PRCA sets out ten tips for launching a PR business
With many communications professionals either thinking about or taking the leap of faith and launching their own consultancies, Richard Ellis, communications director of the PRCA has provided The Drum with 10 tips for budding PR entrepreneurs.
While being your own boss may seem like an attractive proposition, don’t underestimate the level of work or the responsibility that comes with it. When times are good and the business is flowing in, there is generally a shortage of talent making it hard to service your existing clients. When times are bad, it is your responsibility to chase down the work, to make the books balance and to ensure the agency’s survival. Even experienced agency heads who set up their own businesses as a lifestyle choice work longer hours now than when they were employed by other people.
Having said that, running your own agency can be very rewarding both personally and financially. So some advice on how to start off on the right foot.
1. Put together a business plan – at the early stages you need to think very short term as well and longer term. Think about what the ultimate objective of your agency is. If you are looking to sell the agency at some point think about what will make it attractive to buyers and when you want to sell, then work back from there. While you need a vision for the future, don’t overlook the short term. Cash flow is one of the most common reasons for new business failures, particularly in the current economic climate, with banks unwilling to lend. Think about costs and then think about the revenues you’ll need. Finally work out where those revenues will come from.
2. Have a client base ready – it is a competitive market out there. If you don’t have a good contact list you can approach or even a client already signed up, then think hard about where the work is going to come from before you go it alone.
3. Research your pricing – your pricing will determine your profitability. Too high and you price yourself out of the market, too low and you will have to work all the hours of the day to make ends meet. Without knowing your pricing, you will also be unable to budget. However do not make the mistake of pricing low because your overheads are low, instead start out the way you want the business to be in the future. In other words don't price low because you have low overheads as a startup. Always remember that once you're up and running and employing people you need to manage to a defined 'profitability'. This means keeping your resource levels aligned with your income stream. If you start out managing the amount of time you give to match the fee (hours x rate) you will never have to deal with the problem of over-servicing eating all your profits!
4. Keep your costs down – there are two factors to profitability: revenue and costs. Be very strict on your costs as they can quickly spiral.
5. Put together an initial budget – work out what your start up and your running costs will be and then work out how much you will need to make per day & per month to make ends meet. Don’t forget to include time for business development and that you will need to take days holiday occasionally.
6. Identify your USPs – it’s a competitive marketplace out there so think about what makes you different. You may have a technological advantage (ie some software nobody else has), great press contacts or specialist industry knowledge. Your clients need a reason to hire you rather than someone else.
7. Have a strong online presence – If you have a very strong reputation in the industry and will essentially be providing corporate strategy advice to established contacts then a) this is less important, and b) you are very lucky. If not, then a strong online profile provides reassurance to potential clients. A website need only a few pages of concise, well written copy – ie contact us, about us etc. but also make sure that your LinkedIn profile is uptodate. People will research you through it and of course it can be a useful business development tool. Beyond that comment extensively on blogs and relevant online discussion forums to boost your personal profile and demonstrate your knowledge in an area.
8. Network – like crazy. Contacts are everything in this game, if you have already got them, keep in touch with them. If you don’t have a really strong list join relevant LinkedIn groups, go to networking events, contribute comments to relevant online debates, even take your business cards to dinner parties...
9. Use support networks there is for your fledgling organisation – There are two major forms of support. First of all look for individuals who have already done what you are trying to do. They will prove an invaluable source of advice and support. Secondly investigate some of the professional organisations out there who can help you operate more efficiently and effectively - the right bodies will save you money. Examples include the PRCA (the professional body I work for), IoD, PCG… etc. The PRCA for example provides information on charge-out rates, runs lots of networking and best practice events, provide standard contracts and legal helplines. It also runs the Consultancy Management Standard, a tool to help you ensure you have effective structures and systems in place.
10. Protect your reputation – as a PR you know that you trade on your reputation, so don’t promise what you can’t deliver and don’t compromise your reputation for a client.
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