2018 could be a make-or-break year for charities that provide services. As one chief executive recently said to me: "Local authority budget cuts are going to bite much more deeply than last year, and we need to take some very tough decisions if we’re going to survive."
So what are the options? Close or sell services? Strip back operations? Cut central overheads? Move to digital technologies? Negotiate harder externally and internally? Or is there another way? Actually, there is. For several charities I’ve been working with, 2018 won’t be a year of cutting back – it will be one of investing in new business income, particularly from consulting and training.
Given what we saw with the RNIB’s commercial services in 2017, that might sound high-risk. And it’s true: if you go through their annual reports, many large charities with consultancy and training departments are, at best, breaking even. But some are doing remarkably well. The difference is one of mindset: the first group is trying to add income; the second is trying to add value.
I’ll give you an example: a charity that specialises in helping people cope with depression, so they can continue to lead productive and fulfilling lives, identifies that employers lose money every year on covering absence and replacing people who’ve left because of the illness. By helping employers to help their affected employees, it can deliver on its mission and, potentially, generate income as well. But that’s where the behaviour of the two groups diverges.
The first group might approach the corporate social responsibility or human resources teams in a large retailer to sell them some training events or to get funding to provide information and signposting to the workforce. The second group would aim for the operations director, who is looking at those costs on a weekly basis and will place a much higher value on expertise that will make a difference to the bottom line.
The starting point for a successful training and consulting business is value, and the ultimate test of the value you provide is what other organisations are prepared to pay for it. The more you understand your value, and the better you can measure it, articulate it and demonstrate it, the more you can charge and the more impact your work will have.
That last point is crucial. Advice is more highly valued, more comprehensively carried out and ultimately more impactful when it’s paid for. The more your clients pay for your expertise, the more value they need to get back from their investment and the more attention they give to what you say. That operations director will expect to see results, and will have the incentive and the authority to make whatever changes you recommend across the organisation, so the people you’re trying to reach can get your help, respond positively to the change and provide that return on investment.
Charities can make serious income and impact from consulting and training, but only if you reach the buyers who truly value the outcomes you offer and charge for that value, not just to cover your costs. It’s about aiming for the big opportunities, not just playing it safe, and it’s about leaving your cost-based-pricing mindset behind. And that’s why so many charities struggle to make it work.
Not every services charity can sell consulting and training services, but for those who have the subject matter expertise and are willing and able to realise the true value of it, 2018 could turn out to be a great year.
Martyn Drake is the founder of the management consultancy firm Binley Drake Consulting