor key performance metrics?
- Who can help you with these questions?