While it’s not certain that there will be a broad and prolonged economic downturn, there are already signs of weakness and the first reports of layoffs at PR agencies are starting to roll in. Is your agency ready to withstand the downturn?
According to PR agency management experts Bruce Bishop and Rick Gould, the key to surviving a downturn isn’t getting more clients, it’s managing your agency’s personnel and finances better. More clients wouldn’t hurt, of course, but managing your expenses better and making your team more productive are also crucial steps toward strengthening your firm.
Steps to take include:
- Cull your client base (yes, fire unprofitable clients and poor credit risks)
- Cull your least-productive staff if you need to cut, but try to keep your best people, even if you have to give them raises and temporarily trim your profit margin
- Try to keep your agency intact, as it may be in a stronger position to pick up business coming out of the downturn
Bishop and Gould will join me on a Bulldog Reporter PR Management Roundtable on Friday, June 6 at 1 pm Eastern (10 am Pacific) for a full hour of solid agency management strategies for not only surviving a possible downturn but also strengthening your agency management in the long-term.
Some of their other insights:
- To run an agency well, you need strong financial controls and solid cash flow from clients
- Keep a close eye on non-compensation expenses: keep rent below 8% of sales, business development below 5% and everything else in total below 7% of sales.
- Communicate your financial goals to your staff — remember, you’re running a business and they work for one
