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.