The Nonprofit Consulting Playbook

Operating as an independent fundraising consultant can be a challenge. Building a robust client base, addressing staffing needs and managing finances are all hard work – that’s not even including the actual consulting tasks.

Linda Lysakowski and Susan Schaefer recently joined us for a webinar in which they discussed ways that new and established nonprofit consultants can optimize their practices. They focused on the many options available to grow, reinvent or reinvigorate your business. In case you missed it, you can watch a replay here:

Full Transcript:

Steven Shattuck: Thanks for joining us for today’s Bloomerang webinar, “The

Nonprofit Consulting Playbook.” My name is Steven Shattuck, and I’m the VP

of Marketing here at Bloomerang. And I’ll be moderating today’s discussion.

And today I’m really excited to introduce our two guests. I’m joined today

by two leading nonprofit consultants in the nonprofit sector. Linda

Lysakowski and Susan Schaefer are joining us today. Hey there, ladies. How

are you?

Susan Schaefer: Terrific. Thanks for having us, Steve.

Steven: Yeah, thanks for joining us. I was actually fortunate to have both

of these ladies on our first episode of Bloomerang TV a couple days ago. We

had a really fun chat. And this webinar is more or less a continuation of

that chat.

And for those of you who don’t know Susan and Linda, Susan is a consultant.

She’s a writer. She’s a speaker. She’s got a practical approach to

fundraising that has made her a frequent presenter at conferences and

classrooms. She’s on the road speaking a lot. She teaches fundraising in

the Master’s program of Museum Studies at John Hopkins University, which is

really cool. In 2001, she founded Resource Partner LLC, which is her

consulting firm, where she helps out nonprofits with ethics, professional

development, and fundraising and things like that. So, it’s definitely a

treat to have Susan.

It’s also a treat to have Linda. She’s been a webinar guest with us before.

If you don’t know Linda, she’s actually one of less than a hundred

professionals worldwide to hold the CFRE designation. In her 20 years as a

consultant, she’s managed capital campaigns. She’s helped a lot of

nonprofits achieve all of their goals. She’s traveled the world helping

development professionals. She’s been to Canada, Mexico, Egypt, Bermuda,

and almost all of the 50 states, I hear.

It’s definitely a treat to have you both. It’s an honor to have you both,

actually. Definitely serious people in the sector, and it’s great that

you’re going to be here sharing all your knowledge. So, thanks again, Susan

and thanks again, Linda.

Susan: Thank you, Steve. And thanks to all of you who are joining us today.

This is Susan Schaefer. We just want to thank you and really appreciate

this opportunity that Bloomerang is giving us, because Linda and I have

talked about nonprofit consulting for a few years now, and as you probably

know, it’s very rare to have forums that discuss this increasingly

important part of our sector. As all of you know, nonprofit consulting is

becoming a huge piece of fundraising, as well as technology, human

resources, and most other facets of nonprofits. So, the consulting slant

becomes increasingly critical to, number one, the soundness of our sector.

And number two, there are a lot of us who are practitioners in the field

who are looking to become consultants. And that’s where we’re going to go

today a bit.

Hopefully, those of you on the line are either new consultants or you’re

practitioners who are thinking about becoming consultants. And I think it’s

fair to say that all of us in the field have moments where we think about

going to the other side. So, today we’ll explore a little bit of this and

talk about some of the myths and some of the truths about becoming a

consultant.

Linda and I started talking about this topic, as I mentioned, a few years

ago. And Linda, as you heard, has been consulting for over 20 years. I have

for about 13. And when we started, there was almost nothing available that

really catered to people in this particular field of nonprofit consulting.

And business consulting is somewhat different. So, we’re going to talk a

little bit about what it means to become a consultant. And we hope that the

takeaways for you will be that there are many ways to succeed in this

field. And yeah, consulting is not for everyone, so we hope to shed some

light on the myths and the realities. And maybe we’ll start with Linda and

let you take this little poll to get us started.

Linda Lysakowski: Okay. Well, to give us some idea of our audience, as you

saw on the screen, Susan and I also coedited a book, which is out – gosh,

it’s almost a year already. And our book we found very interesting, because

we talked to people throughout the field that were years or

more. And we felt it would be really great to get the expert advice to give

[inaudible] [00:04:52] who are maybe just thinking about starting out or

have been in the field a little bit less than a year.

So, we’d like to get an idea of our audience before we get started. I think

we have – Steve, just correct me if I’m wrong – we have the ability to ask

people to raise their hands or to type into the chat box. I don’t know

which way is the easiest way to do this. Should they type right into the

chat box?

Steven: Yeah, I think typing would be best. For sure.

Linda: Okay, great. So, we’re asking you [inaudible] [00:05:24] more than a

year, six months to a year, less than six months, or are you just thinking

about it? And I see the chats are starting to come in. we have less than

six months, more than a year, more than a year. Quite a few more than a

year. Many years. Less than six months. More than a year. Less than six

months. More than a year. More than a year. For the majority of you have

been here more than a year – a few of you less than six months – I don’t

see anyone at this stage that has answered that they’re just thinking about

it. But some folks on the line are just thinking about consulting and

trying to decide if it’s for them or not. So, I’m going to turn it back

over to Susan, and with that in mind, that most of you are in this field

for more than a year, we’ll talk a little bit from that perspective. Susan,

I’m going to turn it back to you.

