Business By The Book

Larry Burkett

• Publisher: Thomas Nelson
• Year: 1998
• ISBN:
  9781418513399
• Topic: Business
• Subtopic: Financial Risk Management
• Index: Business

What would happen if you made your business decisions by the book? By the Bible that is.

This updated version of the best-selling Business by the Book offers radical principles of business management that go beyond the Ten Commandments and other biblical maxims.

Business by the Book is a step-by-step presentation of how businesses should be run according to the Creator of all management rules: God.

Larry Burkett, founder and president of Christian Financial Concepts, provides business principles from his own experience as well as what God's Word says on topics such as:

• Hiring and Firing Decisions
• Pay Increases and Promotions
• Management Selection
• Employee Pay Decisions
• Borrowing and/or Lending Decisions
• Forming Corporations and Partnerships
• Business Tithing
• Retirement

Whether you are the owner of a business, a corporate executive, or a manager, this best-selling classic is for you.

Part 1
BUSINESS
BY THE
BOOK

1

A Radical Approach
to Business
Management

Early one morning, Will, the owner of a large manufacturing company, was greeted at his office door by his plant manager, John. Without comment, John was submitting his resignation, effective the following Friday. Will was devastated; for the past five years he had been grooming John to become president of the company.

When he questioned John about his reasons for leaving, John refused to discuss it. Will could not even begin to understand why John was leaving. He was paid more than anyone else in the company, including Will. But it was obvious that nothing was going to change John’s mind. He had made the decision to leave.

Will asked John to stay long enough to hire and train a new plant manager, but he flatly refused and reacted angrily when Will asked. Since John had been such a good friend, Will held a company going-away party and gave John a substantial severance bonus.

Three months later, John’s reasons for leaving became apparent when he opened his own company and copied Will’s best-selling product. In time, John’s company grew, and it became one of Will’s leading competitors.

Nine years later Will heard that there was a design problem with one of John’s new products and that several lawsuits were being filed against John’s company. Will had forgiven John years before and regularly prayed for him.

He felt strongly that the Lord wanted him to reach out to John, so he bought one of John’s products, tested it, and discovered what the problem was. Will then put his engineers to work to correct the problem. After he made the necessary modifications and tested it, he called John and told him how to solve his problem.

Radical Christianity! That’s what some would say. Stupidity! That’s what others would say.

Only time will tell how John will respond to this act of unconditional Christ-like love. The results are not Will’s responsibility. His responsibility, like ours, is to do what the Lord tells him to do. Remember, God gave His Son to be crucified by the very people He had helped.

By now you may well be thinking, What school of business did this guy attend? I can tell you with certainty that the business school I attended taught the bottom line: If it doesn’t make money, forget it. But since graduating from business school I have been studying another textbook: It’s called the Bible and, compared to most business schools today, it takes a radically different approach—one more concerned with eternity than with profits.

BUSINESS THEN AND NOW

I am not the first person to discover the principles of business taught in God’s Word. In America the use of the Bible as a business text goes back hundreds of years.

If you were to review a business school textbook from the nineteenth century, you would find that most companies were privately owned sole proprietorships. Businesses expanded through equity funding or selling an interest in the business, and taxes were so inconsequential as to be an incidental entry on year-end reports.

Business principles differed then too. Honesty, ethics, and moral values were taught in the classrooms of all major business schools. Professors placed strong emphasis on a company’s responsibility toward its employees, customers, and creditors.

Why? Because prior to the twentieth century, business courses, and indeed business schools themselves, were based on biblical principles. In fact, it would be erroneous to label them “business schools.” In reality, they were biblical schools that were training future business leaders.

