A constant knock on the PR profession is that too many marketing communications agencies still don’t know how to manage their agencies like a business.
PR shops, of course, have got a pretty good handle on media relations, crisis management and other traditional forms of communications. Not so much when it comes to how to cultivate areas such as CAGR (compound annual growth rate) and create formulas that wed billable hours with employees’ salaries and benefits.
The need for PR agencies to pivot to a more business-oriented mindset was discussed time and again during the Counselors Academy spring meeting earlier this week in Austin.
The consensus: If PR agencies don’t take a more methodical approach to managing their business, they risk getting marginalized in an increasingly competitive marketplace.
Indeed, how to create a road map for the overall business was one of the conference’s most well attended sessions. The session, titled, “The Path to Profitability/Growing Your Agency Organically: Tips, Tools and Tactics,” featured Ken Jacobs, principal of Jacobs Communications Consulting.
Jacobs shared 12 questions that senior PR execs must start to ask themselves if they want to get on the road to profitability, reach a more successful destination, and stay there:
1. Have you stated your income and profit goals?
2. Are your salary/overhead profit ratios in line?
3. Is your firm generating its full income potential?
4. Are you using appropriate billing rates per staffer?
5. Are you disciplined when creating new client budgets?
6. Do you track how much time tasks/projects actually take versus what you budgeted?
7. Do you have detailed budgets, and written, “Scopes-of-Work” for every client?
8. Do you meet regularly with clients whose accounts consistently exceed their monthly budgets?
9. Do you have clients who’ll never pay you what you expend on their behalf?
10. For those clients whom you deliberately over-service: Have you determined how much you'll over-service versus budget each month?
11. Do you have clients on whose behalf you lost a substantial amount of money last year, with no new, more profitable business in sight?
12. Do you have staffers regularly doing work below their level?
What do you think? Anything you would like to add to the questionnaire?
Follow Matthew Schwartz: @mpsjourno1
Matthew,
I’m honored that you felt my Path To Profitability was worth sharing with your readers. And I may use the name you gave it the next time I present that workshop!