Susan: Terrific. This next slide of ours that talks about why consulting,

we’ll make sure that we provide a slant that pertains to those of you who

are already in the field. And it’s worth reiterating what Linda said. This

book that we put together, we solicited articles and essays from people who

had been consultants and were seasoned consultants. We asked them for their

feedback on numerous topics, and what was terrific and what the book ended

up reflecting is that there are so many approaches to consulting and really

no one way to approach it.

So, we’ll quickly move through this slide, because we have so many current

consultants. But as many of you know, the common assumptions about

consulting do not always hold true. Are there better hours? For those of

you who have been consulting less than six months, you’re probably still

working out the whole balance of hours, but it really does depend. If

you’re full-time, there may be better hours for you, but nonprofit jobs

certainly can have a lot of hours as staff. And yet, as Linda and I can

attest, and we’ve worked on projects together the last two years, Linda’s

on the west coast, and she’s often on the phone with me by seven o’clock in

the morning, her time. And I’m often on the phone with her at eleven

o’clock, East Coast time. So, the idea of better hours is very relative.

But as we see in the third item here, the freedom to set your own schedule

certainly does exist. There are consultants we both know who are very firm

in their hours. There’s one I know who literally drops his phone at five

o’clock, will not answer a cellphone call that is work-related, and I

greatly respect the parameters that he places on his business. That said,

there have been some clients who are less likely to work with him, because

they want to be able to call their consultant a little later at night, a

little earlier in the morning. So, really, as many of you know already,

this is a business about customer service, and so while you can have the

flexibility you might like, there’s also sometimes a bit of a price that

you pay.

One of the biggest questions about consulting, of course, is “Is there more

pay?” It really seems as though there might be. And yet, again, it really

depends. It depends because, as we’ll talk about later, there are

multitudes of cost that may end up in your consulting practice, depending

on how you structure it. So, we’ll get to that later.

It really also depends on your business model. It’s very difficult to go

out and chase business all the time, which is why so many consultants

really go into this field with a desire – and I think Linda was one of

those – a desire to serve the smaller nonprofits. And it can become very

difficult, because that inherently means that you will have shorter

contracts, and each contract may not be as lucrative. So, you end up

spending a lot more time marketing. If you create a business model where

you have at least a few larger clients and longer-term contracts, it allows

you to spend a little more time on the actual consulting and a little less

time marketing. So, depending on how you can structure your business, the

income will vary dramatically.

And there’s one other piece that we tend to put in our more advanced

consulting webinars. When we talk about the idea of passive income these

days, and for those of you who have been consulting for a little while, you

know that in the end, your income is very directly tied to your time if you

bill hourly. And then you get to a point where you may have some passive

income streams. You may start out doing things like books, or you may have

some classes you teach for a fee. A lot of consultants are now conducting

webinars. And all of these kinds of things allow you to serve more than one

person at a time and to start making additional money. I should, as a

footnote, add that books are not really the way to make a lot of money, as

Linda and I can attest, but we’ll get to the benefits of that later. But at

any rate, all of these things do give you some additional financial

resources outside of the hours that you set.

The ability to work from home is another reason why a lot of people pursue

consulting. It gets rid of their commute. Maybe their attire costs lessen a

bit. But again, we’ll talk about this some more. It’s really a very

personal decision. And many folks who have very successful consulting

practices decide to work in or out of the home, depending on their work

style, even aside from the cost.

Finally, the variety of work. This is probably the one question up here I

can give a definitive yes to in terms of an answer. If you’d prefer a

variety of work, as I certainly did when I started consulting, it certainly

is there for you if you’re willing to work at it and make sure that you can

expand your horizons. I spent a career fundraising in higher education

before consulting and was very excited about the diversity of work that

came. I’m at a point now with my consulting where, at the moment, I have no

higher education clients. And while I certainly don’t shun them, it’s been

terrific for me to get into so many other fields.

At any rate, let’s move on to the next piece, and I will turn it over to

Linda.

Linda: Let me reiterate what Susan said. I think that last item on that

last slide, the variety of work, is what prompts a lot of consultants. I

know it was one of the things that led me into consulting. I also worked

for higher education. I worked for a museum. And while most of the

facilities that I worked for had a real passion for what they were doing, I

really went into consulting because frankly, I get bored very easily. And

after setting up a brand new development office and getting it into shape

and the way I wanted it in about two half and a half years, I thought,

“Well, what is left for me to do here?”

Certainly some people are really like that, as far working for an

organization that they can continue to work with, but others really like

the variety. So, I think when you talk about the question of “Are you cut

out to be a consultant,” a lot of it depends on your personality type. But

if you are someone like me, who finds themselves getting bored pretty

easily, you might say, “Gosh, consulting is so much better because I get to

work with a variety of people.”

In the 20 plus years I’ve been in consulting, I have worked with higher

education, with private schools. I’ve worked with arts groups, I’ve worked

with environmental groups. I’ve worked mostly with human service agencies.

And I have never had working as a staff person in a human

service agency. So, to me, that’s been really rewarding, because I feel

like I’m part of so many people’s different really, really

and some things that you have to think about.

