Deciding to either buy or build a church facility requires prayer, planning, and careful consideration of various options. One key aspect of the planning process includes developing a business plan. While a church is not a for-profit business, a business plan contains elements you’ll need to consider and possibly present to potential lenders in preparation for purchasing a facility.
As important as it is to be prepared to talk with a lender, that’s not the sole reason for creating a business plan. The process of creating this document requires the church leadership team to carefully consider the current status and health of the church, while also planning for the future. The time, energy, and costs involved in buying or building a facility are significant. To be good stewards of the church’s resources, it’s imperative that we take the time to evaluate and consider how to proceed. Developing a church business plan is a valuable part of that process.
With that in mind, here are several key elements to include in this plan:
#1 – Mission and Vision
This section answers the question of “why our church exists.” What are the driving principles behind your church and how do you plan to live those out on a regular basis? This could include information about the various programs and ministries the church provides that support the overall mission and vision.
In this section, you’ll also want to address why church leadership wants to pursue obtaining a church facility. For example:
- Are you outgrowing the current facility? If so, based on recent trends when do you expect to exceed capacity? Have you already added service times to relieve overcrowding?
- Do you want to expand a specific ministry of the church and need more space to make that happen?
- How will a new facility help support and advance the church’s mission and vision?
- Why does church leadership think buying a facility is better than continuing to rent a facility?
#2 – Marketing
We don’t often equate marketing with ministry. However, marketing is simply how you communicate your message in a way that compels people to pay attention and take action. In this case, you’re trying to get people to visit the church with the end goal of helping them decide to follow Christ and become a member of the congregation. With that in mind, this section should include information about how you intend to communicate your message to the community. That strategy may consist of social media, a website, an email list and weekly emails, community outreach, how a potential church facility looks from the road, where a church facility is located, and much more. Include your church’s marketing approach in this section of the plan.
#3 – Management Team
Who leads the church and what are the levels of accountability in-place? If you have an elder board or other governing body, this is where you would include that information. Potential lenders may want to know who has authority to enter into contractual agreements on behalf of the church along with background information about those individuals.
#4 – Finances
This is where you’ll want to get the accountants involved. You’ll need financial reports for the last 3-5 years (or more, depending on lender requirements) or from the start of the church, whichever is longer. This section should include information about donation trends (are those numbers steadily increasing or not), expenses, and any savings.
This section should also include an analysis of how much the church can reasonably afford to spend on a new facility. Do you have money already set aside for this project? Are you planning to launch a capital campaign to raise funds for the new building? If so, include details regarding when you plan to start that campaign, how you will structure it, and what your goals are for that campaign.
As you come up with the number the church can afford to spend on the project, don’t forget that once you occupy the new facility you’ll have ongoing operational costs. If you’re renting a building now, some of that is probably included in the rent. Janitorial and maintenance costs are not included in a mortgage payment. Those are line items you’ll need to budget and account for as you determine what you can afford to spend on a monthly mortgage payment. For reference, Cool Solutions Group’s research shows that utilities will, on average, run $1.00-$1.50 per square foot annually. Janitorial costs can run $1.50-$2.50 per square foot per year and general maintenance should be about $2.25-$3.00.
Another item to consider is capital reserves. This is money set aside to handle the significant expenditures that come with the long-term upkeep of a facility. Replacing big-ticket items such as HVAC units or the roof, installing more energy efficient windows, and replacing worn-out carpeting are a few examples. The key is to start saving money for those expenditures the moment you occupy the new building so you’ll have the money to pay for replacing them when they wear out. Cool Solutions’ president and founder, Tim Cool explains, “Now is the perfect time as you will not need those funds for 10-15 years, which means the amount needed to be set aside starting day one, will be much less on an annual basis than if you wait to year ten to start to save. Think of personal retirement. If you start saving at age 21, you do not need as much set aside year after year as you would if you waited to age 60 to start.”
#5 – Attendance
While leading a church isn’t all about the numbers, you do need to know how big your next church facility should be to accommodate a growing congregation. Review church attendance and membership from the last few years. Is that number growing at a fairly steady rate? If so, that helps you come up with a rough estimate of how many people you may have in the next 3-5 years. You’ll also want to consider the population growth trends within your community.
#6 - Staffing
If you decide to purchase a facility, you’ll likely need to hire additional staff to handle general maintenance and upkeep. Tim Cool recommends having one full-time equivalent (FTE) for every 35,000 square feet.
#7 – Considerations for the new facility
This section wouldn’t be in a typical business plan. However, since this one is geared towards planning for a new facility, it makes sense to include this information. This is where you’ll outline what church leadership wants in a new facility. You can use this as a starting point in discussions an architect and possibly the builder to gauge the cost and feasibility of making it happen.
Here are several items they’ll want to discuss:
- What gatherings, programs, and classes do you intend to host at this facility?
- What is the attendance you expect to have for each of the items listed above?
- How much parking will you need?
- How many offices and meeting rooms will you need for church staff?
- Do you need a kitchen?
- How many restrooms will you need?
- What types of play areas will you want for children (indoors and outdoors)?
If you’re considering buying an existing structure, keep in mind that requirements for fire suppression (sprinkler) systems are different for retail buildings than for what you may have to have for a higher occupancy usage. You’ll also want to confirm whether the building you’re looking into is in an area that’s zoned for church usage. For instance, if you’re thinking about buying an old grocery store building, it might be zoned for retail only.
The decision to obtain a new church facility is an exciting time for any church. It can also be a bit intimidating. Taking the time to create a business plan will help your leadership team think through what your church truly needs, what it can afford, and how best to move forward as a church family. Developing a business plan may not feel like ministry, but it’s part of being a good steward of the resources and vision God has entrusted to your church.