AN OPERATING BUDGET SOLUTION TO A CAPITAL BUDGET PROBLEM

Pity the poor capital budgeting process. Even at its best, when things were flowing along smoothly, with steadily increasing sales, solid balance sheets, and growing equity, the capital budgeting process, in most firms, in the best of times, was an imperfect exercise in regurgitating numbers from prior years and tweaking past performance in new estimates to guesstimate the financial metrics needed in the year ahead. Within most firms, at their annual budget planning Olympics, there seemed to be two competing camps: the what-to-buy people vs. the how-to-pay people, with neither group really understanding the other yet both sides arguing passionately for their position and control of investment dollars or debt or both.

From 2001 through 2007 large numbers of firms saw unprecedented growth. Heady with optimism they "levered up" with acquisitions, new projects, recapitalization and substantial new debt based on the logic of spiraling successes and the expectation of continued "good times" and ongoing growth.

Along with 2008 came, what we now know as, the greatest recession since 1935. In 2009came the realization that reduced revenues have strained the fixed debt-service while maxed-out financial metrics pushed lending covenants to their limits, or beyond.

In 2010 many firms are grappling with their capital budgeting process knowing that their revenues may not support large budget outlays such as equipment acquisition at a time of continued economic uncertainty or gradual, sluggish performance.

Fortunately there is a business solution that balances capital budget fiscal conservancy with the need to acquire technology for growth and continued performance. Firms that need to invest in equipment, technology or systems can look to the operating budget to leverage outside financing that matches a monthly payment ( cost ) to monthly revenues and cash inflow. This timing solution often allows for an immediate "break even" vs. waiting for months or even years to achieve a break-even on a cash purchase.

For firms that need "off balance sheet" treatment special financing called Operating Leases may offer a special solution that preserves financial ratios. Financial decision makers should consult with their professional accounting, tax and legal experts to determine the most suitable financing solution to their particular situation and need.

The hallmark of good fiscal management is to find or create financial solutions that help achieve a firms' key financial objectives. As such an operating budget solution to a capital budget problem may offer a helpful approach to the need vs. budget dilemma.

TECHNOLOGY FINANCING AS A RECAPITALIZATION TOOL IN 2010

Corporate finance vs. equipment finance are generally two different "animals" each suited to entirely different purposes. Many firms historically opted to use their corporate finance facilities to budget and fund equipment acquisition. In the past, with freely available capital, this strategy did not have the negative budget impact that it does today, in the challenging economic environment. Many firms have discovered that their bank operating lines of credit and corporate financing facilities have been compressed, reduced or curtailed due to a range of factors including operating performance or covenant breach. In some cases, banks that participated in corporate revolvers have have had to curtail or reduce their own portfolio exposure level or withdraw from certain customers ( concentration limits) or pull out of certain industries entirely.

In the 2010 budget planning process financial decision makers might well consider the utility of equipment and technology financing lines of credit, set apart from corporate finance facilities, as an asset allocation tool. For many customers equipment financing can be cost effective with pricing at or near the equivalent corporate incremental borrowing rate. There are several reasons why, in 2010, an equipment financing line may be preferable to funding capital equipment via cash or corporate financing.

Consider that equipment financing & technology leasing facilities;

1) may provide a new funding facility that augments corporate financing

2) may offer more financing without down payments or entanglements such as restrictive loan covenants and loan "call" thresholds

3) may be a lower cost alternative compared to corporate financing which often requires compensating balances and annual fees

4) offers fixed-rate vs. floating rates which are expected to rise. Fixed-rate financing can act as an inflation hedge in a rising rate environment

5) Provides fixed-rate, firm-term financing, up to 84 months or longer, which allows capital equipment costs to be matched and aligned ( as a monthly expense ) to the useful life of the equipment and to the timing of budgets, revenues, cash flow and cost saving economics of the equipment or technology being acquired.


In summary 2010 may be the right time to incorporate an equipment finance or technology leasing facility into your overall Capital Equipment budget strategy. Equipment financing can offer a wide range of structures and benefits including Capital Leases, Managed Services Agreements and Operating leases or hybrid financing structures that allow "off balance sheet" treatment with less affect on financial performance ratios and balance sheet metrics. Equipment Financing can be a cost efficient tool to help take some of the pressure off Corporate Financing restrictions and covenants. At the same time equipment financing may be a better transaction structure for depreciating assets with a multi-year useful life.

