Your New PR Agency Has Launched: Now What?
Despite the economic travails of the past few years, a number of new PR agencies were launched in 2010. And although it’s not precisely clear if we’re through the worst, a number of new firms have opened in 2011; more are certainly to follow before the end of the year.
If you’re the owner or leader of a new PR agency, here’s what you can do in the first six months to ensure your firm’s health and growth. (Of course, firms older than that will find this helpful too!)
1. Accept That Your Job Has Changed Enormously: You’re in a completely new position. Whether previously you were a trusted agency lieutenant, a corporate PR person or a freelancer, everything will change, and enormously: How you spend your day. How much time you spend on new business. How much time you spend on client business. Some days will be tough. Others will be tougher. But the change will be huge. If not, something’s wrong.
2. Not Just In The Business, On The Business: You must spend time not just in the business of your clients’ public relations programs, but on your agency’s business. You’ve proven you’re a keen PR strategist, creative lightbulb, facile with social media, a leader with followers and great at client relations. So now it’s time to focus on a key reason you launched your own firm: To make money. (Unless you’re the world’s first non-profit agency.) You must spend time and effort setting yourself up to make a fair profit, and that includes determining a number of critical factors, including, but not limited to 1) Appropriate billing rates; 2) How much fee income you must generate for the amount of salary and benefits you’re paying out–or better yet, how much salary and benefits you can pay in light of your in-hand fee income; 3) How many billable hours your team can generate. And that’s just the start. If you’re not comfortable in these areas, it’s critical that you give these responsibilities to someone on your staff who can, or get outside counsel.
3. Track Your Time: Related to my last point, you must create a system that tracks how much time your agency spends on each account, in real hours, per staffer, per month. When we analyze time spent this way, we can determine which accounts we’re over- and under-servicing, and by how much. The results can be shocking, and require you to make changes.
4. Get Over-Servicing Under Control: Many agencies are guilty of over-servicing to some degree, particularly during the past two years. That’s fine, so long as you know how much you’re over-servicing each client in real dollars and percentages. You might feel that over-servicing by 15% or even more a month was a price that had to be paid in the PR agency game in the down years. But what if you knew you were over-servicing by 18% or even 25%? At what point does over-servicing, as well-intended as it may be, put your agency in the red?
5. Determine Your Over-Servicing ROI: If the accounts you over-service by a few percentage points per month are growing, it might be prudent to maintain your current level of service. But if you’re over-servicing certain accounts by a substantial amount, and your fee income from those clients is flat or even negative, it may be time to re-think your approach. And you can only do so if you’re properly tracking hours.
6. Hire A New Business Whiz: You! Part of your responsibilities as the owner of a small-to-medium sized firm is to be the key new business generator. (See Point One) And this is particular true of a new firm. When new firms open, many of them don’t generate enough billable hours to be profitable. The solutions?:
- Spend considerably more time in new business generation than you did before you owned the agency;
- Have a written new business plan, with specific, fiscal goals, targets and deadlines;
- Accept that you’ll inevitably lose some business, for reasons that have nothing to do with agency performance. So in my opinion, you’ve no choice but to have an active, aggressive new business acquisition plan; and
- Remember that the most profitable new business wins come from existing clients, so start your efforts there.
Finally, it’s easy for the owners of new PR firms to get caught up in today. My recommendation is to always be thinking about tomorrow.