Nonprofit organizations represent a viable market for IT specialists, although other sectors may offer greater financial rewards. Let’s examine the advantages and disadvantages of pursuing opportunities in the nonprofit realm.
One key advantage is accessibility. Nonprofits often belong to trade groups, making their contact information readily available through public directories. Furthermore, working with nonprofits can provide significant emotional satisfaction, as you contribute to causes you believe in.
However, nonprofits present two major challenges: thin profit margins and competitive bidding processes.
Bidding situations can commoditize IT services. When bidding against pre-existing specifications, competitors may cut corners to lower prices, potentially preventing you from offering a comprehensive and realistic solution.
For many IT specialists, serving private sector small businesses is simpler than navigating the complexities of nonprofit and government bids. Unfortunately, nonprofits and government agencies are often legally obligated to accept the lowest bid.
In competitive bidding scenarios, trust, personality, and credibility may have less influence. Success often hinges on factors like bonding capacity, adherence to regulations, and timely submission of bids.
Bidding also requires substantial non-billable upfront work, including research and configuration development. Securing the contract can be uncertain, making this investment risky.
If you choose to engage in competitive bidding, limit bid chasing to no more than 20% of your business development efforts. Unless your company specializes in serving nonprofits or government agencies, focusing on traditional private sector small businesses is often more effective.
A well-defined Request for Proposal (RFP) for outsourced support services from a government agency can present an appealing opportunity. However, be cautious of hardware-focused requests or one-time installation deals, as these can pose profitability challenges.
While nonprofits and government agencies may be better options than pursuing retail clients, they are generally not as attractive as focusing on small business computer consulting.