LEVERAGING OUTSIDE CAPITAL IN A DOWN ECONOMY

In the current economy and for the foreseeable future many firms have resolved to retain cash, preserve capital and minimize budget spending. These same organizations also find it imperative to limit use of bank lines for operations and working capital. At the same time some broadcast, media or entertainment equipment or technology must be replaced or acquired in order to sustain or even build the commercial enterprise, municipal agency or non-profit organization. Most companies, city, state or county governments or non-profit organizations, that historically paid cash for capital equipment and systems technology projects, are now embracing the alternative of short-term financing ( 12 to 60 months ) as a means to spread the cost of equipment and technology to match costs ( in the form of a monthly payment ) to the timing of budgets, revenues and cash flow. Hoarding cash may be a preservation and survival strategy yet the need to integrate new technology to sustain the business may be just as important. Financing is the tool that allows retention of capital, preservation of bank lines and outside funding for capital projects.

MANAGING THE UNCERTAINTIES OF A CHANGING ECONOMIC ENVIRONMENT

WHAT HAPPENED?

The economic avalanche of 2008 swept over virtually all U.S. industries and market segments, including private enterprise, municipal governments and non-profit organizations. Virtually all segments of the economy were affected with revenue declines, capital shortfalls and equity erosion. This, in turn, resulted in a year-end budget and fiscal plan polarization for business, governments and non-profit organizations, as worry, fear and uncertainty gripped investors, workers and consumers alike.

The dramatic reversal of a boom economy that seemed invincible came at a stunning pace. Beginning in the second quarter of 2008, a series of interrelated events cascaded like toppling dominoes tumbling down one upon the other in a free-fall of markets, institutions and economic principles. None of the so-called economic experts had predicted the near collapse of the U.S economy. It seemed, as reporters scrambled to fill their notebooks and newscasters headlined wave after wave of “bad news,” that no one had an explanation or an answer, although with the political season in full swing, it wasn’t surprising that politicians promised a resolution to the economic uncertainty.

When the housing market peaked with banks and insurance companies holding tens of thousands of at-risk, floating rate mortgages, financial stability at household-name institutions first wobbled, then began to tumble. The fear of “failed banks” and a banking crisis featured prominently in the news media and fueled a “run” on some banks, which saw significant deposit erosion. Banks began to falter and Congress began attempts to shore-up the banking system to avoid a panic in the financial markets. Even while banking giants struggled to grasp the weight of their own portfolio risk, they began to tighten commercial credit, reduce loan exposures and limit new lending, which in turn, began a not-so-slow strangle on a business economy built on the ready availability of capital. Suddenly many firms awoke to find their investment capital or bank lines of credit greatly reduced, unavailable or altogether withdrawn, in many cases over-night. In some cases, banks significantly raised rates at the same time bank-to-bank borrowing costs were falling. In other cases, banks “called” loans (demanded immediate repayment) when commercial borrowers’ revenues, assets, profits, liquidity or equity fell below pre-set financial “performance ratios” and benchmarks. The FDIC quickly closed several wobbly banks, leaving those borrowers with no borrowing capacity whatsoever and no other institution available or willing to lend to them. Near panic was setting in. Hardest hit were real estate-related businesses, developers, realtors and large landowners whose greatest assets, were now overly-inflated real estate values. When real estate values began shrinking, developers and land owners found they had no ability to borrow, nor to resell these once prized assets, while, at the same time, their loan obligations and debt service requirements remained constant. The collapse of the real estate market had begun when at first residential housing buyers stopped buying, then most development projects were halted, then commercial development ceased. As a result many developers and other firms related to the real estate industry, such as realtors and loan brokers, failed or closed their doors.

As the diving economy entered an accelerating phase, where liquidity was shrinking, real estate asset values declined, credit availability was reduced, and financial markets were paralyzed with worry, fear and uncertainty. Retail sales, in general, began a slow stall, and the cloud of recession began to impact commercial, industrial and retail goods, products and services. The media maintained a heightened focus and spotlighted every morsel of negative news, economic measurement factor or dwindling facet of the economy. Just as it had with financial decision makers at the country’s business institutions, the same kind of worry, fear, uncertainty and a lack of confidence invaded the mindset of nearly every person, family or group in the U.S.