Some of you, like myself and probably most successful consultants, really

like being independent. But I’ve worked with consultants who really don’t

do well in that atmosphere, because they like the teamwork that’s

associated employment-wise. They like going to work every day and working

with a team of six or seven or 10 or 50 people.

I know I have one consultant that worked for me, and she started out

consulting on her own. And she said, “I just don’t like being on my own. I

like the teamwork, I like the camaraderie of having a group of people.” So,

she approached me to come to work for me. But what I found in that

experience is, while she was a good consultant, sometimes I felt she was

just too dependent on me, and she wasn’t independent enough to work with

clients on her own. So, you might feel, gosh, you like the idea of bouncing

things back and forth with other members of your team. And maybe being an

independent consultant isn’t for you. However, that does open up the

possibility of going to work for a larger consulting firm. So, it doesn’t

mean you can’t be a consultant at all. It just means that you have to maybe

think about whether you really want to be working alone.

Income is something Susan raised. And I think one of the things that people

will often think is, “Well, gosh, these consultants are getting $2,000 a

day, and that’s really great, because I don’t earn that much as a staff

person.” But they don’t think about several things. One of them is all the

expenses that a consultant has that comes out of that $2,000 a day. But

they also don’t think about the paychecks that are . And not

only the paychecks, but the benefits. And now I’m fortunately at an age

where I’m qualified for Medicare, so I don’t have to worry so much about

benefits. But before I was at that stage when I was consulting, I was

paying a lot of money in health insurance benefits for myself. And if you

have employees, you have to pay that for them too.

So, some people don’t that stable paycheck, especially if

you’re the sole income earner in your family or if you’re really relying on

a second paycheck. The thing about consulting that you have to face is that

there always seems to be those fluctuations of periods of really great

times when you’re doing really well, and you’ve got three or four major,

big clients, and the income is just rolling in, and you think, “This is

great.” But then you have the dry desert periods too, where maybe nothing’s

coming in for a couple of months. So, that’s something to think about with

your personality.

You’ve also got to think about whether you like multitasking. And even

though in the job you certainly do a lot of multitasking if you’ve been a

director of development… And I do see we have at least one person who’s

just thinking about consulting. So, if you’re in a position where you’re a

director of development, or you’ve been in that position, yes, you had to

multitask the events and the grants and the major gifts and the planned

giving and everything else, but with consulting, you’re not only doing

different tasks, but you’re doing them for different people. Especially if

you’re a grant writing consultant, for example, you might have to juggle

“All these clients have grants due at the end of this month, and how am I

going to get them all done?” So, you have to think about whether you’re

good at multitasking. And I find some people are great at it. Others are

not so good at it.

You also have to think about whether you really enjoy focusing on that one

mission, or do you like the variety of different clients.

committed to one thing. And you can certainly control that by saying,

“Okay. I’m really into the environment and preserving the environment, and

I loved working for the Sierra Club or whoever I worked for before.” So, if

you want to commit to something, you can decide to focus just on

environmental agencies or just on the arts or just on higher education, but

what you’ll probably find is, after a while, you’re going to exhaust all

the clients in your geographic area. And then you have to think about

“Okay, am I ready to spend most my life on a plane, and travel all over the

country and maybe beyond?” So, that’s another thought to think about.

We talked about schedule predictability. Again, in the development

position, we all know it’s not a nine-to-five job, but we pretty much know

what our hours are going to be from week to week, where in consulting, I

can tell you, honestly, I don’t know many consultants that are like Susan’s

friend who doesn’t answer his phone after five o’clock. I did know one

consultant who said he took off every Friday, and I thought what a great

life that would be. But most of the consultants I know, in all honesty, are

probably working 60 to 80 hours a week.

So, even though you have long hours, what you do have is flexibility. And I

find that even though I work many hours and most weekends, on Monday, for

example, I had a friend in town, and we decided to pick her up at her hotel

and drive out to Red Rock Canyon and picnic and go out for dinner. So, we

had a great experience, and I could not do that if I was working in a full-

time job.

So, I think your personality has a lot to do with whether or not you’re

going to be successful as a consultant. It also has kind of has a lot to

say about what kind of consultant you will be. Some people – I would never

be happy doing this – but some people are very happy doing a single focus.

They only want to do, for example, grants management or foundation

relations or capital campaigns. Some people are more full service. They

want to do a broad range of grant services. Or they want to do capital

campaigns, but they also like doing development audits and other things,

maybe board development or just general fundraising. So, those are

decisions that you have to make.

And then you have to talk about what type of a business model do you want.

And we’re going to talk about that a little bit more in a few minutes, as

to how you structure your business. But sometimes we have people who never

want to have anyone else involved. They just want to be a single sole

proprietor or a single shop person. And others like working for a large

firm. So, there are decisions like that that you have to make.

And then you have to think about do you like being a single focus? Do you

like working only in the arts or human service or education? Do you like

working with large, medium, or smaller organizations? I’ve worked with

probably all sizes. I really enjoy working with the smaller organizations,

but they do present more challenges to a lot of people. But some groups,

some consultants might say they only want to work with large institutions,

and that’s fine. Again, it’s knowing your personality and what you’re

comfortable with and where your expertise is. If you’ve never worked for a

large organization, you might be much more comfortable working with smaller

groups.

