Chapter 10: Business
Updated: 1/20/20
For it [God’s kingdom] is like when a man was about to go into another country. He called his own servants and gave over to them his wealth. To one of them he gave five talents, to another he gave two, and to yet another he gave one talent. Each one received an amount according to his own ability, and that man went on his journey. The one who received the five talents went at once and invested them and made another five talents. Likewise the one who had received two talents made another two. But the servant who had received one talent went away, dug a hole in the ground, and hid his master's money. Now after a long time the master of those servants came back and settled accounts with them. The servant who had received the five talents came and brought another five talents. He said, ‘Master, you gave me five talents. See, I have made five talents more.’ His master said to him, ‘Well done, good and faithful servant! You have been faithful over a few things. I will put you in charge over many things. Enter into the joy of your master.’ The servant who had received two talents came and said, ‘Master, you gave me two talents. See, I have made two more talents.’ His master said to him, ‘Well done, good and faithful servant! You hav been faithful over a few things. I will put you in charge over many things. Enter into the joy of your master’ (Matthew 25:14–23).
This is one of the parables that I call the pocketbook parables. Jesus used parables relating to money in order to convey spiritual truths to His audience. He recognized that people understood economics better than the understood theology. Yet He was speaking to audiences of Jews, who had better theological training than any other people on earth. This is why I think it is wise for us to understand biblical economics. It makes our understanding of basic theology far more accurate.
The topic of Matthew 25 is the final judgment. But before Jesus got to the section on the final judgment, He offered two parables. One of them was the parable of the ten virgins. Five virgins took along containers filled with oil; five did not. As the bridegroom was returning, the virgins who had not taken extra oil asked those who had if they could have some of their oil. The five virgins who had been wise in filling their lamps refused to share the oil. The unwise virgins went to a local town to buy oil, but when they returned, they found that they were locked out of the marriage feast.
The second parable is known as the parable of the talents. A talent was a specific weight. It referred to a coin’s weight and fineness of a precious metal.
The general topic of the two parables was the kingdom of heaven, as verse 1 declares. But the context of both the two parables was the day of reckoning. The final third of the chapter deals with the final judgment. That, of course, is the supreme day of reckoning: the end of history.
Jesus told the story of a rich man who went into a distant kingdom for a considerable period of time. Before he departed, he called three stewards before him. He gave coins to all three. To the first man, he gave five coins. He obviously trusted this man’s abilities to manage his money well. To the second man, he gave to coins. He had less confidence in this man’s abilities. To the third man, he gave only one coin. He clearly did not have much confidence in this man’s money-making abilities. As it turned out, his assessment of all of the stewards’ abilities was correct. The first man doubled the rich man’s money. The second man also doubled his money, but he had received only 40% of what the first man had received. The third man produced a rate of return of zero.
Then the servant who had received one talent came and said, ‘Master, I know that you are a strict man. You reap where you did not sow, and you harvest where you did not scatter. I was afraid, so I went away and hid your talent in the ground. See, you have here what belongs to you.’ But his master answered and said to him, ‘You wicked and lazy servant, you knew that I reap where I have not sowed and harvest where I have not scattered. Therefore you should have given my money to the bankers, and at my coming I would have received back my own with interest. Therefore take away the talent from him and give it to the servant who has ten talents. For to everyone who possesses, more will be given—even more abundantly. But from anyone who does not possess anything, even what he does have will be taken away. Throw the worthless servant into the outer darkness, where there will be weeping and grinding of teeth’ (vv. 24–30).
The fact that the owner of the capital, who represented God in final judgment, had expected a positive rate of return confirms the legitimacy of investing that produces a positive rate of return. In this case, the resentful, risk-averse steward was informed by the owner that he should have put the coin with the money lenders. This way, the owner of the coin would at least have gained some positive rate of return: interest.This parable is clearly an affirmation of the legitimacy of banking. Anyone who argues that the Bible is in any way opposed to commercial loans made by banks to lenders who promise to pay a rate of interest on the loans does not understand of the New Testament. He also does not understand the Old Testament. The Old Testament, meaning the Mosaic law, did have a prohibition against interest taken from charitable loans made to poor brothers in the faith (Exodus 22:25). These were not business loans. They were also not loans to consumers who wanted to increase their purchases of luxury goods.