WHAT HAS BEEN THE IMPACT TO CHURCHES?

The overall impact of wave after wave of negative economic events was that hundreds of thousands of workers were displaced, resulting in the highest unemployment rate since the recession of the late 1970’s. In addition, the reduction of housing sales, auto sales and many other types of goods and services resulted in lower commissions, reduced or eliminated bonuses and lowered salaries. All of which resulted in a cycle of less to spend on goods and services, which in turn resulted in more layoffs and reduced hours for many workers.

To make ends meet, to continue to pay regular installment debts, mortgages, utility bills many individuals and families were forced to draw on their life savings, their retirement “nest egg”, and their cash reserves. Some borrowed on what remained of home equity lines of credit. Some borrowed on credit cards. Many retirees and soon-to-be retirees found that as stocks and real estate values plummeted so did their hope for work-free retirement. Many people lost their entire savings, and many of the “baby boomers” who had planned to live a carefree retirement began a slow realization of a new economic reality for their senior years.

These dramatic and rapid changes in the basic economic fabric of the country had a profound effect on nearly every individual and family. In turn, the members of congregations of nearly every church and ministry were affected from a financial and personal standpoint. For churches it became evident that combined “offerings” in the form of tithing, contributions and donations would adjust to reflect a new era of conservatism, caution and uncertainty. From a practical standpoint many members of congregations had lost their jobs or their hours were greatly reduced, or their salaries were reduced or their commissions or bonuses were either non-existent or greatly reduced. Members of the congregation came to Saturday and Sunday services with financial concerns. Many churches reported increased attendance. And, at the same time, churches reported that requests for financial assistance from members of the congregation and non-members from the local community had risen as much as 30%. In other words, while giving was down the need to help had increased.

The National Association of Church Business Administrators, on April 3rd, 2009, released a survey of its member’s responses in answer the question: “How is the economic recession impacting your congregation?” Highlights of the survey include:

32% of church respondents stated that their church was experiencing financial difficulties related to the current economy. This figure was up from 14% reported in a similar survey in August of 2008.

63% of respondents said their church experienced steady or increased giving by the congregation in 2008.

24% of churches said that they have curtailed some mission activities as a result of the economy, which was an increase up from 10% in August of 2008.

47% of churches reported that they have frozen or reduced staff benefits, which was up from 18% in August of 2008.

26% of churches reported postponing a major capital project.

Although the NACBA survey reported stable or increased giving in 2008, a November 2008 poll conducted by Church Solutions Magazine found that 53% of churches surveyed said that giving had decreased, 29% said that giving had remained about the same and 18% said that giving was up in 2008.

In their March 30th, 2009 article in ??? “Lifeway Biblical Solutions For Life” the authors point to their survey of 1000 Protestant pastors who reported that giving in 2008 was up an average of 4% of 2007. “While many sectors of the economy have taken a step back in the last year Protestant churches have held their own,” said Ed Stetzel, director of Lifeway Research.

Why such differences in the perception or result of giving throughout one of the most difficult economic periods in recent memory? There appear to be several factors including the uneven geographic impact of unemployment and job loss. Just as some physical storms seem to render destruction unfairly, so have the economic tornados and hurricanes as they have hit some communities far harder than others. Another factor in sustained giving may be in the power of “intention”. Writing on behalf of Cargill Associates, a Christian stewardship development firm, Pat Graham, president of the firm reports, “the interesting thing is this – most of the churches we’ve worked with in the fall of ’08 saw record giving levels achieved, right during the worst financial collapse since the Great Depression.” Dr. Steve McSwain, senior vice president of Cargill and author of “The Giving Myths” further explains; “the difference is internationality.” He adds, “If ever there was a time to teach giving, to encourage generosity, to step out in faith, now is the time.”



Writing for CBN News in March 30th, 2009, as published in U.S. News, Dan Busby, president of the Evangelical Council for Financial Accountability states, “The impact of the economy is uneven across churches and other Christian organizations. I think some of the organizations that came into the recession in a weak financial position have been impacted the greatest because they simply don’t have the flexibility that organizations that came in better prepared.” Busby adds, “We are very blessed people even though all of us may have been impacted by the economy. I think it’s a time for prayer and for both the churches and the para-church organizations and a time to pray for donors that God will bless them so they can bless the churches and para-church organizations as well.”