And then client geography is a huge one. I notice we do have a question in

here already from someone that is based in Canada and wants to know what

the sectors in the US market are that present the largest opportunities.

And it’s kind of hard to say, because I think we have so many more

nonprofits in the United States than they have in Canada, just based on the

population of our country. But some of the things that you have to think

about if you want to spread out local, national, or international are some

of the things like state registration. And we’re going to cover some of

those things, I think, a little bit later too, but those are some things

that you really have to think about when you’re trying to expand your

geographical scope.

How much time do you want to spend on an airplane? I remember several years

ago, I spent seven days in a row on an airplane, and I said, “Even flight

attendants get a day off. What am I doing on a plane seven days in a row?”

And I’ve now cut back my travel schedule tremendously, because I’m now a

caregiver for my husband, who has a medical condition that requires a lot

of help, so I’ve definitely changed.

And there’s no reason to say that you can’t change any of these things as

you go along. You might decide to go from full service to being single-

focused. Or you might decide to go from a small proprietor into being an

LLC. Or you might decide to go from focusing strictly on the arts to

focusing on all types of organizations or vice versa. There’s nothing that

says once you’ve locked into this, you can’t reinvent yourself. And we have

a lot of really interesting stories in our book from consultants who have

reinvented themselves. So, just because you’ve decided to be one kind of

consultant doesn’t mean you have to stick to that. Same thing with our next

topic, which Susan is going to talk about, and that is where you want to

work. That changes sometimes too. Susan, it’s all yours.

Susan: It does. And we won’t spend too much time on this, since a lot of

you are already in the trenches, so to speak. I do want to go back quickly

to one thing Linda mentioned about multitasking and just reiterate,

particularly for those of you who have been consulting for a little while,

that the multitasking includes a lot of administrative tasks that people

don’t always give a lot of consideration to before they start consulting –

things like the marketing and the bookkeeping and just general

administrative tasks that deal with taxes and the rest of it. So, it is

really important to think about these things.

These days, there are lots of resources if you are not interested in doing

some of these pieces. I’ve got someone who designed my website, for

instance, who I pay a very minimal fee each month to maintain my website in

different ways, whether it’s upgrades or just updates of some latest things

that I’m working on. But I know consultants who outsource their bookkeeping

or administration or keeping their calendar or whatever it is. But

particularly if you do want to travel and do some of the things Linda was

talking about, your time in the office then decreases and it gives you more

reason, possibly, to outsource some of the multi-faceted, multi-tasking

pieces of your work. So, consider that if you’ve been in business for a

little while and are feeling overwhelmed by the many different pieces to

consulting.

Where do you want to work? Some people, this comes very naturally. They

think at the beginning, “I don’t have much of a budget. I need to work from

home.” But I think the big takeaway with this one is really go with your

gut. And as Linda just mentioned so well, you should not be afraid to

change case as the years or months, even, go by. There are many consultants

that we each know who have gone back and forth, because they realized that

one environment seemed right and then wasn’t.

And one piece that we list here under a so-called real office is prestige.

And depending on your client base, it can be important for you to have, if

not a real office, a real office address, which we get to at the bottom of

this slide under “Virtual Office.” There are some national organizations,

be they universities or just national charitable organizations that really

do tend to hire larger firms. And it’s one thing for them to hire someone

who’s a full proprietor, but they really might, whether it’s subconscious

or not, they might think twice about hiring someone who works from home,

mostly because, while things have changed dramatically, there is still some

stigma to a type of business that’s run out of someone’s home. On the plus

side, they might tend to assume that that type of consultant charges a

lower fee, so you could build that in as a benefit.

But as one example, I did some work early in my consulting career for a

client that was affiliated with the World Bank, so these are very corporate

type nonprofits. And without my ever saying that I worked from home, this

client just made the assumption that I worked in a high-rise glass building

in downtown Washington DC. I didn’t even get a chance to tell him otherwise

until we were a little further into the engagement, but those assumptions

can be very real. You might want to think about the types of clients you

want and make sure, at least, that you have a virtual address, if not a

real office address. There are many folks who work in offices where they

just get a room in a larger organization, and that allows them to share the

kinds of ideas that Linda was talking about, if you are more team-oriented.

And finally, one other piece I want to add to this is that here are some

middle grounds in these offices now, particularly if you’re in a larger

city. You can often get almost a part-time office where you get a real

address and you get a receptionist, and you can have an office or a

conference room when you need it. And that is beginning to serve as a happy

medium for folks who like the flexibility of working outside of their

house, but can’t find a good arrangement to have a full-time office. So,

there’s really a range of options, and a lot more goes into it sometimes

than people would think.

So, now we’re going to get back to the subject of how to structure your

company. And I’ll let Linda take that one.

Linda: Before I go into that, I do want to add one thing to what Susan said

about the advantages of working at home or working in a real office. I just

had an experience a few months ago where I contacted one of my local

universities, because I thought I wanted to hire an intern to come and help

me with some social media and some things that I just didn’t find the time

to do. And I found out that the universities will not allow interns to go

into someone’s home office. So, that was kind of an eye opener for me. And

I thought, “Well, even though I could maybe have this person do work

remotely from their own site.” They said, “No, you have to have an office

to have a virtual assistant or an intern.” So, that’s something that you

might want to think about, that you can’t get an intern if you’re in your

home office.

