There’s a movement among church consultants to treat churches as a business. Personally, I disagree. But, who knows? I might be wrong. What if God intended churches to rival multinational corporations? Who’s to say that that my humble 60-attendee community church, MBCC, shouldn’t be vying for global notoriety like Microsoft, Starbucks, or AIG?
Since I’m not one to hold back my skills on what might not be God’s plans, I am publishing the output of my business acumen on the Internet for all churches, gratis. Here’s a McKinsey-esque strategic business analysis of the church using the famous Porter’s Five Forces model.
My Analysis of the Church with Porter’s Five Forces
Michael Porter is a famous professor from Harvard Business School, who developed the prevailing theory on business strategy and profitability. Now, I won’t let my traditional notions of profitability and church get in the way of this analysis. The best route to profitability, according to Porter, is managing (a.k.a. squeezing) the five forces that affect a business: bargaining power of customers, bargaining power of suppliers, competition within the industry, the threat of substitute products, and the threat of new entrants.
Customers: Anybody who walks into your church and sits down in a pew is a “customer”. Their bargaining power? Very strong. In fact, they decide how much money they’ll give you, which is usually just a few bucks thrown into the offering plate. That’s chump change when I calculated the cost of Sunday service at my church was $57.69 per person.
Suppliers: God, I suppose, is the main supplier. Bargaining power? Extremely strong. After all, he’s God. Fortunately, he’s free.
Ministry staff are usually the most expensive in a church budget. Strangely, church pastors, for all of their education and responsibilities, are paid relatively low. Again, we’ll put aside my personal belief that it’s wrong to underpay pastors and cherish the thought that cheap ministers = profitable churches.
Competition: All of the other churches in the area are “competitors”, eager to steal your “customers” (don’t worry, high-priced consultants are here to help!). Given this framework, church competition is rather weak.
Substitutes: For me, Sunday football and my pillow are the biggest substitutes for church. To be honest, I must admit that watching football or sleeping are sometimes more enjoyable than church services that I’ve attended. Threat of substitutes? Strong.
My church is in San Francisco, a city that loves holding events and street fairs on Sundays. Most recently this included Fleet Week, the Blue Grass Festival, and the Folsom Street Fair (featuring penis-shaped ice sculptures). Threat of substitutes in San Francisco? Very strong.
New Entrants: Keep an eye out for Scientology 2.0, as they may come out of nowhere and take the church industry by storm. Fortunately, the public tends to be skeptical of new religions.
A more reasonable threat is a mega-church popping up around the corner and taking much of your congregation with them. Threat of new entrants? Moderate.
Conclusion: Churches are not a Profitable Business
Porter’s five forces doesn’t bode well for church businesses. If you care about profitability, forget them. Put churches on the list of “unprofitable business” along with Detroit automakers and major US airlines. Instead, try being the CEO of a bailed-out financial company. You can run the company to the ground and still walk away with millions.
Posted on October 14th, 2008 by Ryan
Filed under: church, economic theory, societal concerns | 2 Comments »