While giving at churches is uneven from community to community, stable in some communities or even up in some churches and communities, one thing appears to be certain across most churches; that is the need for help from within the congregation and from the local community at large, has increased. Writing in Church Money in October 2008, the Reverend Howard White of Pierce Chapel United Methodist Church in Midland says, “What I have primarily seen as a result of this economy (so far) is that the kind of help people from outside our church, and from within our congregation, are calling about is more dire and from people who would not normally need help – the employed, people living in their own homes. This is new.”

David S Bell writes for the Center for Christian Stewardship. In an article entitled “Sluggish Economy Increases Financial Pressure for Church Leaders” he writes, “People have primarily two “pockets” for giving – giving from earned income and giving from assets. As congregations age or an earned income decreases giving through the offering or annual campaign often decreases. Churches that are thriving financially promote giving from both earned income and assets. They promote annual gifts, major gifts and estate planning gifts. Major and estate planning gifts are generated from people’s assets.”
This would leave one to surmise that future giving may be impacted by the viability of the job market, in a community, as well as the future of asset values. The decline of asset values, such as real estate and home values, may affect future asset giving and major gifts, as defined by Mr. Bell.

Another factor that could affect giving in churches would be a surge in church attendance. However although this writer found spotty evidence that some churches have experienced modest increases in attendance, most research does not appear to support a wholesale or massive gain in congregation as a result of economic difficulties. In fact, most increases in attendance appear to be more related to a certain church’s ministry growth, expanded facilities, modernized campus, or integration of media technology, most of which were begun prior to the effects of the 2008 economic slide.

WHAT NOW?

Pastors, church executives, facilities managers and financial stewards understand that there is divine purpose in all things that happen in life. God’s message is to be heard among the chaos, fear and uncertainty of economic challenges and changes. Part of the events of the past year appear to represent an opportunity for us all, including the church, to get back to basics. There seems to be a re-adjustment in the order of our thinking, a kind of re-setting of priorities. As individuals and as institutions, we seem to be discovering that a new reality is emerging concerning our financial health and well being.

In speaking with church leaders it is clear that that many churches are taking action to help members of their congregation with special prayer sessions and practical workshops. Many churches are striving to help members and non-members with financial aid and assistance, financial counseling, life staples and basics such as shelter, food and clothing. From an operational standpoint, fiscally responsible church leaders have taken steps to adjust to new economic realities by rethinking budgets, re-evaluating expenditure plans and reshaping priorities. Financial stewards in churches are acting to sustain their church’s financial viability and lead their congregations with specific initiatives aimed to manage through these uncertain economic times. Examples of these steps include:

1) Reality Check:

Assess the impact on the congregation from the local and national economy. What are the issues facing members of the congregation? How can the church best help? What does the church need to do remain financially viable?

2) Immediately assess and adjust Budgets & Expenses

For most churches this is a good time to study the tithing of the congregation. How committed is the congregation to weathering the storm? Where can the church “tighten its belt”? What expenses can be reduced or forestalled?

3) Priorities and practicalities

Now is the time to sort out what is the “need to have” and what is the “nice to have,” whether it be a project, a mission, equipment or technology. For many churches media technology has been a new “engine” that drives and sustains attendance and participation. Is the congregation stable, falling, or growing? Invest in equipment, technology and projects that build and sustain the ministry.

4) Spread costs where possible.

Like many businesses, churches have historically funded capital equipment costs or even real estate out of the annual capital budget. If surplus cash and fund balances are abundant, that still may be a good strategy. However, if cash and fund balances are tight, it may be a better strategy to spread capital equipment or real estate costs over their useful life. For instance, a $100,000 media system may be a significant outlay in 2009 but spreading those costs with 60 monthly payments results in a monthly cost allocation of just $1950 a month, which aligns naturally to monthly contributions and tithing.

5) Increase savings and build an emergency fund balance

If business, government, non-profit organizations and we, as a people, have learned anything during this economic crisis, that is that it is critical to have an emergency fund to sustain us during the unexpected event or catastrophe. During this difficult economic period it is essential to develop the habit of building and maintaining a fund balance that would sustain operations for several months should there be a catastrophe that would undermine member donations, tithing and contributions. Also, as we have learned, in the midst of those difficult periods, the church will be called upon by those in need of assistance for basic life staples. A fund balance not only is a tenet of good financial stewardship but, as a practical matter, it offers the church financial leverage when negotiating with vendors, suppliers and even lenders.