Before we talk about structuring your company, I want to tell you that we

are not lawyers. We are not accountants. We are not financial advisors. So

we would absolutely suggest that you contact your legal counsel to decide

what is the appropriate structure for your company. But Susan asked me to

talk about this slide, because I’ve done every one of these except the

first one, sole proprietorship. So, I can tell you, if not from a legal

perspective, but from an individual, personal perspective what I’ve found

are the advantages of these, except I have not been a sole proprietor. Most

people do not opt for the sole proprietor because of the liability issues

that are involved. So, most people today are probably opting for LLCs.

When I started my business, I was a subchapter S corporation, because

actually, I started my business before LLCs existed in the state I was

incorporated in. So, the subchapter S corporation gave me some benefits of

protecting my own personal assets from any liability, which at that time,

it was either you’re a corporation, a partnership, or a sole

proprietorship. So that’s why I opted for the subchapter S corporation. I

just got done filing my income taxes, and still the subchapter S is open,

although it’s pretty much phased down. But I can tell you it cost me more

to file taxes for an inactive company than to file my taxes for the LLC,

because I opted to have the LLC income put onto my personal income tax. But

it still protects me from some liability.

I also had a partnership for a while, and the partnership arrangement can

be really good, or it can be a nightmare, I think. My experience with

partnerships, or the good side of it was I had a partner who had strengths

that I did not have, and then I had strengths that she didn’t have, so we

had a good partnership arrangement for that reason. We also happened to be

in two different states at the time. I was in Pennsylvania, and she was in

Ohio. And it’s probably a good thing it was, because our work styles were

totally opposite. We probably would never have lasted more than a week in

the same office.

So, I think if you’re going to do a partnership, make sure that you have

built some kind of collaboration with this person before you go into

partnership, because you have to agree on common goals. You have to agree

on marketing styles. There’s a lot of thing that partners really need to

agree on. And if you don’t agree on those things, you’ll probably find

yourself at odds, and maybe the partnership will dissolve, because mine

did. And mine dissolved, not because we couldn’t get along with each other,

but because we had different goals for the company.

In fact, when we started the company, we talked about this, and my partner

was about 10 years younger than I am. And she said, “But, you know, I’ll

probably be at a stage where I’m wanting to grow this business, and you’re

wanting to cut back.” And the exact opposite happened. I was ready to grow

the business, and she was ready to cut back. So, sometimes, even though you

talk these things out in advance, things do come up and maybe a partnership

doesn’t merge. It didn’t take a lot of effort to dissolve the partnership,

but there were some issues that we needed to deal with. So, I think if

you’re going to consider a partnership, make sure you know the person that

you’re going into partnership with pretty well, and that you really feel

like you can build a good working relationship. So, that’s what I have to

say about that.

I do want to talk a little bit about some legal issues. And again, we’re

not attorneys, and we can’t give you legal advice. But some things that I

really wanted to point out, and particularly, I think Lydia asked what are

some of the issues facing the charitable sector. And this doesn’t exactly

address that question, but it’s issues that face consultants.

In the United States, we have 50 states that about 46 of them, I think, now

have some type of state registration. And this is going to be important for

you to make decisions about where you want to work, because if you’re going

to work nationally or even internationally, you need to be aware of those

state registrations. You also need to know about the expense that’s

involved. And it’s a lot of work just completing all of those forms. I

currently am only registered in a few states, because I’m not doing that

much consulting out of state anymore, but at some points in my time, I’ve

been registered in like 10 different states. And the prices range from

anywhere from usually $250 to $800 to register in each state, so you need

to be aware of that. And you do need to register in states wherever your

client is based. So, if you have a client in Washington DC – Susan can

probably add more to this – they not only require registration, but you

have to have a business license in the city of Washington DC.

So, there are a lot of things that you have to be concerned about. There

are companies that can help you navigate through this, though. They help

nonprofits who fundraise nationally, and they can get involved in that.

You also need to be aware of some of the IRS regulations that determine

whether someone’s a contractor or an employee. And you need to know this

for two reasons. First of all, you might have some clients approach you

that say, “Well, we’re going to hire you as an independent contractor.” And

there really is no such thing. The IRS has very clear guidelines about

that. You’re either independent, or you’re an employee. You don’t just go

into an office and get an office and business card and work in that office

every day and have a supervisor, and at the same time say you’re an

independent contractor. So, you’re either an employee or you’re an outside

vendor or contractor or however you want to look at it.

You also need to be aware of those regulations for your own staffing. If

you’re going to hire people as independent contractors, most likely, you’re

going to be paying unemployment insurance on those people, even though

they’re not employees of yours. So, those are things that you need to be

aware of. What kind of tax laws, what kind of liability issues are there,

especially when you start hiring staff people within your organization. So,

those are some things you need to look into, things like liability

insurance and things like that.

Somebody posted a question: “How do you find out if you need to register?”

And I’m going to answer that question right now, because it’s appropriate.

