Church Construction Quick Start Guide – Build a long runway
Having a long runway means you have a great idea of where you’re going and how you’re going to get there long before you actually need to arrive. I’m often with churches that need their new space yesterday. They’ve come to what they believe is the right time to build in the life of their ministry only to find out the conversation they had yesterday, when they pushed the “start” button, should’ve happened 18 months ago. Starting early is one of the best ways to leverage your resources well during expansion. So here are a couple of things to consider while you’re building your runway. 
Money – When I’m considering working with a client here are a couple of metrics I like to see in place.
- Debt to income ratio – I like to see a church at no more than 35 – 40% debt to annual income ratio. If you have an annual income of $1 million, that means no more than $400,000 should be debt. When you apply for funding the bank is not going to be interested in taking a second position behind your current debt. Therefore, the new funding will have to cover the amount needed for the new project as well as the existing debt. If that ratio is off balance your chances of funding drop significantly.
- Cash On Hand – No matter what size the project, a minimum of $200,000 is going to be needed in a designated building fund to get the ball rolling. A design team, contractor, and civil engineer are just of few of the professionals that will need to be hired prior to the project being fully funded. Part of building a long runway is waiting until you have enough money to navigate the first season of the project financially.
- Margin – I could go into a rant regarding how you need to maintain margin in your life through this process, but I’ll save that for a later blog in this series. Having margin means there is a reasonable gap between cash in and cash out through the ministry. Margin is one of the most commonly underestimated elements for churches that are seeking funding. Today, banks are much more concerned with this number than annual income or Capital Campaign pledges.
If you’re church needs a financial check up I’d highly recommend you connect with Casey Graham over at The Change Group. I feel like I get smarter every time I hear his name. He has a new book out “Funded and Free” and has made the first three chapters available for download free. Click Here to download it…I dare you!
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I’d like to hear your rant on personal margin.