How was it possible for the first two stewards to return twice as much money as the master had delivered to them? They had made this money as entrepreneurs. They had started businesses or else they had gone into joint ventures with others who had started businesses. But how did business enable them to double their money? What is the basis of entrepreneurial profit? This: correct knowledge of future market conditions. Successful businessman are able to predict the conditions of supply and demand better than their competitors. Profits come from the successful forecasting of future demand and efficient organization of production. Losses come from unsuccessful forecasting and inefficient organization of production. Profits are not guaranteed. Losses are not guaranteed. There is an element of uncertainty associated with business forecasting and planning.
The rich man gave five coins to one of the participants, two coins to the second, and one coin to the third. The stewards would be judged by the rich man in terms of an unequal initial distribution of assets. Obviously, the rich man would prefer to double his money with five coins invested rather than only two coins invested. So, not only was there inequality with respect to the initial distribution, there was also economic inequality in terms of the results of his investment. There was also inequality with respect to the rewards. Even more explicit is this: “Therefore take away the talent from him and give it to the servant who has ten talents.” He who had earned the greatest amount of money received the money of the man who performed least effectively. The owner did not give the coin to the second steward, who had a total of four talents. He gave it to the first steward, who had a total of ten talents. There is no clearer statement in the Bible regarding the legitimacy of economic inequality. This parable represents all forms of asset distribution. Inequality of talent, inequality of intelligence, inequality of performance generally: this is not only what God expects, this is what God demands. Here is an example from the sports world. In horse racing, the jockeys with the best records get hired by the owners of the fastest horses. Then their records improve even more compared to those who did not get hired to ride the fastest horses. Their pay goes up as rich horse owners compete to hire these elite jockeys. The rich get richer. This is the underlying principle of the parable of the talents.
The biblical principle that the rich should get richer, which they do in a free society, does not mean that the poor get poorer. On the contrary, they also get richer. They just do not get as rich as fast as the rich do.
Throughout history, there has been a constant critique of economic inequality. We see this in Luke’s version of this parable. “The nobleman said to them that stood by, ‘Take away from him the mina, and give it to him that has the ten minas.’ They said to him, ‘Lord, he has ten minas.’ 'I say to you, that everyone who has will be given more, but from him that has not, even that which he has will be taken away. But these enemies of mine, those who did not want me to reign over them, bring them here and kill them before me’” (Luke 19:24–27). Jesus did not mince words. He said explicitly that those who criticized the capital owner’s allocation of rewards were deserving of death. They were rebels against his authority. From the beginning, even before he departed, they conspired against him. “But his citizens hated him and sent a delegation after him, saying, ‘We will not have this man rule over us’” (v. 14). This was why they were on the side of the economic non-performer, who himself was envious of the wealth of the rich man. They were also non-performers. He was their kind of person.
Whenever you hear someone who comes in the name of Christianity or any other worldview and calls for wealth redistribution by the state, think of him in the same terms that Jesus thought of the rebels in Luke 19. No one who calls himself a Christian should be in favor of the redistribution of wealth by the power of the civil government. Such a view of redistribution through power is evil, and Jesus identified it as evil. It is not merely wrong-headed. It is not merely an intellectual error. Its underlying philosophy is evil. This philosophy goes back to the temptation of the serpent. God is said to be keeping man from what is rightfully his. “For God knows that the day you eat it your eyes will be opened, and you will be like God, knowing good and evil” (Genesis 3:5). It’s just not fair, the serpent implied. It deserves resistance. It deserves rebellion. It deserves a new world order based on a new system of ownership. “Steal the fruit and eat it. It’s not God’s property. It’s yours.” The fact that there is a Christian socialist movement, also called the social gospel, that has promoted such a policy since the 1880s is indicative of the lack of faith of those who call themselves Christians, and the lack of trust in the words of Jesus. This is why one aspect of Christian activism should be to challenge the idea of the welfare state: wealth redistribution through state coercion.
Anti-free market political activists seek to structure the tax laws so as to take from the rich and give to the poor. This is a violation of what God requires. These political reformers are not content with the biblical standard. It rewards the productive with greater wealth than the less productive. They claim to be morally outraged. They claim to represent the moral high ground. They not content with economic inequality.
Throughout the Bible, righteous men received the economic blessings of God. Let us start with Abram. “Now Abram was very rich in animals, in silver, and in gold” (Genesis 13:2). Then there was Jacob. “God said to him, ‘I am God Almighty. Be fruitful and multiply. A nation and a company of nations will come from you, and kings will be among your descendants. The land that I gave to Abraham and Isaac, I will give to you. To your descendants after you I also give the land’” (Genesis 35:11–12). Most famous of all was Job. In the beginning of the book, he was wealthy. “He possessed seven thousand sheep, three thousand camels, five hundred pairs of oxen, and five hundred donkeys and a great many servants. He was the man who was the greatest of all the people of the East” (Job 1:3). As a test of his faith, God allowed the devil to take away his wealth. But, at the end of the test, God restored to Job not simply the equivalent wealth that he had possessed before, but twice the wealth (Job 42:10). This is Christian economics in action. It is also Christian economic analysis.