And actually, in our book, one of the authors of one of the sections of our

book runs an organization that does help nonprofits and consultants

register. And we actually have a whole chart in the back of the book that

has the state contacts that you have to make to find out if you need to

register. And every state has seemingly different laws, so you need to look

into that. But you can do all this research yourself on the internet if you

have the time, but if you buy the book, it’s right in there so you can find

it there.

So, I’m going to turn it over to Susan to talk about marketing, because I

know this is something that a lot of you are interested in, and we want to

make sure we get this in before we run out of time.

Susan: Thanks. And it’s probably easily said that we could spend the full

hour just on marketing. So, we’re going to really hone in on the topics

that I think matter the most. And as you can see, just in a brainstorm we

listed quite a few avenues for marketing your consulting business. I think

as with most things in life these days, any one of these can become

overwhelming. And in my experience and many others who I’ve spoken with

about this subject, it’s really terrific if you can figure out one or two

vehicles for marketing your business that really suit you and your

personality and your business goals.

So, it goes without saying that a website does seem like the standard these

days for a consulting company, but I have to say that I know plenty of

consultants who do not have a website. I probably went my first five years

or so as a consultant without a website, and I was busy all the time. To be

honest, that’s one of the reasons I did not create a website, because I was

too busy consulting to do it, so I thought. When I did create a website,

the most immediate benefit was that people stopped calling me to ask me to

do things that were not among my service offerings. So, I did save a lot of

time with those calls that were not going to be fruitful. That said, you

can go either way. But many groups, and particularly if you, again, want

some larger, national clients, do expect a website.

I’ll skip to social media, because it’s something that is, I think, a

constant conversation amongst consultants these days, particularly one-

person shops. Should you do it? Should you not? I really think it’s

dependent on the type of clients that you would like. There are a few

consultants I know who spend a lot of time on social media. They blog.

They’re on twitter. They do Facebook, all the rest, and pour a lot of time

into it. And it is successful for them. It’s most beneficial for those

people who are really looking for clients nationally. They’re looking to be

thought leaders and looking to create a following. And they often have

ancillary products that they’re looking to sell because of that national

audience and the numbers that they’re garnering.

For me, someone who decided after going through many of the phases of

traveling and taking on clients in many states, I decided that between the

registration, the travel, and all the rest, I was really happy working in a

more regional market. So, now, I mostly work in the Washington DC area. And

because of that, I’ve decided that doing a whole lot of social media really

doesn’t benefit my company, because I’m looking to get in touch with people

on a regional level rather than national. So, again, consider your

priorities as you think about that.

Regardless, professional associations have really been able to propel a lot

of consultants’ careers if they choose the right one. I know plenty of

consultants who are involved either in AFP or GPA, the Grant Professionals

Association, or many of the other nonprofit-oriented groups. And these

consultants pour many, many hours into these groups, and it’s got huge

benefit for their firms. Something that comes as a surprise to many newer

clients is that some of your best sources of referrals will be other

consultants. So, getting into these situations and getting known by many of

the others who do what you do can really result in a lot of great

referrals.

Networking is obviously terrific. And again, I highly recommend trying to

find local or national networks of consultants. There is one national

network – well, two national networks of consultants if you’re not familiar

with them. One is called the Giving Institute, which tends to have some of

the larger firms nationally involved. And then there’s one called APC, the

Association of Philanthropic Counsel, which has many sized organizations,

but it does tend to be focus more on one or two-person shops. So, those are

great places to learn about your craft and network with some terrific

consultants.

I’ll say also that advertising, for most consultants I know, is not always

a terrifically great investment. Maybe there are some sources locally, but

I’d say about 90% of the consultants I know have tried it and then decided

to move on to something else. So, you may found a particularly great venue,

but for the most part, I think these other avenues tend to work better.

And finally, speaking and writing can be terrific, particularly if you’re a

very good speaker or a very good writer. That may seem obvious, but you’re

only going to command potential clients after a speaking session if you

were terrific. So, again, it’s really worth prioritizing and doing a

personal assessment of your strengths. And why waste your time traveling

around the country and doing speaking just to do it? Really do it if you

feel that you’ve given it a try in some local venues, and you get a crowd

at the end and people want to hear more and know more.

So, I think there’s something here for everyone, but don’t try to do them

all, because you need to leave time for your consulting. With that, we’ll

talk a little bit about fee-setting.

Linda: Okay. I’ve been answering some of the questions just because they’re

appropriate to the slides. Let me see. We did have one question about

recommending time and billing software. I use QuickBooks for all of my

financial stuff including bulling and invoicing. However, I can’t give you

much advice on time tracking, because I have never billed on an hourly

basis. But this is something that you need to think about is how do you

base your fees. Some consultants I think do charge on an hourly basis.

Particularly if they do a lot of grant writing, I believe. They are much

more prone to do hourly or daily. Many people have a daily rate. I

personally do mine all on a project-based time, because I feel like I know

what needs to be accomplished. And frankly, in most cases, you’re not

really being paid for your time. I think this is one of the biggest hurdles

that consultants need to think about is it’s different from being an

employee, because you’re not paid by how many hours you put in. You’re paid

by the results that the client sees at the end of working with you. So, I

prefer always doing everything on a project-based fee, and I think for many

consultants, that seems to work better.

