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Linda Lysakowski, ACFRE

About Linda

Your Business Plan -- the Market Research Component

So you've decided to become a consultant! Now what? Do you hang out your shingle and hope that the business will come?

With an eleven year banking career behind me, when I decided to start my business, I took some rather unusual steps (like renting an office space and hiring a full time employee with one contract signed the dotted line) but one of the things I did right was to start with a business plan. A good business plan starts with market research. There are several things you need to research:

  • types of services you want to provide
  • type of clients you want to serve
  • competition
  • pricing
  • legal structure for your business
  • financing your business
  • location
  • growth issues
  • critical risk factors

This article will focus on selecting the types of services you want to provide and the types of clients you want to serve.

Determining Services

My first glimpse into market research for my consulting practice was empirical evidence. An associate of mine and I had been accepted to present a three hour workshop on Starting a Development Program, on the last day of the AFP conference in Atlanta in 1993. Based on past experience at these workshops, we anticipated having about 20 people in attendance. When we ended up having 137 people in the session and Standing Room Only, it dawned on me that there were a lot of organizations that needed development programs but didn’t know how to get started. Having been in a position of starting a brand new development office, I decided this was a good market niche for me. However I soon discovered that while there a lot of organizations that needed to get started in development, few of them had money to pay a consultant.

So, your first foray into research is to determine what services are needed by the clients with whom you hope to work. And, what are they willing to pay for them. Your research needs to include an honest evaluation of your own capabilities as a consultant. What areas are you experienced with and how can you use your skills and talents to help organizations. And make money!

As I realized that a lot of organizations that needed help could not afford my fees, I began focusing on small capital campaigns, since organizations are usually willing to pay for a campaign consultant. However capital campaigns are a tough place to start unless you have many years experience working in large institutions and have run capital campaigns yourself. Even though I had limited experience with campaigns, my unique niche was working with organizations that did not have a development staff. Most organizations will not hire a consultant without a solid track record, but I felt this focus would enable to serve a market that rally needed consulting expertise. I did some research to find out how many capital campaigns were being conducted in the geographic areas I felt were my prime market. Over time, the smaller campaigns became bigger and bigger and now about sixty percent of our work is in capital campaigns, and the size of the campaigns grew from hundreds of thousands to millions and tens of millions.

How to Get Started in Market Research

There are several ways you can do market research. You can hire someone to do (or do yourself) a telephone or mail survey of nonprofit organizations in your community (or the geographic area you want to serve) in order to determine:

  • what services these nonprofits need
  • whether they have ever considered hiring a consultant to provide these services
  • what they look for in a consultant
  • how much they are willing to pay for consultant fees

A less formal form of research is to attend meetings such as your local AFP chapter and talk to people about their experience with consultants and what they see as their greatest needs. Your local community foundation, United Way or Chamber of Commerce also prove helpful in determining the needs of the nonprofits in your area.

Ongoing Research

Your Business Plan needs to be updated on an annual basis. One reason for this is that your target services may change with time. You may find that you start out being a grant writer and then, after working with organizations to guide them through the process of developing program grants, that you have a knack for strategic planning. But, is there a market for that service and can it be profitable? Or, you may feel that your special skill is in organizing and managing special events, but as developing sponsorship opportunities for events becomes more of a focus, you may find yourself developing annual corporate campaigns for your clients.

After about six years in business I discovered that I really loved doing workshops and training people so I teamed up with another consultant to form my current company, originally thinking that we would actually make money doing workshops! We soon discovered that it is very difficult to actually make money on workshops, but they proved to be a great marketing tool.

Determining Client Focus

The other side of this research is -- to whom will you provide services? Many consultants specialize in a certain field -- education, environmental organizations, health care, human services, arts and culture. Some are even narrower in their focus, i.e. private schools, mental health, or a certain denomination of churches. Your first research again should start with you -- what do you know best? What has your past experience been and which organizations do you like working with? If you have an artistic flare, you may chose to work with arts groups as your primary focus. Or perhaps human services are the area for which you feel your experience best suits you.

Your research should also include talking to others who work in that field who would not be in competition for you. For instance, if there is an architect in your community who is known for designing libraries, you might want to talk to her about what unique situations and personalities exist in the library community. Be aware that some fields will again only be interested in hiring someone with extensive experience in their field. I find that often churches want to hire a consultant who has done numerous church campaigns within their denomination. If you decide to focus on a particular area, be aware that you will need to engross yourself in their unique language and culture. For example, agencies dealing with disabilities are very sensitive to person-first language and an unknowing consultant can start off on the wrong foot if they re not familiar with this concept. Also, just as institutions of higher education usually tend to only hire staff with experience in higher education, the same is true of their acceptance of consultant, and they will usually not hire a consultant that does not have a higher ed background.

Another Option

The other option is to be generalist, either in types of services provided and/or types of agencies served. I personally prefer being a generalist because I love working with a variety of clients that have included international causes, animal rescue organizations and museums, among many others. And I enjoy interacting with the various personality types in different organizations. However I have many consultant friends who say they will never work with another arts group, university, church, (fill in the blank).

Being a generalist is wise if your geographic focus is limited, it will open up a lot more prospective clients to you. However, those consultants who gain a reputation as being a specialist in certain areas, often have unlimited opportunities to travel to clients all over the work.

The key, though is to be certain that there is a market for the work you want to do before you set out your shingle and risk your income stream on a new line of work.

categoryNonprofit Consulting Review

consulting for nonprofits

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