One of the worst fallacies in economic thinking is the fallacy promoted by the former soldier and essayist, Michel de Montaigne. He wrote in the 1570's. Chapter XXI is titled: “That the Profit of One Man Is the Damage of Another.”
. . . No profit whatever can possibly be made but at the expense of another, and that by the same rule he should condemn all gain of what kind soever. The merchant only thrives by the debauchery of youth, the husband man by the dearness of grain, the architect by the ruin of buildings, lawyers and officers of justice by the suits and contentions of men: nay, even the honour and office of divines are derived from our death and vices. A physician takes no pleasure in the health even of his friends, says the ancient Greek comic writer, nor a soldier in the peace of his country, and so of the rest. And, which is yet worse, let every one but dive into his own bosom, and he will find his private wishes spring and his secret hopes grow up at another’s expense.On the contrary, physicians make money by healing sick people, not by making them sick. They are sick before they come to a physician. The sick person and the physician enter into an exchange. Each of them believes that the results of the exchange will be mutually beneficial. If they did not both believe this, no exchange would take place. Furthermore, if the person gets well, this benefits the physician’s reputation. If the person gets sick from something else again, he is more likely to return to the physician who cured him in the first place. He may also tell friends about the wonderful cure. The physician does not do well by doing evil; he does well by doing good. He helps sick solve their problems. This should be the model of every businessman or professional who offers his services in exchange for money or other valuable resources.
The basis of success in business is service to specific consumers or customers. This service mentality is basic to the gospel, and it is basic to every social order that adopts the free market as the basis of ownership and exchange. The businessman who serves his customers well gets rich. The businessman who does not serve his customers well does not get rich. He may go out of business.
Paying customers decide which businessman succeed and which fail. The private property social order leads to voluntary exchange. In this exchange, customers are dominant because they own money. Money is best defined as the most marketable commodity. Every businessman wants more money from his business. He must satisfy customers in order to achieve this goal. The customers possess greater economic authority because they possess money. Hardly anyone wants the specific output of a business. Almost everyone wants to do business with the person who has money. There is unequal authority in the transaction. The customer, not the businessman, has greater authority.
When somebody goes into business, he does so because he thinks that competing businesses have not satisfactorily met the potential demand of a group of customers. The businessman believes he can meet this demand more efficiently, meaning with a reduced use of scarce economic resources. He believes that he understands what future consumers will want to buy. He enters the market to buy productive resources in order to produce specific goods or services. He may be incorrect. He may lose money. But if he is correct, he will make money. There is nothing evil about the relationship.
Individuals sometimes are motivated to go into business in order to get rich. Owning a successful business is the most common way to get rich. But this motivation is not consistent with the biblical outlook on wealth. God does not call people to get rich for the sake of consumption or power or status. He calls people to be good servants ethically and therefore good stewards economically. His goal is to extend the kingdom of God in history (Matthew 6:33). As part of this kingdom-extension process, people who have business skills can put these talents to work by serving customers. They make the lives of customers better than their lives would have been if the businessmen had not started their businesses.
It is a constant struggle in the lives of Christians to avoid being seduced by success indicators. Someone who goes into business needs success indicators, profits and losses, to assess the success of his business in meeting the wants of customers. But if he has achieved profits by means of unethical practices, the success indicator of profit is misleading him. The psalmist initially lamented this fact.
Surely God is good to Israel, to those with a pure heart. But as for me, my feet almost slipped; my feet almost slipped out from under me because I was envious of the arrogant when I saw the prosperity of the wicked. For they have no pain until their death, but they are strong and well fed. They are free from the burdens of other men; they are not afflicted like other men. Pride adorns them like a necklace around their neck; violence clothes them like a robe. Out of such blindness comes sin; evil thoughts pass through their hearts. They mock and speak wickedly; in their arrogance they threaten oppression. They set their mouth against the heavens, and their tongues march through the earth (Psalm 73:1–9).
But this was not the end of the psalm. He continued: “Then I went into God's sanctuary and came to understand their fate. Surely you put them in slippery places; you bring them down to ruin. How they become a wilderness in a moment! They come to an end and are finished in awful terrors. They are like a dream after one wakes up; Lord, when you arise, you will think nothing of those dreams” (vv. 17–20).