Things began to change shortly after the Civil War. The federal government assumed a stronger position in the private sector. Politicians, pressured by war-rich industrialists, passed laws that strangled competition. Monopolies sprang up in industries such as railroads, steel, oil, and utilities. The leaders of these industries, greedy for even more advantages, began to use their economic influence to promote laws that punished workers who were seeking minimum wages, shorter work weeks, safer working conditions, and child labor prohibitions. Although pretending to pass laws to protect labor, both Congress and the courts consistently used the law to protect business and control the growing organized labor movement.

Prior to World War I, America remained primarily an isolationist nation, although a few businesses managed to create huge profits in developing countries. By the end of that war, in 1918, the United States had become a global economic power—perhaps the global economic power. America was on a growth binge. The production of every other nation in the world was compared to that of the United States, and the U.S. dollar became the world’s exchange currency.

But clouds hovered on the horizon. The Bible says that we reap what we sow, and America’s business leaders were sowing distrust and animosity between management and labor. When circumstances changed and the unions gained political power, management began reaping the destructive harvest of unionism. Hourly workers and management began to develop an adversarial relationship, and government had to assume the role of regulator. That meant business had to pay. For the first time taxes began to take a significant bite out of profits.

Between 1930 and 1950, the government’s share of business profits grew to more than 20 percent of gross profits. At the same time labor unions continued to gain strength and Congress began to reverse the labor laws it had passed in the previous several decades. Still, America retained its competitive edge in the world marketplace, primarily because we were the most industrialized and enterprising nation on earth. Even as late as the early sixties the stamp of value was the trademark: “Made in the U.S.A.”

After World War II, however, a more ominous cloud began to form: debt. Prior to the Great Depression we had been an equity-funded nation: businesses had expanded primarily by selling a part of the ownership. But the Great Depression had caused a general lack of confidence in the stock market, and after World War II debt surpassed equity in business. Most companies simply found it cheaper and easier to borrow money than to raise it through equity funding.The decades from the fifties to the seventies saw the peak growth of debt in America. Borrowing became the accepted way to fund business expansion.

Not until the mid-seventies did we begin to see the cost of this debt expansion. Too much easy money eventually makes itself known by way of inflation, which is nothing more than a surplus of easy money in the hands of willing buyers who want to spend it. Such spending inevitably bids up the price of goods and services. Credit is like an opiate because it seems to numb the minds of those who use it.

THE BIBLICAL PERSPECTIVE ON
GETTING AND SPENDING

I began a personal study on the biblical principles of how to operate a business shortly after becoming a Christian in 1970. The one principle that caught my attention most vividly was that God’s people should be debt-free. Unfortunately most Christians weren’t, and they didn’t want to be. As one Christian friend who owned a car dealership told me, “Debt-free living makes no sense. Listen, I can finance my cars for 6 percent a year and then turn around and make 12 percent profit when I sell them.”

My friend made a common error many Christians make. When the logic of what we’re doing doesn’t match God’s Word, we assume it’s a misinterpretation of the Word. A few years later, when interest rates climbed to nearly 22 percent, he began to see that God meant us to take Scripture literally. Too much debt makes the business vulnerable to the interest rate swings.

Between 1950 and 1970, the average cost of labor rose by 50 percent and government overhead increased to nearly 40 percent. This opened the way for major foreign competition as prices soared. Starting a new business and making it profitable became harder because capital, the key factor in business start-up, became the most costly overhead item. The combined cost of labor, government overhead, and credit sounded the death knell for many previously all-U.S. industries. Without government support, many of those that remained could not compete and make a profit.

During the next 10 years the cost of labor and government grew another 10 percent. Government became, quite literally, a partner in business. Through countless regulations, government made decisions for business and shared in its profits without doing any of the work. Government told farmers what they could grow, advertisers what they could sell, and schools what they could teach. To oversee this regulation, a massive government structure grew up, with nearly 20 percent of the American people on the government’s payroll. Unwittingly, we had allowed a fascist form of government to develop—in the sense that fascism means privately owned but centrally controlled.

