Wow! The news just keeps getting worse. DHL announced last week they were laying off 9,500 workers in order to trim operating costs during the down economy. That will hit Wilmington, Ohio, a small town less than an hour from Fairhaven Church, really hard. It's inevitable that when companies' revenues fall, costs must be reduced in order to stay solvent. The same is true in our churches. When income falls, and most churches have experienced some shortfall in giving this year, we must find ways to trim our budgets. Probably like you, one of the first places I look for ways to reduce spending is in operating costs. Let me give you some background.
For several years, our operating costs had exceeded budget. It seemed the costs of maintaining the facility, utilities, equipment, supplies, etc. just could not be wrestled within budget. We were willing to accept the situation most years because the church was growing, giving was strong, staff and new ministries were being added (and associated costs), and so the rising costs could be explained, if not justified. Last year, we missed our budget by $137,000 on the income side. But compounding the situation, we overspent our general operations budget by $70,000. Fortunately, we cut back in other areas to soften the blow, but had we been able to hold operating expenses to within budget, our cash flow situation would have been vastly improved as we turned the corner on the year. It definitely brought to light the critical need to attack spending on operations for 2008.
This year, with the help of a new Director of Facilities, we took a magnifying glass to every line item within the operations budget. We identified areas where we could exercise greater spending controls, instituted closer scrutiny of projects and requests, and began a consistent communication plan to get the entire staff of 60 to "buy in" to the need to control costs. The results have been spectacular. Through 10 months this year, our operations budget is $3,400 under budget, which is a $74,000 swing given the fact that we did not increase the operations budget from '07 to '08. That has made a world of difference on both our cash flow and our ability to adjust to what looks like another giving shortfall (we are projecting $150,000, but currently at $110,000).
I'll summarize some of the ways in which we have been able to control what was before, seemingly uncontrollable.
- We repackaged our advertising in telephone directories to reduce costs, yet maintain our "wow" factor.
- We negotiated a buyout arrangement with Xerox, allowing us to replace both our copiers with less expensive, newer technology copiers.
- We created an inventory tracking system for light bulbs, maintenance supplies, perishables, etc. allowing us to replicate a "just in time" system to reduce costs and waste.
- We replaced our security service with a more dependable, low cost, team of two men, who not only lock the building each night, but are meticulous in making sure lights are out and thermostats are turned down (or up).
- We began a ministry called, "Monday Morning Men," comprised of mostly retired guys who come in on Mondays for donuts, coffee, a brief devotional, and several hours of light handyman work around the building...saving us lots of paid man-hours, contractor costs, custodial costs--and providing them with purpose and community with other guys.
- We began an annoyingly repetitious mantra to turn off lights and turn down the air conditioning, which has resulted in almost $10,000 in savings YTD.
- We emphasized electronic communications over snail mail, which has saved over $2,000.
- We downsized our staff retreats and emphasized the need to hold down indiscriminate staff ministry expenses (taking congregants out to lunch, etc.).
- We downsized our dumpster, transferred more lawn care responsibility to volunteers, reduced the scope of snow plowing and salting areas, and lots of other small things which taken together, really add up.
Even though it's been a challenging year on the income side, these initiatives on the spending side have helped us to not only bring our operations spending under control, but it's made the operations budget a model for the other ministries. As I said, start by attacking operations.