The covenantal structure of the world rests on Bible-revealed ethics. God blesses the righteous in history. But historical cause and effect are not instantaneous. The first three of Job’s four visitors mistook Job’s distress as evidence that he had broken a law of God. They were incorrect. At the end of the book, God condemned them.
It came about that after he had said these words to Job, Yahweh said to Eliphaz the Temanite, ‘My wrath is kindled against you and against your two friends, for you have not spoken of me what is right, as my servant Job has done. Now therefore, take for yourselves seven bulls and seven rams, go to my servant Job, and offer up for yourselves a burnt offering. My servant Job will pray for you, and I will accept his prayer, so that I may not deal with you after your folly. You have not said what is right about me, as my servant Job has done’ (Job 42:7–8).
The desire to become rich for its own sake is a great delusion. It mistakes a success indicator for success.
Do not work too hard to gain wealth; be wise enough to know when to stop. Will you let your eyes light upon it? It will be gone, for it will surely take up wings like an eagle and fly off to the sky (Proverbs 23:4–5).. . . but the cares of the world, the deceitfulness of riches, and the desires of other things enter in and choke the word, and it does not produce a crop (Mark 4:19).
Now those who want to become wealthy fall into temptation, into a trap. They fall into many foolish and harmful passions, and into whatever else makes people sink into ruin and destruction. For the love of money is a root of all kinds of evil. Some people who desire it have been mislead away from the faith and have pierced themselves with much grief (I Timothy 6:9–10).
The success indicator of profit is the means by which buyers maintain control over sellers. They buy or refuse to buy from specific producers. This keeps producers in line with the desires of customers. Bookkeeping is necessary for producers to know how well they are doing in their attempts to meet the demands of customers. The primary economic role of the profit system is to guide production according to the demands of paying customers. Any attack on the profit motive or the profit system is necessarily an attack on the authority of consumers. This is what advocates of the welfare state do not understand. Christian activists had better understand it.
People pay lots of money to obtain accurate knowledge. They pay even greater amounts of money for accurate knowledge of the economic future, especially prices. Someone who is a good forecaster of the prices of commodities can get extremely wealthy by trading in the commodity futures markets. Not many people can do this consistently.
Accurate knowledge about future conditions of supply and demand for specific products and services can be converted into great wealth. The rule is this: “Buy low. Sell high.” If you can see that some asset is underpriced in terms of what the future market will establish, you can buy that asset, withhold it from the market, and then sell it when the price goes up. The risk is this: you may be incorrect. You may buy the item, and then it declines in price. You will therefore suffer a loss. All free markets display constantly changing prices as people buy and sell assets in terms of rival predictions about what prices will be in the future. Some people think they will rise. Others think prices will fall. Buyers compete against buyers. Sellers compete against sellers. Out of this competition comes an array of objective prices.
If you possess this comparatively rare ability to forecast supply and demand accurately, you should consider becoming either a speculator or a business owner. A speculator does not run a business. He makes his money by predicting prices and investing in terms of his forecasts. A businessman does more. He enters into the marketplace and purchases resources that he believes are underpriced. He believes that his competitors do not see an opportunity. He purchases or leases assets, including the following: human labor, raw materials, specialized information, capital goods, and real estate. Through a production process, he mixes together these producer goods. He hopes that the results of his efforts will be products that can be sold at prices above what his competitors had imagined likely. If he does this, he will produce profits. If he can do it consistently over long periods of time, he will build a profitable business.
If you have the unique ability to forecast future demand more accurately than other businessman, then you should consider going into business. It is a wonderful way to serve customers. If you are correct in your judgment, you will make their life better. They will prove this by paying you money for the output of your business. The better you are at business, the more money you will make. There is no suggestion in the Bible that business as such is in any way unethical. Certain practices are unethical. The Bible says not to indulge in such practices, but it does not criticize the profit motive or the profit system. On the contrary, the Bible establishes a system of privately owned property which upholds the right of contract. This system fosters business.
In most businesses, profits come mainly from repeat sales. Customers are hesitant to make the first purchase. It takes specialized marketing and advertising for a business to persuade a potential customer to make the first purchase. But after the first purchase, it is easier for sellers to make additional sales if a customer is satisfied with what he purchased. It takes far less advertising to persuade the person to make a second, third, or fourth purchase. Every time the person is satisfied with the transaction, he is more ready to make another purchase. This comes from an increase in trust. As trust increases, resistance to making additional purchases decreases. Buyers are convinced that making purchases from a particular seller are beneficial to them. Therefore, they are less resistant to additional sales offers.
