Just like every other organization in the communications industry, public relations firms have been forced to dramatically alter how they operate in response to the COVID-19 pandemic.
While I could wax philosophical about how this ongoing catastrophe continues to affect virtually every sector of the global economy, I’ll instead focus on what PR agencies should learn when it comes to running their businesses going forward.
If there are any positive aspects that result from these challenging times, it’s that agency leaders are being required to better reassess and clarify goals, review team and staff roles and much more.
In fact, many leaders are now reshaping and reprioritizing 2020 strategy plans in the form of stabilizing and taking care of employees, connecting with clients to keep vital services going, preserving as much of the current business as possible and observing the competition for opportunities to succeed in the pandemic recovery stages.
Of course, there will be post-pandemic winners and losers, and for the agencies that can keep their doors open, they may be able to gain market share as the competition plummets.
If you were caught off-guard in recent months—especially if you’re a niche agency specializing in areas like travel or tourism, for example—it’s time to step back and reassess. Here are several lessons learned from the pandemic to consider as we regroup and aim to get businesses gradually back on track:
Have a line of credit established with your bank (whether you need it or not). Cash set aside, or a line of credit that’s set up in advance could be a useful backup plan in an emergency situation, such as a pandemic, recession or natural disaster. Now is a good time to review your agency’s profitability and stress test your business to see how you can handle a drop off in revenue.
Always have three months operating cash in the bank. Perhaps you’ve had to furlough or terminate employees during these uncertain times. Most financial experts recommend putting away a minimum of three to six months of operating expenses in the bank for a “rainy day.” The bottom line: take as much cash out of your agency as possible during good times and squirrel it away. Unfortunately, “rainy days” do come.
Encourage transitioning to a virtual agency. The concept of office space is a major consideration looking ahead. In many cases, rent expenses can equate to 10 percent of your overall revenue. Not only can you save a lot of money on rent by working from home, but you can also cut back on overhead and travel expenses. More agency buyers recognize that brick and mortar isn’t what necessarily defines a modern PR business. And, if you do want office space, take less space than you need for all your employees and sign minimum year agreements: three years at the most.
Try to have one-year agreements with clients rather than 30-day, 60- day or 90-day termination provisions.
Diversify. It’s no longer fashionable to put all of your eggs in one industry basket or niche. For example, if you’re in the travel space, consider exploring complementary niches like consumer products. Those PR firms that are more diversified and increase their bandwidth tend to weather a crisis better than niche firms.
Put crisis provisions in your employment agreements that can enable you to reduce salaries or furlough people if the situation warrants it.
Don’t lay out large sums for your clients in the form of reimbursable expenses. Instead, have clients pay for any expense directly that’s over $500 in advance.
Make it clear to your various vendors that you’re not responsible for costs incurred on behalf of your clients.
A few final thoughts
The PR agencies that survive any type of massive crisis like the COVID-19 pandemic are the ones who can quickly adapt to change. I urge PR leaders to be as proactive as possible in reaching out to clients to learn how to best support them right now.
I believe it’s vital to learn how to communicate via the latest technology and tools, including social media and any other virtual communication platforms like Zoom and GoTo Meeting.
It’s also wise to use any free time well: consider staying active mentally by registering for online courses and webinars that can help you hone your skills and grow in your career. Staying in touch with how your clients are impacted, their emerging needs and the latest trends in the market’s future recovery can help you determine what skills to develop at this time.
We’re all working to process an abundance of constantly-changing information about the virus and its impact, adjusting to unavoidable changes in our professional and personal lives and taking precautions to be safe and healthy.
And no one thing, by itself, can clear the gray cloud of uncertainty instantly or significantly lessen its impact. However, if agency leaders can assume a more proactive, aggressive stance, they boost their odds of maintaining a better balance and shaping their future once we do eventually come out on the other side.
Art Stevens is Managing Partner of The Stevens Group, consultants to the PR agency profession.