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Charity
Channel
Your Business Plan
Part
II
by Linda Lysakowski, ACFRE
President/CEO
CAPITAL
VENTURE
SM
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In our last article we talked briefly
about how to determine what products you want offer
as a consultant. This article will examine product
selection in more detail as well as discuss pricing
your services.
In the fundraising arena, there are a number of
“products” you can offer—capital
campaigns, planning studies, grant proposal development,
major gifts fundraising, annual appeals, direct
mail, telephone fundraising, planned giving. In
addition there are many services related indirectly
or directly to fundraising—strategic planning,
management consulting, executive search, writing
for development such as case statements, board development
and development audits and plans.
There are several areas to consider when determining
your range of products—
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- How much experience do you have
in these areas?
- What do you enjoy doing?
- For what services is there a market?
- Will it be profitable?
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Experience
Being a generalist in a development shop is often a good
preparation for being a consultant because most nonprofit
clients have variety of needs, and having a general knowledge
of all the aspects of fundraising will enable you to serve
many of these needs. However, there are people for whom
being a consultant means being a specialist. One of the
best ways to gain a regional, or even a national, reputation
is by being an expert in a narrowly defined field, such
as planned giving. I doubt that any nonprofit would hire
a consultant to help them with their planned giving program
unless that consultant had years of experience in the
field. However, a working knowledge of planned giving
is helpful in capital campaign and general fundraising.
Therefore, if you have limited experience in an area such
as planned giving, it may be useful even if you don’t
specialize in that field. And, anyone who has a good grasp
on marketing can help a nonprofit develop ways to market
their planned giving program. It is crucial, however not
to pass yourself off as an expert in anything that you’re
not fully knowledgeable about. Knowing when to partner
with another consultant or recommend an expert in a field
in which you are not comfortable is the ethical and smart
way to consult.
I am often amazed when I read a posting from a “newbie”
saying, “I just got hired to do my first planning
study—how do you do a planning study?”! It
is sometimes said that the mark of a good consultant is
that when finding oneself in a situation where the prospective
client says, “We need help with (fill in the blank);
do you do (fill in the same blank)?”, the consultant
answers “Sure, we can do that,” and walks
out of the room saying to themselves “Now how the
heck are we going to do that?” This is a rather
tongue in cheek description, but it happens fairly often.
The key is—do you want to do that? Who do you know
that can do that? And how can you make an arrangement
that will provide the best service for the client, while
still making money!
And remember, that even if you are the expert in a certain
area, there may be many other reasons why someone else
might get the job--board politics, geographic location,
experience with that specific type of organization, or
perception that experience with a particular kind of organization
is more important than being an expert on capital campaigns,
or whatever you are proposing to the prospective client.
Do What You Love and the Money Will Follow
A few years ago, a book with this intriguing
title led me to believe that if we do what we really love,
we will make money doing it. I believed that for a while
until the cold reality set in that there is more money
to be made in some areas of consulting than in others.
However, you really have to love what you do in this business;
otherwise none of us would be working on Thanksgiving
Day writing an article for other consultants to read on
their weekend “off.” You may really enjoy
teaching others about fundraising. If so, look for opportunities
to expand your services into teaching and writing. Perhaps
you really enjoy capital campaigns because of the sense
of excitement that surrounds a campaign and the fact that
it is a short term assignment and then you can move onto
the next client. Other people prefer building long-term
relationships with their clients and working exclusively
in the capital campaign arena means you may never work
with that client again. So know what you love to do and
at what you are good. If you like instant gratification,
planned giving is probably not the field for you!
Is there a market for this service?
You may find yourself in an area where there is no market
for the services you hope to offer. Part of your business
plan must include the research mentioned in the previous
article to determine if there is a market for what you
offer. And, you must determine how far you want to travel
to offer your services if there is no local market. The
old saying about selling iceboxes to Eskimos is a pretty
tough way to make a living. Find out what people are looking
for by doing a formal or informal survey in the area in
which you hope to work. Find out what kind of services
the nonprofits in your community need and then try to
determine if these are areas in which you have a wealth
of experience, can set yourself apart form the competition,
and that you love doing.
The Bottom Line
The final question to ask yourself about the services
you hope to offer is what will people pay for the services?
While price fixing among consultants is prohibited by
anti trust laws, you can informally shop around and find
out what other consultants are charging and how much people
are willing to pay for the services you plan to offer.
How do you charge for services—by the hour, by the
day, per project? While some consultants work on a per
diem basis, others find it more valuable to the client
and more practical to work on a project basis. One important
thing to remember is that you are not an employee! A good
consultant gets paid for their knowledge and experience,
not their hours on the job.
It is also important to calculate the real cost of doing
business. For example, you might think that charging $100
an hour sounds pretty good compared to the salary you
may have been getting as an employee, but the costs to
provide consulting services include such things as: |
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- Rent (even if you are using your
home as an office, there are utility bills etc. that
need to be considered;
- Technology—a consultant needs
the latest technology in order to remain competitive;
- Marketing costs—website, brochures,
etc;
- Travel and meal expenses that may
not be billed to the client—for instance visiting
prospective clients;
- State registration fees;;
- Continuing education for yourself;
- Memberships in professional organizations
like AFP, AHP, APC, CASE, etc.;
- Subcontracting with other consultants
and/or staff salaries;
- Printing and mailing costs.
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So
after you do a realistic budget, figure your rates accordingly.
Even if you work primarily on a project basis, you should
have an hourly figure in mind when calculating how many
hours you will work on a project in order to determine
the project fee.
Setting realistic fees and offering only services in which
you can provide real expertise is one sure step to a successful
consulting practice. |
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Part
I |
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