Originally posted on PRSay:
So you’re thinking about starting your own PR firm. It’s a little nerve wracking, no doubt, but there’s never been a better time to launch. With the economy rebounding, bonus checks and tax refunds on the way, nothing should hold you back from taking the entrepreneurial plunge.
Of course, there are many considerations to contemplate before quitting your job and taking that plunge. Let’s explore.
It’s A State Of Mind
Optimism, confidence and a small dose of fear are perhaps the most important qualities for anyone starting their own firm. When I started FRAUSE in 1998, it took me a while to acquire these assets, especially confidence. I knew I could make the jump; but things like paying the bills without an income and putting food on the table were worrisome.
As a matter of fact, it took me 10 years between knowing I was ready and actually doing something. What pushed me over the edge was a piece of advice I received from a long-time colleague and friend who said, “Just do it. You won’t believe how many friends you have out there who want to help until you actually commit.”
He was right.
Colleagues, friends and strangers come out of the woodwork when you confidently decide to start your own business. One friend gave me office space for seven months. Another gave me a computer to use until I could pay him for it. Many more spread the word that I was in business. And best of all, the phone started ringing.
Hundreds of “start your own business” books line bookstore shelves. I didn’t read one. The business training I received at Hill & Knowlton and DDB, plus a certain level of intuition, was more than enough to set me on the right track. Here are a few key factors every aspiring PR agency owner should keep in mind:
- Relationships Are Key. Assuming you have solid professional skills, your contacts and relationships are your most important new business asset. Work them like there is no tomorrow. Start dialing and emailing for dollars immediately; but not while you are in the employment of others. It is unethical and could be illegal.
- The 30-60-90 Rule. Generally, it is going to take approximately 30 days to attract your first client(s). Unless you ask for an advance upfront (some clients will pay a month retainer in advance), your first invoice to clients won’t go out for 60 days from your launch date. If all goes well, you will start seeing cash flow in 90 days. And, once cash starts following never let it stop. In short, you will need at least 90 days of cash and short-term credit staying power. You don’t need long-term credit or capital if you do this right. I started my business on $72 and a Visa card with a $6,000 limit. I have never borrowed a dime to finance the agency.
- No More Than Two Owners. Years ago I thought I needed partners to make an agency work. While partners may bring business and professional skills, plus some level of anxiety reduction, they cut into your ability to maximize opportunity and freedom. I say go it alone. Or if you must, maintain at least 50 percent equity in your firm.
- Resist The In-Home Starter Office. Resist the temptation to start your business at home. The PR business is all about personal relationships with clients and employees.
- Hire A Good Bookkeeper. You have plenty to do in launching your firm without having to worry about aggregating time reports, doing the billing and paying the taxes. Utilize the skills of an expert bookkeeper to help set up your books and pay the bills. You will also want them to create your balance sheet, profit and loss statement and statement of cash flows. Those three reports are a must-have for all business — new or old.
- Don’t Worry About Size. Based on your business vision, size might matter; but don’t focus on that at the expense of more pressing matters. To maintain a healthy business, you must grow with a sustainable profit of at least 7 percent annually. And you’re ready to hire a new employee when your wage expenses (salary and employment taxes) are about 45 percent of fee income.
Big Rewards Await
There are a myriad of additional details and concerns to consider before you open your doors, but don’t be afraid to take the plunge. Owning and running your own firm can be hugely rewarding; especially in providing you an opportunity to hire, train and work with some of the best and brightest.
You’ll know you have made it when a new client calls and tells you that you just won the business. That’s when reality hits and you have to perform. At that moment, you’re finally in charge.