6) Pay down debt.

Those churches with no debt or nominal obligations are in the most advantageous position to weather financial storms and the rise and fall of a roller coaster economy. Lack of debt plus a healthy fund balance allows the church to self sustain through good and difficult times. Lack of debt allows the church to negotiate the lowest interest rates when it does borrow. Having no or little debt is a hallmark of good financial stewardship. It is also a good example for members of the congregation who may be struggling with control of their personal finances. For churches that have debt, now may be a good time to refinance mortgages and commercial loans to fixed, low rates.

7) Find the opportunities

In the midst of a tough economy, the church can manage the uncertainties by defining what is certain and helping members to refocus on what is important and where the opportunities lay. Some of the strongest character growth comes during the most difficult challenges we are asked to face. God does not give us a task without the tools to achieve that task. Look for the blessings. Have gratitude. Allow the moment to lead us in a new direction. While the economic market may be in the midst of a “correction,” let the lesson for us all be a correction in thinking, hope and belief.

SUMMARY:

Financial stewardship means that church financial decision-makers pray for guidance and make adjustments to budgets, plans and church business strategies, with an inner peace grounded in the knowledge that God’s purpose in our financial lives is just as relevant as his “light” is in our spiritual lives. The underlying emotion felt by so many people touched by the economic events of the past year has been worry and fear. Yet it is in the midst of fear that more people come to the church ready to embrace God to find relief and answers. Many people will find a new life and God’s grace and blessing in the midst of these unsettling times.

Technology Finance Strategies In a Tough Economy

Churches, stadiums, arenas, live theatrical venues, broadcasters, convention centers, and any organization that has embraced media technology as a primary communication tool may be uncertain about how to proceed with budgeting and funding existing, planned or future projects. One thing is certain; most organizations are taking a careful look at their revenues, tithing, contributions and sources of current and future revenues, cash flow or donations. While some organizations have chosen to "table" projects it appears that many projects continue to be underwritten and funded.

Many organizations that, in the past, might have paid "cash" or traditionally funded out of the Capital Budget are now seeking to retain cash and limit the use of Capital Budgeting. Many of these firms now consider use of the Operating Budget as a means to pay for needed equipment, systems and technology out of "real time" cash flow as it occurs month to month.

Many types of equipment and technology projects either create savings or enhance revenue. Often the technology can "pay for itself" over time as the new system creates additional monthly revenue or provides savings that match the monthly payment.

Equipment and systems are currently discounted at historic levels. Combined with low interest rates the overall cost of acquiring media technology on a budgeted or cash flow basis may be extremely timely.

Historically a company might Capital Budget $100,000, in the current year, for a project with the expectation that the equipment would operate for 3 years. Iin the current economy, by using financing, a firm might choose its Operating Budget to cost justify $100,000 of equipment as a monthly payment solution. The benefit is a lower annual outlay of capital, and the amoritzation of costs over the useful life of the equipment and monthly payments that are paid out of monthly revenues and cash flow.

FINANCING STRETCHES THE CHURCH TECHNOLOGY BUDGET

Christianity Today, in a revealing study of church borrowing, reported that historically over 84% of churches utilize some form of debt or borrowing for construction or media technology projects and that nearly 70% of churches with annual budgets exceeding $500,000 finance AV technology. The amount of money a church borrows depends on the size of its budget.

Technologies for Worship Magazine's annual survey of church plans for media technology projects reports that a high number of churches plan to add, upgrade or install new media technology including sound reinforcement, digital display technology, integrated computer and communications systems, broadcast technologies, enhanced security and fire alarm systems and music ministry equipment. At the same time contractors and systems integrators report that churches often "under-budget and over-spend" on their AV, media technology projects. The result is that churches often settle for "less than" optimal systems. One leading church media systems contractor reports that in many cases churches repeat the process of technology integration two or three times before finally "getting it right". Technology budget failures are costly from a "financial stewardship" standpoint.

