One of the saddest things to watch is when a business fails by refusing to recognize the reality of their market. What’s even sadder is when these businesses decide that the solution is not to invest in learning, but rather to spend more time and energy in establishing a plethora of new establishments in hopes that a few will find purchase and become productive. The problem with this approach, however, is that by ignoring market conditions, they are just as likely to accelerate their own demise as they are to facilitate growth.1
The market condition in which church businesses2 find themselves is not very good. In fact, according to the statistics which are coming out year after year, they are downright dismal. Baptisms are down, the membership is growing older, giving is down, and if something is not done soon, thousands of church businesses are faced with the real prospect of closing up shop. In fact, many already have.
So what do the Southern Baptists plan to do about this? Well the buzz in the past few years has been church planting. In fact, the North American Mission Board has recently announced it’s intention to direct the majority of it’s efforts towards planting new churches in North America, specifically in the north and Canada. I suppose the hope here is the akin to throwing a bunch of mud at a wall and hoping some of it sticks.
But what about the practical implications of encouraging and funding many new start-up businesses in an already saturated market?
In economics 101 we learn that every market contains a saturation limit. This fact is readily obvious here in the Bible-belt where a church can be found on almost every corner and mega-churches are a dime a dozen.
From a business analysis perspective it is hard to see how the approach of starting new businesses in a saturated market makes much sense at all, especially since donations are a finite resource. In my next post, I will address the market conditions in areas which do not have an abundance of buildings to service an underdeveloped market.
- For a good example of this market phenomenon, think about the recent mortgage crisis and how banks decided to employ a staggering amount of leverage to squeeze more profit out of a saturated financial market. Sure, the fact that the lending practices were flawed to the core didn’t help either, but that could have been easily corrected for if they had taken the time to grow slowly and deliberately. [↩]
- If you wonder why I use this particular phrase, I invite you to visit my previous post in this series where I define terms such as “church”. [↩]