10 Tips to a Better Church Plant Budget: Cash Flow is King
It’s 1:00 AM and you’re restless in bed dreaming about budgeting for a new church God is calling you to? A smile spreads across your face as you envision an intricate Excel spreadsheet calculating projected revenues and sustainability for the new church. If this describes you, you’re probably not a church planter. I haven’t met a planter yet that loves spreadsheets and budgeting and have met quite a few that dread the process. This series of posts will help alleviate some of the pain. We will cover:
- Cash Flow is King
- The Importance of Margin
- The ratio between the Size of the budget to the size of the congregation
- How to calculate local offering
- The proper ratios for spending categories
- The Budget as a vision document
- The path to sustainability
- Monitoring monthly reports
- Best practices for budgeting and finances
- How to lower expenses
Cash Flow is simply the amount of money in the bank account at any given time. The church cannot operate with a negative balance in the bank. Therefore, it is important to understand how the timing of income and expenses impact the bottom line of cash flow. For instance, if a church planter plans to spend $30,000 on an equipment package in the month of July, but finds a great deal on used equipment that would save $10,000 in April, the inclination is to jump on it. However, the answer in cash flow not money saved. If the church planter has a large gift from a partner church arriving in June designated in the budget for equipment, the money many not be available in April to make the purchase. Purchasing the cheaper equipment in April, could result in not being able to make payroll in May.
Think of the church plants budget like a bucket. Income such as fundraising and offering fill the budget. Expenses such as payroll and facilities empty the bucket. The goal is to have water in the bucket. So when making a purchase you have to not only see if you have enough water in the bucket to make the purchase today, but also if the bucket will be refilled in time to make other planned purchases.
This seems like common sense stuff. All of us do this same thing in our personal budgets. The difference is that in a personal budget income is typically fixed. In a church plant budget, income is variable. Because of this it is important to maintain a healthy margin in the budget, the topic of the next post.