But however you’re going to charge, I think the thing that’s important is

you have to think about things like what are the expenses that you have to

involve. A lot of times, people have said, “A good rule of thumb is the

rule of thirds.” If you’re paying someone to do this job, or if you’re

paying yourself to do this job, let’s say you’re paying someone $100 an

hour. Then you should be charging the client $300 an hour, because one

third of that is a salary that you’re paying out. One third of that is your

expenses. One third of that is the profit. But you have to think about

things like what personal expenses are involved in running your business,

if you’re running an office, if you have to pay utilities.

I personally run an office from myself, so my company pays myself or

actually my husband for a space in my home. And you can do a lot of

different variations of that. But if you have to pay for your own

healthcare, that’s an expense that you’re going to need to deal with. Do

you have a retirement fund where you’re currently working? Well, if you’re

going to set up a retirement fund for yourself at home with your own

business, that’s something that you should think about. What kind of

startup costs do you have involved that you have to think about? Travel

expenses – you’re usually billing them mostly to the client, but you might

also have to think about the experience that you have and what kind of

experience do you have. Can you charge more because you’re more

experienced? What’s your competition margin? You also want to look at

things like that. And that’s going to be different in every environment.

And, frankly, a lot of times when I was working national, I might charge

more for a client that I’m working with in Washington DC, for example, or

the state of California, where prices are a little bit higher, than I would

charge a client in Nevada for several reasons. That’s what my competition

is charging, but also, if you’re going to be traveling, you have to take

into consideration the time that you’re going to be spending in your car or

on a plane. So you have to think about those things as well.

So, there’s a lot to think about when it comes to setting your fees, but as

I said, I think try to get out of that fact that “I’m charging X dollars

per hour,” because people aren’t paying you for your time. They’re really

paying you for your experience and your expertise. So, I think that’s an

important thing to think about when you set fees.

I’m going to turn it over to Susan. And then I think we have one or two

more slides, and then we’ll go into some questions.

Susan: Great. Well, we called this last slide “Surviving and Thriving,”

although we also love to think about it as reinventing yourself, because

that’s really what this entire consulting career ends up being about. And

as you can see by the graphic we selected, Gene Wilder’s face there in

“Young Frankenstein” has become the mascot for Linda and I of what it means

to consult some days. And it’s not always a pretty picture. But the good

news is, whatever it is about your company that gets to be frustrating or

too demanding or just distasteful at some point, you have the ability to

change. And that’s a little harder if you’re working for a firm, but if

you’re working for yourself, in particular, there are many different

directions to go, and that’s part of what makes this such an exciting

career.

First, we’ve talked about this in many different lights today, but being

flexible is just terrific. And it’s really worth just constantly monitoring

your own changing needs and preferences and interests. And make sure that

you’re always doing what you’re good at and what you love to do, because it

really does come through to your clients. You don’t want to take on jobs

just because a client comes to you. And it’s a dangerous way to consult

actually.

For instance, there’s a consultant who wrote for our book who talks about

the fact that her core business was strategic planning for years, and she

loved it until she didn’t love it anymore. And suddenly, her business

became a source of real frustration for her. And she one day went to a

seminar about social enterprise and loved it, and took what I think is a

very admirable and bold move and decided to just immerse herself in what

had been at the time this new role of social enterprise. And for several

years after she really became self-taught in that field, she dropped the

whole strategic planning element of her company and went into social

enterprise exclusively. And that went on for a few years. She was very

successful, because she really had done her homework. And at the end of her

day, she did add strategic planning back to her list of services. So, it

just shows that there really are endless options if you can give yourself

that space to be flexible and create parameters for yourself that make

sense at the time.

I think one of the most important pieces for consultants is for us to

continue to have mentors and coaches and even peers that we can talk to

throughout the years. It’s always a fine line between being the experts to

our clients and knowing that we’re not expert at everything in our own

minds. So, whether you’re talking to people about the latest breakthroughs

in your discipline area, or just talking to a consultant who’s more senior

than you about how it is that they charge for their travel or how it is

that they structure their contracts, there is just always something new to

be learned. So, seek out those folks. I do find this to be a very generous

field, so we’re very lucky in that.

As we talked about, the idea of adding, eliminating, and changing services

is a real option. I will just caution, again, against the idea of taking on

projects that you are not qualified for. There’s always this fine line

between taking on something new that you haven’t done, because you want to

push your own box and you may want to gather skills in something, but do

make sure that you are fully educated and trained or that you have

developed a strategic alliance with another consultant before you take on a

project that’s new. Because it really only takes one failed project to ruin

the reputation that you have built for yourself for all the years that

you’ve been consulting, and at the end of the day, all any of us really has

as consultants is our reputation.

So, take that seriously, and don’t do what some do and just accept jobs

because they’re offered to them. As tempting as it can be, be strategic.

Bring people on with you. And there are many consultants who partner

temporarily on projects so that you can bring in an expert. And that can be

something done behind the scenes or something more explicit so that your

client knows you’ll be working with someone else.

Along those lines, you can also learn new skills by becoming an associate,

or otherwise known as a subcontractor, to someone else in the field. And

it’s a terrific way of learning skills. If for instance, you want to grow

your business into the capital campaign market, if you’ve never done a

campaign before, one thing you can do is work alongside of an experienced

campaign consultant. And you might have to charge a little bit less. So, as

Linda said, that consultant is making his or her full fee, but it’s an

education for you and real world experience and working on a campaign that

you can later take back and market on your own.

