Tip Sheet: Manage by the Numbers to Increase Profitability

By Rick Gould In the PR agency business, consider a recessionary period to be any point when your operating profit drops below 20% of the top of the line. It may sound harsh, but there is absolutely no reason to generate operating profits under this margin. Based on this, PR agency owners should commit to the practice of managing by benchmarking, a process researched and reported on in StevensGould Pincus' 2008 Best Practices Benchmarking Survey. By knowing the key benchmarks of "Model Firms" and tracking your firm's monthly results against them, you will understand why your firm may not be performing to its maximum capacity. *First, define a "Model Firm": From a financial standpoint, a Model Firm is one that year after year generates operating profits of a minimum of 20% and often in excess of 30%.

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