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Live Off Past Performance

It is funny to me that we usually teach people to use percentages with their personal finances, but corporately, churches do not seem to do this.  Some churches use percentages very well, but in my experience, I find most churches are living off what they “think” will happen versus what has already happened.  I know you guys are thinking about budgets for next year, and I wanted to offer a suggestion.  This may sound absolutely crazy to you, but I know this works!

2 Tips for Budgets:

1. Don’t use a “projection” for next year’s budget

Instead of projecting what you think “might” happen, just look at what happened this year and create your budget for 95% of it.

If you brought in $1,000,000 last year, budget next year on $950,000.  Why in the world would you do this?  You do this to create margin.  Is this realistic to do?  AB-SO-LUTE-LY (as my friend Joe Sangl would say).  This will help you make the tough decisions before you have to make tough decisions.  Dave Gibbons says, “Scarcity breeds clarity.”  Clarify and cut where you need to cut.  This will help you also make staffing decisions.  I know this sounds crazy, but it will work.  Just do it! 

2. Live off percentages

This is the best advice I’ve ever been giving about church finances.  Honestly, I didn’t think like this when I was a CFO of a church, but after getting out with literally hundreds of churches, I now see this as a must for financial health.  Here is the principle:  pick percentages and live off them regardless.

What percentage do you want going to staffing, buildings, administration, giving, and ministry areas?  I know one church in California has 70% staffing, and they totally believe that is the way to go.  I know one church in Alabama that has 28% staffing, and they believe that is the way.  Both churches are mega-churches (over 8,000 on weekends).  Just pick your percentage and live and die off of it.  If you do this early on, you will not regret it.

I could write a book on this, but people don’t read long blogs so I’ll cut it off here.  Any questions or need help, just leave a comment or fill out this form.  

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Casey Graham is the founder of The Rocket Company. He worked for ten years in the trenches of local church ministry, which led to his passion for helping church leaders win in their ministry and personal lives. He lives in Atlanta, Georgia with his wife, kids and their Westie dog named Westie.