If the sale has been profitable to the seller, he also wants to conduct additional business with a buyer. This is how long-term business relationships are established. Business owners want to develop these long-term relationships because they are profitable. Buyers also want to establish these long-term relationships. These relationships reduce search costs. This is why repeat business is important to both buyers and sellers.
I recommend that if you start a business, you make plans from the beginning on how to develop long-term business relationships with your customers. Do not go into a business in which all the profit comes from a single sale. It is too expensive to make these sales to new customers. It takes too much advertising money to make the initial sale. If this is the final sale, your business will be dependent upon constant expensive advertising. Trust is basic to long-term relationships of all kinds. In the field of business, trust is best manifested by repeat sales. A seller should strive to build up his reputation as a reliable seller who delivers high value to customers.
Most new businesses fail. The business does not become profitable. There is nothing unique about a business failure. Most ventures fail. Most people’s plans must be revised. Life is a series of what appear to be false starts.
Because people fear to lose in public, they do not start businesses. They do not want to lose money. But, most important, they do not want to be visible failures. It is common for successful businessman to start several businesses that fail before they find the one that succeeds. I believe that this fear of failure is the greatest barrier to entry. In nations that have many legal restrictions against starting a business, these may be more important than the fear of failure. But in a free society in which it is relatively easy to start a business, the fear of failure is the biggest barrier to entry. This is what keeps new competitors out of the market. This is why one of the most important personal traits that most businessmen possess is optimism regarding the future and also regarding their own abilities to beat the competition. It is usually difficult to raise money to start a business. There are really only three ways to get the money necessary to start a business.
1. Save up enough money of your own to start the business.
2. Borrow money from somebody else by promising to pay him a positive rate of return.
3. Find investors who will put up money for a percentage of ownership in the business.
One of the ways that some people borrow money to start a business or to keep a business going is by selling subscriptions or future services. The seller promises to deliver services over a period of time. If he can get buyers to believe him and agree to put up money in advance, he can use this money to build the business. This is not usually seen as a form of debt, but it is.
Other barriers to entry are imposed by the state. Governments pass regulatory restrictions on going into specific businesses. This barrier to entry goes back as far as there are historical records, but it has accelerated in modern times. It began in earnest in the early decades of the twentieth century. A free society limits such restrictions. They are restrictions on people who believe that they have better ways of accomplishing the service of customers. These restrictions also limit potential customers who are not allowed to pay for services rendered by people who are not licensed by the state to render these services.
Another major restriction is lack of experience. This problem was long solved through the apprenticeship system, which began no later than ancient Greece. Physicians took an oath which we call the Hippocratic oath. They promised to teach the sons of the person who taught them the skills of being a physician if the teacher should die. The apprenticeship system still is required by governments in certain professions, but increasingly the possession of formal certification granted by academic institutions has substituted for one-on-one apprenticeship.
Advertising has always been basic to success in business. Yet there has always been suspicion about the legitimacy of advertising. Part of this is because sellers are tempted to mislead potential buyers. They do not have the buyers’ interests at heart. They make false claims about whatever it is they are selling. This is a form of fraud. But there is nothing unique deception in business advertising. When courting, young men and young women do their best to impress each other. They conceal their shortcomings. In every area of life in which people seek to impress other people, they are tempted to mislead those people. They want people to think well of them, despite the fact that there are many aspects of their lives that they are not proud of. So, it is illegitimate to single out business advertising as being uniquely corrupt. Compared with political advertising, business advertising is a paragon of virtue. In some cases, the same advertising agencies that do commercial advertising also do political advertising. The standards of business advertising are vastly higher than the standards of political advertising. It is possible for a buyer to sue a seller for misrepresentation and collect damages in a court. It is not possible to do that with a politician who has misled the voters.
A professional writer of nonfiction books and articles should learn early in his career that there are three primary criteria for good writing. The first is accuracy. The second is clarity. The third is persuasion. Given the limitations imposed by the length and the format of the published material, it is supposed to be accurate. Second, if it is not clear, then accuracy is wasted. Third. if it does not persuade the reader, then both accuracy and clarity are wasted. In the art of communication, persuasion is called rhetoric. This has to do with motivating people emotionally. It often has to do with symbols. Rhetoric is basic to the successful practice of politics and law. When we think of a lawyer pleading in front of a jury, which is perhaps the central institution of justice and liberty, we think of someone who makes a case that is accurate, clear, and persuasive. With respect to the practice of law, a trial lawyer is heralded for his rhetorical ability far more than his ability to adhere to the truth. Unlike a witness in a court, a lawyer is not required to swear to tell the truth, the whole truth, nothing but the truth. On the contrary, most people assume that he will do none of these things if that is what he thinks is necessary to defend his client successfully.