So, a corollary to that, in terms of growing your business, if there are

pieces that start getting tiring for you, you can also subcontract out work

on your own. We talked before a bit about having interns and others help

you with things like answering the phones or doing your books, but you can

also do that in more substantive areas like writing or helping put together

development plans or even doing some data entry, whatever you need done.

So, it’s a great way to build your business and not have to hire employees

yourself. So, this whole consulting field is really as creative as you’d

like it to be.

So, thanks again for joining us. It’s always terrific to have new quality

people enter this field. And if there are any additional questions, Linda

and I would be happy to answer them.

Steven: Yeah, great.

Linda: I see some in the queue that I think Susan probably can’t see, but I

wanted to comment – actually, some questions and comments. Les just

commented on an RFP that was apparently a school board hiring what sounds

like a grant writer that specifically stated if they did not receive the

grant, they expected their money to be returned.

And Anne made a great response to that. This is definitely something that

you’d want to avoid. I think you also need to be aware of the AFP’s –

Association of Fundraising Professionals – code of ethics and other

associations that also have codes of ethics. APC has a code of ethics, and

I believe the Giving Institute does as well. But one of the things that is

definitely an ethic goal is to work on a contingency basis. And as I said,

we get paid for our expertise, but when you put time into a project, you

should be expected to be paid for that. So, I think this is a really good

comment.

And another point that Anne made that I thought is really important is

making sure to clarify your payment agreement. Have a written contract. And

I know I always ask for a down payment on that contract to be paid before

any work starts, because I think we’ve all been in situations where we have

been burnt occasionally. And maybe someone said, “Well, I’m not paying it.”

And even though your contract has it in, they still think they shouldn’t

have to pay for one reason or another. So, have a written contract with it

clearly outlined when payments are due. And I also have a service fee that

if payments aren’t made promptly, they pay, I think it’s 1.5% interest. So,

I think that’s some great suggestions.

There was one question here that I wanted to address to Susan, because I

think she’s having trouble seeing some of the screen, but somebody was

looking for a networking group in the Washington DC area. And in addition

to the national networking groups, many larger cities do have networks of

consultants. So, Susan, do you want to answer that question about a

networking group in Washington?

Susan: Sure. There had been one several years ago that is no longer. For

all of you, I’ve set up plenty of informal networking groups as the years

have gone on with groups that just benefited me at the time, either people

within my specialty or outside of it. To the person who wrote that, there’s

a fairly new group that’s just formed. It’s actually come out of

discussions that had been around our consulting group. It’s through the

Association of Fundraising Professionals. We now have a Consultant’s

Affinity Group, and it’s been terrific. It’s been going on for close to a

year now. And it’s just a group of consultants sitting around and talking

about discipline-specific and business development ideas. So, I’m happy to

give you more information if you want to send me a note.

Linda: I think in that regard, we do have a slide with both of our emails

are on there. Actually, it’s an email that you can use to touch base with

both of us: [email protected]. And if you’re

interested in buying the book, you can contact us through that too, and

we’ll happy to answer how you can get the book.

One other comment that I see is Les answered that he does ask what the

budget for the project is, and I think that’s really important that you

find out not only what the budget is, but what the timeline is too. Some

people might have a timeline that’s unrealistic. “We need to have this

grant written in two weeks” or “We need to have this campaign done in three

months.” You want to stay away from those kinds of clients.

Steve, did I miss any questions? Did you see any come in that we missed

answering?

Steven: You know, I think you got them all, so thanks for that. And thanks

for making it a little more interactive. I know there was some chatter

within the chat group as well. That was excellent. That was a lot of fun.

Wow, what a great resource this is going to be. I can already think of
three or four people that I’m going to be sending this to who are thinking

about getting into consulting. So, Linda, Susan, thanks for sharing all

your knowledge with us today. I hope everyone listening enjoyed it as much

as I did. So, thanks.

Susan: Thank you for having us.

Steven: It was awesome. And to everyone listening, I will be sending out a

full recording of the whole presentation later this afternoon, as well as

the slides. So you’ll be receiving those from me a little later today.

And I just want to quickly highlight an upcoming webinar we have. We do do

a webinar every week, but I thought this group would be interested in one

that’s happening in late April about capital campaigns. So, check out our

webinar page. You can see all of our upcoming webinars. Check this one out

for sure. You’ll definitely see this webinar hit our blog later next week.

Wow. It’s just about two o’clock, so good job, Susan, good job, Linda, with

the timing. That worked out perfectly.

Linda: Thank you. And we’ll look forward to possibly coming back again if

this is something that you are interested in.

Steven: Oh, definitely.

Linda: We’d be happy to come back and maybe get more involved in some of

these topics if you want to learn more about marketing or anything else

that we’ve talked about. Let us know.

Steven: Yeah. You’re both welcome back for sure. And do check out their

book. Check out their website, and look Susan and Linda up online. So, with

that, I’ll say a final goodbye. Thanks to everyone for joining us for an

hour today, and have a great rest of your week.

Susan: Thanks.

Linda: Thank you.