Excellence at the practice of PR is the backbone of any good agency, but it is only part of the equation. Knowing how to run your firm as a business and make lots of money doing it is just as important.
As senior partner at The Stevens Group, I’ve gotten to know many PR firms in the $500K-to-$5M range that can show year-to-year revenue growth, but profitability is non-existent.
Some owners have figured out how to make millions in the PR agency business while others with comparable PR talent lay awake at night worrying about making payroll.
The latter group of owners would be wise to consider the following to boost profits:
• Don’t over-service clients.
• Cut overhead without compromising service.
• Delegate where possible.
• Get out of the office and bring in more business.
• Stop over-servicing clients!
• Merge with a bigger, better-managed firm.
I realize the idea of working for someone else is a bitter pill for most owners to swallow, but the benefits are sometimes just too great to ignore. Access to additional personnel and technology, as well as collaboration with other savvy PR pros, might be the catalyst to bringing out the best in your firm.
Most owners are mistakenly convinced no one will want to buy their firms and that flat profitability will hurt chances of getting a fair price. Buyers, however, are primarily looking at the type of clients, fee income potential, quality of work being done, and chemistry with the prospect.
I’ve seen stagnant firms realize triple-digit growth with new owners.
Never take your eye off the bottom line if you hope to realize the full financial potential of your firm.
* * *
Rich Jachetti is senior partner at The Stevens Group, PR agency mergers and acquisitions consultants and facilitators.