Christian Finance for Christian Business Owners
The phrase “Christian Finance” can be both a noun and a verb. Finance is the capital available to a business or ministry.
To finance means to raise the capital for a business or ministry. We refer to it here as money needed to start a business.
When you want to take advantage of Christian business opportunities you need money to start and operate your business.
Where Will You Get It?
Scripture has a lot to say about borrowing, lending, debt, loans and finance in general. The Bible says that the borrower is servant to the lender.
For example… we believe it would be unwise to borrow money to go to Disney World when you can’t afford it! We do believe that your first financial goal is getting debt free.
Be sure you use good bookeeping practices. One of the best software systems avaible is Quickbooks. We’ve used it for years.
Have a Business Plan
Regardless of how you finance your venture you will need a good business plan. A business plan covers ownership, business environment, marketing plan, operating plan and financial plan.
The financial plan covers start-up expenses, income statement, cash flow, and risk assessment.
There are some home business ideas you can start without a lot of money. Our current business is a good example.
We started it with a business loan for less than five thousand dollars ($5,000). It was financed with a zero percent (0%) credit card offer.
This can be a good Christian finance strategy… but we strongly caution you about borrowing money. You should have all other debt paid off (except your home) before borrowing to start a business.
Get Your Finances in Order
Debt is a major problem in our country today. It’s as big a problem for Christians as any other person. Be sure to check out behavioral finance to understand the principle of contentment so you can enjoy what you have while you build wealth.
Your approach to personal Christian finance has a direct influence over your business and ministry finance.
Read this personal finance article for insight into proper attitudes towards stewardship.
Having said this… what about business? Does wisdom in Christian finance mean borrowing money to start a business is a bad idea or just plain wrong?
We used to think it was. Out of a good heart we never wanted to be in debt. This was the right approach but we learned that the Bible does not teach that borrowing is wrong. It gives guidelines on the proper application so you can make wise decisions and protect yourself from making bad choices.
Most business start-ups require large investments of finance capital (money). When we started our ski and bike shop it took over $150,000 just to open the door and another $100,000 to keep it going.
So there may be times when using Other People’s Money makes sense.
Other People’s Money (OPM)
Since we did not have cash we used Other People’s Money (OPM) to start some of our businesses. In the case of our ski shop it was one investor who had just sold another ski shop. He was looking to re-invest his capital.
This is how wealth building works, Christian or otherwise. Your ultimate goal is to earn enough money in your business to become an investor yourself. This is what Rich Dad Poor Dad teaches.
To become part of the Great Commission by investing your wealth in the Kingdom of God you need to learn how to become an entrepreneur. As you grow in your Christian Finance skills you will have more money to invest in Kingdom building.
The benefit of using OPM is that it keeps your money from being tied up in a long term investment. The downside is that you have to return that money plus some of your profits. Investors invest because they expect a return.
Business loans are another way to use OPM to finance start-up costs. Banks offer businesses various terms that can be negotiated to fit your particular needs. A bank may want some form of collateral or property that protects them from a default.
Some people use the equity in their home to acquire finances through a home equity line of credit. Be careful here. Do you really want to put your house at risk? Not the best idea.
Remember… anywhere from half to three quarters of new business start-ups fail. Make sure you have a solid financial plan.
Good Credit Card Debt?
There is really no such thing. In rare cases, with a lot of self discipline and your household finance in order it can be done wisely.
The low monthly payment puts very little financial stress on your new business.
It can be interest free… fairly easy to acquire… freeing up more cash to re-invest in your new business.
Most new businesses fail because they lack enough cash in the beginning stages. It turned out that we paid off that “business loan” very quickly.
That five thousand dollar ($5,000) investment has returned five hundred thousand dollars ($500,000) in just eight years.
Put Your Money Where Your Mouth Is
The problem with all “low start-up cost” Christian business opportunities is just that. They don’t cost much. It’s very hard for people who invest only $39.95 to “start” their business to take it seriously.
This is one reason why most people who join a network marketing type business fail. There is little to lose so not enough effort is put forth to build a real business.
There is very little commitment. People treat their business more like a hobby. This means certain disappointment. Hobbies cost you money! We know… we love to ski and bike which are not for those short on cash.
You have to treat a business like a business. When you invest a million dollars in a franchise opportunity you treat it like a business!
When we help a Christian finance their new business we never lend them the money. We know they need to find a way to finance their venture to demonstrate to themselves that they are more committed to their business than we are.
In every case those who look for a short cut or a cheaper way to get started never succeed. Where there’s a will there’s a way. If there is no will… find something else to do.