There are competing theories of advertising, just as there are competing theories of almost everything that the human mind puts itself to. I am a great believer in an approach known as reasons-why advertising. This approach stresses the importance of presenting highly specific benefits to the reader or viewer of the advertising. There is a slogan governing this approach: “Lead with the benefit. Follow with the proof.” The benefit should be real. It should be instantly understandable to the viewer or reader. The proof must not mislead the potential buyer. It must be consistent with the benefit. This approach to advertising has produced above-average results ever since its development in the early years of the nineteenth century.
The person creating the advertisement begins with an understanding of what a prospective buyer really wants to buy. He had better understand human psychology. He had better understand the motivations of people who are interested in a particular product or service. Everything he does must focus on what the buyer wants. This is service-oriented advertising. The advertiser must think through the offer in terms of what the buyer really wants from this product or service. A paid advertiser who focuses on what his client wants is not going to produce effective advertising. Here are the two words that are the most powerful words in advertising: “free” and “you.” I speak from experience. I have written advertising copy that has generated a lot of money in sales. Of course, I had to pay a lot of money to run the advertising, so this income was not all profit. For over four decades, I have learned how to motivate buyers to spend money on what I was selling. I know how to motivate buyers. I say from decades of experience that telling buyers the truth is a successful way to sell commercial products.
Marketing is crucial for success in business. You must budget for it. While it is true that what is called word-of-mouth advertising is an effective form of advertising, is extremely difficult to devise and execute a marketing program that relies heavily on word-of-mouth advertising. There is a famous saying in American life: “If you build a better mousetrap, people will be a path to your door.” One of the most successful marketers I have ever known, Mac Ross, had a variation of this statement. “If you build a better mousetrap, but you fail to allocate money for marketing, you will die alone and broke with a garage full of mousetraps.”
There is an old saying: “Let the facts speak for themselves.” This statement is misleading. Somebody has to present the facts. He has to explain what the facts mean in a particular context. Similarly, products do not sell themselves. Salesmen sell products. If you go into business, you had better learn to be a good salesman. Here is the best definition of advertising: “Advertising is salesmanship in print.” Do not forget this definition. Learn how to implement this definition in your advertising. If you fail to do this, you will not have much success in business.
Jesus issued this warning: “What does it profit a person to gain the whole world and then forfeit his life? What can a person give in exchange for his life?” (Mark 8:36–37). In His parable of the rich man and the poor man, He made this plain.
Now there was a certain rich man who was clothed in purple and fine linen and was enjoying every day his great wealth. A certain beggar named Lazarus was laid at his gate, covered with sores, and longing to eat what fell from the rich man's table. Even the dogs came and licked his sores. It came about that the beggar died and was carried away by the angels to Abraham's side. The rich man also died and was buried, and in Hades, being in torment, he lifted up his eyes and saw Abraham far away and Lazarus at his side. So he cried out and said, ‘Father Abraham, have mercy on me and send Lazarus, that he may dip the tip of his finger in water and cool my tongue, for I am in anguish in this flame.’ But Abraham said, ‘Child, remember that in your lifetime you received your good things, and Lazarus in like manner evil things. But now he is comforted here, and you are in agony’” (Luke 16:19–25).
Jesus warned against believing that either great wealth or business success is proof of successful living.