Spread the cost of media, sound or AV technology to match the timing of cash flow. Churches, large and small, struggle with the idea that equipment and technology must be paid out of the annual capital budget. In turn the typical capital budgeting process is sometimes an annual quagmire that delays or reduces a project size. One of the primary reasons that churches leverage outside capital (financing) is that it spreads costs over multiple budget periods and across the life of the equipment. Churches find financing to be a creative "business solution" to budget and cash flow needs. They value how it helps stretch the budget and helps fully fund the optimal AV project. By working with a creative lender or qualified financing source a church may discover a unique and creative way to meet budget objectives for its full media project. Sometimes the best solution is mid-term financing from 24 to 84 months. Other times the best solution is a "bridge loan" for 12 months with the ability to pay-off at any time.

Interim financing can support media technology projects that often take weeks and months to fully design, order, deliver, install, test and implement. After the original design consultation, contract administration and order process a recent $2.2M audio and video projection system in a well known California church took nearly 11 months to install and activate. The AV systems installation needed to coordinate with the construction timetable for the facility. The project included eleven months of "interest only" financing leading to a 36 month fixed-rate term financing. Not all projects take this long yet it is not uncommon for projects to unfold over several months especially where construction and facilities are involved.

Churches finance media technology as a means to match costs to the timing of tithing, contributions and donations. There are also other reasons why churches utilize financing as a financial stewardship strategy including:

1) Financing helps the church retain and preserve cash and capital
2) Financing helps preserve bank credit lines for operations, working capital and ministry growth
3) Financing acts a "hedge against inflation" in that the church pays for today's use (of the technology) with today's dollars and pays for future use with future dollars.
4) Fixed rate financing allows churches to spread costs over multiple budget periods while creating a predictable monthly payment
5) Financing helps to the church to "right-size" the project and lets the technology "pay for itself" through ministry and congregation growth

Small and medium sized churches borrow infrequently. Church leaders may not know what questions to ask of a lender or financing source. Here are a few suggestions: Determine your financial, budget and cash flow objectives then seek a financing solution that accommodates your specific goals. Ask your financing source how experienced they are with lending to church and house of worship facilities. Request recent references. Ask what criteria are used to determine credit approval and the interest rate. What about fees? Is there is a pre-payment penalty for early payoff? Obtain a commitment to a step-by-step process so that you know, in advance, what the procedure is. In most cases you should not have to submit an application fee or monies up front to get approved.

Today's church media technology projects can be complex and involve almost every key department in the church administration. As such it is critical that churches, big and small, new or well established, take a professional approach to evaluating, planning and implementing church media projects to insure that they fit the scope, objective and timetable respective to the particular ministry. At the same time its important that executives within the church who are charged with leading a major media project take the time to engage the most reputable and knowledgeable professionals available to consult, design, advise and implement a comprehensive media technology strategy. Prudent methodology extends to the analysis of budgeting, planning for and funding media technology projects to insure the best stewardship of church finances and a maximum return on media technology as a powerful tool within the ministry.

SPREAD COSTS OVER MULTIPLE BUDGET PERIODS

On the one hand the overuse of financing and the over-availability of easy credit, especially in the housing industry, is a big part of the reason for our current economic struggle. At the same time virtually every segment of our country's economy was built over the last hundred years on the the leverage of outside capital investment. It is not the use of outside investment capital or borrowing that got us into trouble but rather the sometimes lack of prudent, restrained or intelligent use of borrowing. It remains important for us, as business men and business women, to make that distinction because our economy will recover and advance and a key part of that re-growth will be the return of normalized "credit markets'. As part of that process we need to apply a "lessons learned" approach to the use of capital investment and the leverage of financing.

Most businesses today do not fund their day-to-day operations entirely with internal cash but rather they utilize a "working capital line" or operating credit line at their bank. This type of short term, usually "revolving" commercial credit facility allows the business to operate steadily during times of uneven cash flow, seasonality or intermittent earnings periods in order to pay suppliers, maintain payroll, cover operating expenses and generally bridge the timing of revenue vs. costs. The lack of availability of such financing means that many organizations cannot sustain themselves through uneven revenue periods, economic "down-cycles" or various transition periods. Many businesses, governments and non-profits operate through uneven revenue cycles and are especially vulnerable during periods of calamity such as natural disasters, a dependence on seasonal buying (Christmas) or periodic shifts in customer buying habits.

Hopefully, the current "pain" that so many businesses, city, state and county governments and virtually all other types of organizations are experiencing will provide a "lessons learned" approach that causes "financial decision makers" to build sufficient cash funds and capital reserves while balancing the use and utility of outside capital investment and borrowing as an important resource to be conserved yet leveraged intelligently.