By the early 1980s, with interest rates climbing, the burden of debt made many industries structurally unprofitable. That trend has accelerated to the point that, according to one statistic, 60 percent of all American businesses are potentially unprofitable once the interest rates reach 15 percent. Our lack of fiscal discipline and our obsession with quick profits make U.S. industry vulnerable.

For nearly two decades we allowed countries like Japan and Germany to develop unrestrained while increasing the regulatory burden on our own businesses. As a result, we have lost major industries to our foreign competitors.

Japan is an interesting study in business development. At the conclusion of World War II, President Truman appointed General Douglas MacArthur to be the military governor of Japan. Capitalizing on the Japanese respect for authority, General MacArthur was able to establish many basic biblical doctrines as a part of their business ethic. This highly efficient system of labor/management cooperation, combined with a fierce national loyalty, propelled the Japanese beyond their teacher.

Unfortunately, General MacArthur established the correct principles but failed to share their source: the Lord. It remains to be seen whether unrestrained capitalism without the balancing influence of Christianity will succeed long term. Eventually, I fear, human nature will prevail.

U.S. industry has rebounded in the nineties—courtesy of Japan’s financial collapse. The Japanese have also discovered that “everything that goes around comes around.”

It’s a shame that, instead of taking the relative prosperity of the nineties as an opportunity to pay down debt, American businesses, consumers, and their government have actually increased their borrowing. Once the economy cycles down again, as it inevitably always does, bankruptcies will set new records.

It’s an interesting paradox that we taught the Japanese in the forties and fifties. They taught us in the eighties, and neither of us learned the real secret of success: biblical truth.

But God’s principles of business are not offered “cafeteria style.” In other words, you can’t simply pick and choose those you like and ignore those you don’t. God’s Word sets up a whole structure by which a business is to operate: a foundation. You can build a business (or a house) without a sound foundation. But when the wind blows and the waves come, it will collapse. God’s Word is the Rock upon which a business must be built.

Do the biblical principles of business work? Without question they do—over the long run. If you’re looking just for quick profits, don’t choose God’s way; but, if you desire long-term growth and stability, God’s way is the only way. As Jesus said in Matthew 7:24–25, “Therefore everyone who hears these words of Mine, and acts upon them, may be compared to a wise man, who built his house upon the rock. And the rain descended, and the floods came, and the winds blew, and burst against that house; and yet it did not fall, for it had been founded upon the rock.”

I have seen these principles work in one-person businesses doing $50,000 a year gross volume and in 12,000-employee businesses making $800 million a year.

Our organization has grown from a budget of $40,000 a year in 1976 to more than $12 million a year—all without the use of debt. Even that figure is misleading, because we broadcast on 1,100 radio outlets daily—an outreach that would normally require an additional $10 to $12 million a year but costs us only a fraction of that. We have more than 15,000 counselors nationwide and receive nearly 100,000 telephone calls per month.

All of this is to say, God is looking for a few good men and women whom He can strongly support (see 2 Chronicles 16:9). Our great advantage today is that He doesn’t have a lot of talent to work with right now, so if we are willing to be used God is willing to use us.

In the years that we have been teaching these principles to business owners and managers throughout the country, hundreds of businesses have been rejuvenated and thousands of lives have been changed. You’ll read some of these stories as we discuss the different biblical principles. Although the names have been changed, the people are real.

THE OUTLOOK TODAY

What kind of an economic environment does a Christian business owner or manager face today? Certainly not a favorable one.

Anyone from past generations, looking at our economy today, would quickly assess that we have some potentially catastrophic financial problems facing us. When the success of an economy is determined by a 3 percent shift in interest rates at any given time, that economy is in deep trouble.

As the statistics demonstrate, the federal government is the catalyst behind most of our current debt. The United States government now owes nearly $6 trillion and growing. Most Americans work the first five months of each year just to pay their taxes, and it still isn’t enough. In spite of taking in more than $1.5 trillion a year, the government must borrow another $150 billion each year—just about the int...