GREENWICH, Conn., April 19, 2006 (PRIMEZONE) -- Becoming a PR entrepreneur has never been easier or more attractive, as demonstrated by the record number of start-ups of solo and virtual agencies spurred by the ongoing downsizing of corporate America, the continued strength of the U.S. economy and the leveling force of the Internet on the competitive characteristics of the PR industry.
But running an agency still requires a strong grounding in the business aspects of PR, says Greg Miller, President of MarketcomPR, and that's something many practitioners lack. Speaking today at the Fairfield County Public Relations Association, Miller suggested that aspiring agency owners avoid these five mistakes:
1. Overvaluing your Rolodex. Potential clients and referral
sources may hesitate to sign on with your new agency
until you develop a track record. Others, you will find,
liked you more when you were associated with your old
company or agency. Meanwhile, cash flow suffers.
2. Doing it all yourself. Lacking the resources to hire
staff or outsource key functions, you may find yourself
quickly bogged down in everything from release distribution
to tech support to billing. And doing new pitches solo can
be tough. At the same time, you find yourself competing
against bigger agencies or better-established freelancers
who don't have these pressures.
3. Under investing in marketing and new business development.
If you spend all of your time servicing the business you
have, you may find it tough to get out and sell more
business. When people ask how things are going, you cross
your fingers and say, "Great!"
4. Becoming too dependent on a few key clients. When you
really do become successful, and get two or three big
clients, you always look over your shoulder and wonder
what happens if they leave. So you work even harder
(Mistake No. 2) and go full-speed ahead (Mistake No. 3) while
losing touch with the business contacts you used to have
(Mistake No. 1).
5. Underpricing your services. Because you wanted to get
cash flow started quickly, you lose control of pricing
with your first clients, who now don't want to pay more.
Why should they? And your profit margins (you do know
how to figure profit margins, right?) make it more
difficult for you to invest in critical mass
(Mistakes Nos. 1, 2, 3) to spread the client risk
(Mistake No. 4) across a wider financial base.
Drawing on his experience as a PR entrepreneur, Miller suggests these three rules for achieving success in the critical first 12 months of a new agency's life:
1. Define your market niche. Are you a freelancer or an
agency? Price your business accordingly. What products or
services can you deliver better than a larger agency?
Focus on that (and price it right).
2. Understand your economics. Do you have any idea how much
you should bill per hour? How much you should bill your
client for the use of a freelancer? Do you know how much
it will really cost to carry a $75,000 a year employee?
(Hint: with payroll taxes, health and life insurance
benefits, retirement and profit sharing but not bonus,
figure a minimum of $15,000 on top of that to be
competitive.)
3. Get real. Start acting like a real company from the
beginning. That means: Business cards and email branded
with your agency's name. Definitely a website (no website
= bad positioning). Someone who answers your phone in your
company's name. And, if you don't have the resources for
employees, assemble a team of freelancers who can help with
your work, come to client meetings and new business pitches,
and handle specialized assignments in areas where you lack
expertise.
Miller adds: "Starting a successful agency or freelance business is not inherently difficult . . . but it is a business, and as such very different from just working in PR or communications. Those who understand what clients want -- and how to price it -- will be the ones who succeed. And those who can't figure that out will work for the ones who can."
About MarketcomPR
MarketcomPR designs and implements communications initiatives that combine classic media outreach tools with market-oriented thought leadership vehicles to help clients communicate better with their key audiences. For more information, visit http://www.marketcompr.com.