In these parables, Jesus made it clear that lifestyle is a matter of eternal importance. A man can enjoy his lifestyle immensely, but if he neglects the issue of his eternal soul, his lifestyle will testify against him throughout eternity. This does not mean that poor people inherit eternal life merely because they are poor. But Jesus was clear that rich people are at greater risk of losing their souls because they do not pay attention in history to the issues that really matter. “Jesus said to his disciples, ‘Truly I say to you, it is hard for a rich man to enter the kingdom of heaven. Again I say to you, it is easier for a camel to go through the eye of a needle than for a rich man to enter into the kingdom of God’” (Matthew 19:23–24). Their economic success leads to their likely catastrophe in eternity. They are blinded by success indicators. They do not understand the fundamentals of success in both history and eternity. When a person’s lifestyle in history blinds him to his “deathstyle” in eternity, he has made a catastrophic mistake. It is good for a person who is economically successful to live comfortably and in safety. But it is a mistake to pursue the adornment of wealth. An individual should always ask this of every potential luxury purchase: “How will owning this advance my purpose in life?” It is wise for a craftsman to own the finest tools of his trade that he is capable of using. Tools maximize our productivity for the kingdom of God. To the extent that the ownership of a tool enable us to maximize our productivity, we should save money until we can afford to purchase that tool. In some cases, we may have to go into debt to purchase it. It would be a mistake to buy a luxury good that announces our success publicly in preference to buying a tool that enables us to achieve greater success. Again, this is the error of mistaking a success indicator for success. In the best-selling book, The Millionaire Next Door (1996), the two authors describe the lifestyles of many self-made millionaires in the United States. They pay cash for consumer goods except for a mortgage on their home. They do not buy luxury goods in preference to using this money to invest in their businesses. They are constantly investing. They do not buy a new car every year. They do not live in the most expensive neighborhoods. They live in comfort, but they do not live in luxury. These were not members of the super-rich, although two of the richest Americans in history, Sam Walton, the founder of Walmart, and Warren Buffett, known as the world’s most successful stock market investor, both of whom were worth tens of billions, lived comfortably with few luxuries. They resided in the homes they had purchased as young men. Most of the rich men surveyed in the book were members of the high-net worth class who had ed their income through business, not through high salaries paid by employers. The safest way not to fall into the trap of living a luxurious lifestyle in preference to living a productive life is to avoid going into debt for any consumer good. Money spent on nopn-essential comsumer goods should be money that your business is not dependent on for expansion. I assume that you have already begun to tithe on your income. The practice of tithing should be maintained with respect to the success of your business. If your business makes a profit, it should pay a tithe on this profit. But in some jurisdictions, the tax authorities will not allow a business deduction of 10% paid to your church out of the profits of the business. If you are in such a tax jurisdiction, there is a way around this problem. If your business is a sole proprietorship, then all of the profit in the business flows back to you as an individual. This is the legal meaning of sole proprietorship. The tax authorities will make you pay whatever you owe to them, and then you can donate money. But it is better if you live in a tax jurisdiction that enables you to donate the money and then deduct this from your gross income when you pay your income taxes. This is the situation in the United States. Donations made to tax-deductible charities come from gross income. The taxes are imposed on the remaining income. On the other hand, if your business is a standard corporation, you will be paid a salary. You will pay your tithe from your salary. If the business is successful, you will be paid dividends. Pay your tax on the dividends you receive. But what happens to the profits that the business retains for reinvestment? This money is not paid to you personally. The corporation is a separate legal entity. In the United States, it is considered to be a legal person. The tax authorities may not allow you to deduct a full 10% out of profits before paying the tax. What now? One way is to donate 10% of the shares of the corporation to your local congregation when you start the business. The money that you retain in the business for investment and growth is not paid to the church. If the business is successful, the church has ownership in a growing business. The church is not defrauded of the money that you owe as your tithe. The payment comes in the form of ownership of future profits rather than annual payments or monthly payments. Ownership in a successful company is certainly a valuable asset. The church benefits from this ownership. When dividends are paid to shareholders, the church will receive its 10% of total dividends. If you sell the business for a lot of money, then the church will get 10% of the total value of whatever you are paid. You will not owe a tithe on this 10%. Jesus tells us to count the costs of our actions. When someone starts a business, he must pay attention to how much money it is going to cost him to organize everything in advance and then advertise the existence of the service or product. But it is even more important to make an estimate about the amount of time that he must invest in starting a business, sustaining the business, and growing the business. Once somebody starts a project, he is expected to finish it. But a business is an ongoing lifetime project unless the businessman sells it. Furthermore, because of the pressure associated with running a business, especially a growing business, there are constant demands on the time of the business owner. There are always fires to put out. There are always opportunities to take advantage of. These constant interruptions bleed away time. Owners become victims of what is sometimes called the tyranny of the urgent. Where will you get the hours required to keep the business growing? Who is going to do all of the tasks associated with the business? If it becomes a successful business, at some point you will have to turn over some of the tasks to other people. Then you will have to become a manager. Do you have skills in managing other people? If not, how do you intend to develop these skills? It takes great courage to start a business. If