NEW ORLEANS - Starting your own PR consultancy will require financial deftness and at least a year of start-up funds, not just a ledger of ideas, according to presenters at the International Association of Business Communicators conference here last week. It has been commonplace for communicators to prioritize right-brain creativity over left-brain analytical skills, but the tides are turning as more communicators shed traditional corporate titles.
"To earn your place as a strategist [for the future], at times you will have to take off your communicators hat and rely on business-management skills," says Les Potter, a strategic planner for Blue Cross and Blue Shield of the National Capital Area, Washington, D.C.
Entrepreneurs are having success going it alone, according to a study by Jillian de Beer, managing director, de Beer Marketing & Communications, Auckland, New Zealand.
Only 1 percent of start-up executives return to the corporate world after beginning new ventures but at least half cite difficulty with the financial aspects of their businesses or tax management, de Beer's International Survey of the Self Employed shows.
Success calls for a working knowledge of everything from the securities market to reading a balance sheet, IABC presenters said. Debeer's observations are based in part on an ongoing international survey of self-employed entrepreneurs worldwide.
Nearly 400 self-starters have been queried about starting their own businesses and the obstacles they've encountered.
Planning the Corporate Escape
Perhaps the most crucial step in launching a business is calculating the start up costs. Calculating the amount of funds you'll need to go out on your own, says de Beer and Kim Karnett, principal of Carrollton, Texas-based Karnett & Associates, requires six key steps:
- Complete a net worth statement. This should include personal assets and debt;
- Determine the amount of liquid assets and other income usable during your first year;
- Craft your personal monthly expenses for the next 12 months;
- Analyze your initial start-up expenses (these can be budgeted as one-time expenses or over a period, such as monthly or quarterly);
- Calculate your monthly business expenses; and
- Determine your surplus or shortfall of start-up funds.
Potter advises PR executives to learn to decipher five kinds of ratios whether working for yourself or a client, including:
- Liquidity ratio reveals the connection between a firm's cash and other assets to its liabilities
- Asset management ratio gauges how effectively assets are managed;
- Debt management ratio indicates how a business leverages debt;
- Profitability ratio: shows the effect of liquidity, asset management and debt management on operating results, such return on total assets, return on common equity and profit margin on sales; and
- Market value ratio ties the firm's stock price to its earnings and book value.
Conference speakers also pointed to other progressive skills, such as harnessing the Internet and learning a second language to excel in international PR. IABC hosted more than 1,000 attendees from all over the world.
(Jillian de Beer, de Beer, 09 302- 0405, Kim Karnett, Karnett & Assopc. 972/418-6747, Les Potter, 202/479-8529, )
$tart-up Expense Work $heet
To determine your start-up expenses for your first year in business, add up the items listed below. These expenses can be budgeted as a one-time expense or spread over a period of time. Some of these expenses, depending on your business, could be considered capital expenditures and should be discussed with your accountant:
General expenses:
Business licenses and permit _________
Initial marketing materials/announcements _________
Graphic design of business identity (logos, etc.) __________
Stationery/business cards _________
Office supplies _________
Software _________
Office equipment (computer, printer, fax, copier, etc.) _________
Furniture (desk, filing, cabinets, telephone, etc.) _________
Rental deposit for office _________
Utility and telephone deposits _________
Business liability insurance _________
Professional/business membership expenses _________
Secretarial/answering service deposits _________
Legal and accounting expenses
Business plan/strategy formation _________
Legal fees (business structure, lease, etc.) _________
Incorporation fees _________
Finance arrangements (e.g. collateral) _________
Other professional fees for establishment _________