|Financial Management: Back to basics|
|Written by Chris Brown|
|Wednesday, 06 January 2016 02:36 PM America/New_York|
Employing God’s principles for money and business
God’s principles for handling money work every time and in every situation.
Most of us would probably accept that truth in our heads, but it’s easy to let it fall between the cracks when we face the real world of Christian retailing. In fact, I talk to people all the time who believe that what works at home is somehow different from what works in business. That’s faulty logic though. God never changes, so why would His ideas about finances change from one context to another? They don’t.
The same truths that help people win with their personal finances also provide the keys for winning in business. Here are a few examples:
The Bible says we must be diligent to know the state of our flocks and herds (Prov. 27:23). That means following careful accounting principles. For example, never mix your personal and business accounts. Keep them separate and use them only for their intended purposes. If you’re self-employed, don’t forget to set aside at least 25 percent of your monthly profits to cover quarterly tax estimates.
Hopefully, you already know it’s important to create a personal budget on paper on purpose every month, but it’s just as important for your business. Call it a spending plan or a cash flow plan or name it after your favorite pet! The important thing is to have a plan.
In Luke 14, Jesus told the story of a man who started to build a tower. Who in this parable ended up bearing the brunt of everyone’s jokes when he couldn’t finish the job? Why? He didn’t have a plan. Budgets make a difference because they free you to serve people with the excellence they deserve.
When it comes to expenses, my advice is simple: Act your wage. It might be tempting to compare your business with the company down the street—you know, the one with the super-slick website and the cool, new gadgets. But rationalizing a bunch of expensive toys won’t improve your business—or your bottom line. If you don’t need it to help your team or grow the business, don’t buy it!
You also need to avoid the tax-deduction myth. That’s when you buy something purely as a tax write-off. You don’t really need it, but you justify buying it by pointing to the supposed “tax benefit.” In other words, don’t pour $10,000 into a work van you don’t really need just to save $2,500 in taxes.
You’ll hear a number of myths about debt floating around in the business world. For instance, one of the myths is you have to borrow to start a business. That is simply not true. In fact, 26 percent of new businesses launched in 2013 with no debt. Another 34 percent launched with less than $5,000 of debt. That’s 60 percent of all new businesses starting with less than $5,000 of debt. The truth is, starting or gradually expanding a business using cash lowers risk and minimizes mistakes.
Another myth says companies need credit cards to work effectively, but businesses that make solid cash projections will never need a line of credit. Besides, a debit card can do everything a credit card can do—except hit you with an 18 percent interest rate. Our team at Ramsey Solutions has now grown to more than 500 members—and still not one credit card.
There is no such thing as “good debt” because the borrower is always slave to the lender (Prov. 22:7). If your company is in debt, put as much of your profit as you can toward debt reduction. Break the chains!
Wise business leaders not only avoid debt, but they also save (Prov. 21:20). Savings, also known as “retained earnings,” are vital for a company’s prosperity. They protect against emergencies, allow for reinvestment and create growth opportunities. Each month, set aside a percentage of profits so your retained earnings grow as the business grows.
Generosity is the hallmark of people—and businesses—who win with money. It reflects the heart and soul of an organization, so be generous with your products and services in the community. Be generous toward your team members. And while the Bible doesn’t specifically say to tithe on your business, you should tithe on the profits you take home from the business.
Genuine stewardship requires we use all of God’s resources God’s way for God’s glory—and our businesses are definitely one of God’s blessings. It just makes sense to apply His financial principles to our business dealings. That’s how we grow the company—and expand His kingdom.
Chris Brown is a nationally syndicated radio talk show host, pastor and speaker, carrying the message of stewardship and intentional living nationwide. “Chris Brown’s True Stewardship,” available on radio stations across the country, provides biblical solutions and sound advice for questions on life and money. Follow him on Twitter (@chrisbrownonair), on Facebook (chrisbrownonair) or online (stewardship.com).