you must invest all of your money and all of the time that you presently sell to an employer, this is an enormous responsibility. You will have to invest enough money and enough time to make certain that the business is prosperous. You must count the cost. The meaning of cost is simple: all of the things that you could have done with the money and time that you must invest. You may want some degree of leisure. You will surely have to forfeit this. You may want time for academic study. What about the time that you must invest in your family? Your church? Your civic responsibilities? The time must come from somewhere. It must come from something. What will you have to forfeit when you shift your time away from other activities and into your business? If you start a business in your spare time, you will find that you no longer have any spare time. You may not have any spare time for the next three or four decades. That has certainly been my situation. Will you start the business in the evening after you get home from your job? Then what happens to your family? Will you make it a weekend business? But this means only one day. The other day must be devoted to worship and rest. If all you have is Saturday and perhaps one hour in the evenings when you get home from work, will this be sufficient for you to launch the business? If not, you would be wise not to launch the business. Your goal is to replace your job with your business. But your business must be sufficiently profitable to enable you to pay yourself a salary at least as large as the salary you receive from your regular job. It may take several years for you to achieve this. In the meantime, you are going to have to juggle your work schedule, your calling schedule, and your family, church, and state schedules. There is no such thing as free time, but someone who starts a business learns this fact from the day he starts the business. You would be wise to serve as an apprentice for a time. Of course, you do not wish to be paid the low salary that an apprentice usually receives. I do not mean an apprentice in the old-fashioned sense. I mean someone who learns on the job while he receives a salary. If you can get a job that is in some way related to the business that you want to start, this is an ideal situation. You will get training on the job. At some point, if you are a wise observer, the knowledge that you receive from your employment can be transferred to your own business. This is my recommended strategy for starting a business. I learned to budget my time when I was in high school. I had an after-school job. I became very good at budgeting my time. I developed habits of time management. In retrospect, I believe that this was the most important skill that I learned in high school. If you start a business, and if that business is successful, you will make a lot of money. You will learn how to budget money in order to reinvest most of it in the business in the early years. You will learn the skills of time management. Unless the business is inherently a one-person business, you will learn the skills of managing other people. As the owner and as a manager, you will learn how to interact with other people. Generally, you will interact only with subordinates. If you own the business, then you make the basic decisions regarding the business. People may give you advice, but they will not be in a position to tell you what to do. This means it you must accept an enormous amount of responsibility, not simply for your own decisions, but for the survival of the business. Other people will become dependent on you for employment. There is no way to escape this responsibility if you are the owner-manager of the business. Virtually all of life is supposed to make us more responsible. We have responsibilities in the five covenantal areas. We have responsibilities in the areas of life that are related to our work. The more successful we become, the more responsibilities we are required to accept. Highly productive people must learn how to say no to requests for their time. There are always people requesting money, but it is a lot easier to say no to them than to say no to family members, church members, and people connected to your business who ask you for your time. Most people do not attempt to start a business. I think this is wise. Most people are not capable of running a business. This is why a majority of businesses fail in the first five years. I recommend that you do whatever you can to gain knowledge and experience in running a business before you start one of your own. I did not understand this when I started my publishing business in 1974, and I went through some difficult times because I did not have sufficient experience. I got through these times of trouble, but the price I paid in terms of stress, money, and time was much greater than I had expected when I started the business. It is a good thing that we cannot count in advance all of the costs of business, just as it is a good thing that we cannot count in advance all of the costs of marriage. We enter into these relationships burdened by great ignorance. I recommend working for a successful business as a training ground for starting a business. Probably best of all would be to work for a successful business that was started by the man who still runs the business. If you can get information from other employees about how the business ran before it became highly successful, this will give you information that will be highly valuable if you start a business. You should be motivated most of all by serving customers. You should be internally driven by the belief that you have something to offer other people, meaning something of value to them, that is not presently being offered. You must have confidence in your ability to deliver a superior product or service to paying customers. If you do not have this self-confidence, you will find the responsibilities associated with starting, developing, and expanding a business almost overwhelming. In short, you must be an optimist regarding the outcome of your efforts. If you tend toward pessimism, I recommend that you do not start a business. __________________________________ To read the entire book, go here: https://www.garynorth.com/public/department197.cfm.
For which of you who desires to build a tower does not first sit down and count the cost to calculate if he has what he needs to complete it? Otherwise, when he has laid a foundation and is not able to finish, all who see it will begin to mock him, saying, 'This man began to build and was not able to finish.' Or what king, as he goes to encounter another king in war, will not sit down first and take advice about whether he is able with ten thousand men to fight the other king who comes against him with twenty thousand men? If not, while the other army is still far away, he sends a delegation and asks for conditions of peace (Luke 14:28–32).