With the Dow Jones industrial average hitting all-time records the last two weeks, PR firm executives can't help but be aware how the overall strength of the economy is propelling their business. For many firms, the past 18 months have been the strongest and most profitable period they can remember.
The good times can't last forever, and are in stunning contrast to the dark period of 1990-92. Then, many firms suffered a collapse of business, which spurred layoffs, reorganizations, mergers and some outright failures.
Recalling this period, John Softness, chairman of The Softness Group, New York, said that was the first time since he founded his firm in 1960 that he thought he might be forced to close.
What lessons did firms learn from those difficult times? How have they adapted? How are they preparing for the next downturn --which is inevitable at some point?
Many firms have become more sophisticated as businesses since the downturn, believes Lou Williams Jr., president of L.C. Williams & Associates, Chicago. "I think the real overriding factor is that there are a lot better managers out there running PR businesses. These aren't just a bunch of publicists who started PR firms."
For example, Williams has seen firms make better use of accounting and planning systems. "There is a much greater dependence on good systems...for accounting, receivables--you name it." These computer-based systems help firms stay much more in touch with cash flow and their overall business position.
Michael Fineman launched his firm, Fineman Associates Public Relations, San Francisco, about two years before the early '90s downturn. The lesson he learned from that period was: "never stop marketing; keep the pipeline full at all times." At his firm, which has grown to a staff of 11 professionals, "we are marketing ourselves on a daily basis."
At Boasberg Valentine-Radford Public Relations (BV-R), Kansas City, Mo., Eric Morgenstern, president, said the firm is "much stronger today than five years ago," and is enjoying record growth.
In today's market, with many corporations more comfortable with assigning projects to firms rather than agreeing to annual budgets, BV-R has changed its new business approach to acknowledge this reality. "Our business development approach is to get started with a project," he said. "In the past, we would have been more focused on selling an annualized program as a way to get started" with a new client.
The firm also is more careful about giving away ideas during new business presentations. "We virtually never prepare a detailed annualized plan until we have won the business. What we'll do instead is prepare a skeleton, and the first step in the agency-client relationship will be the full development of their annualized strategic communications program. That's a change" from before.
BV-R also concentrates more on earning fees through planning and counsel, with less reliance on executing programs that it helps create. This often leads to opportunities for unplanned income when short-staffed clients ask for help on execution, he said.
However they're managing their businesses, PR firms should enjoy the golden business climate that exists today. "If you're not making money now, find another business," said Williams, who founded his 22-person firm in 1985. "It will never get any better." (Softness, 212/696-2444; Williams, 312/565-3900; Boasberg, 816/531-2100; Fineman, 415/777-6933)