We all receive unwanted spam on the economic freedom and unbridled joys of owning your own business. It’s marvelous to work at home in your own business…make big money…spend more time with your family…control your own destiny…did we forget…make big money?
A Dose of Reality
Someone once said if it sounds too good to be true it probably is. That is certainly the case for many PR practitioners who suddenly find themselves on the outside looking in or simply decide now is the time to hang up their own shingle.
There are a couple of things wrong with our industry:
- if you’re an agency staff member you always know you could run the company better than your boss
- you already hold your clients’ (internal or external) hands so why not get paid the big bucks
- the cost of starting your own consultancy is so low business cards, telephone, letterhead, a media directory and maybe a web page “anyone” can do it
But if you’re thinking of opening your own agency and even if you aren’t but want to have a better understanding of the business side of the business, Small Business for Dummies makes for some interesting reading.
The first thing Tyson and Schell do is give you a dose of reality. The opening chapter helps you take a hard look at whether or not you have what it takes to become your own boss or if you are better off remaining an employee. Even if you take the aptitude test and find you don’t have what it takes to start your consultancy business, we believe you’ll still find the remainder of the book meaningful to read.
Main Pieces of Advice
People tend to forget that they don’t instantly start earning a six-figure salary and they either have to forgo or pay for “amenities” like food on the table, dental/health insurance, life insurance and office rent. The authors note that if you’re going to start your own business the first thing you need is a cash reserve of at least three six months to cover your minimum living expenses. Even if you’re fortunate enough to start your business with clients you probably won’t have a positive cash flow during the start-up period.
The authors wisely recommend that you test the waters by freelancing before you jump into the deep end of the pool and start your own public relations consultancy. Their part-time approach helps readers understand aspect of the public relations business the minute you win a client you have to begin looking for its replacement and during the early stages you have to spend as much time promoting your business as you do promoting your clients.
Unlike most of your target clients, it is impossible to obtain venture capital money to launch your firm so the most common approach is to rely on personal savings and family loans to start the business. Bootstrapping your agency (or business) as the authors point out is a healthy way to launch a company: “The fact that bootstrapping is so pervasive and works so well makes sense if you think about it. First, what better way to instill discipline and to make things work efficiently than to have a limited supply of funds? Second, because you care deeply about risking your own money or that of family or friends, you have a powerful incentive to work hard and smart at making your business succeed…Bootstrapping is the unchallenged king of start-up financing.”
Unfortunately the authors aren’t of much assistance to people who decide its time to strike out and form their own agency the delicate task of balancing present business with getting new business. One of the truths that seasoned or new agency heads know is that the minute you win a new client you have to begin looking for their replacement. Your client can outgrow you, you can outgrow your client, people change jobs, businesses go through cycles and life goes on.
If you’re good at your trade providing effective counsel and work is the easy, fun part of the business. Pitching and winning new business is “less easy, less fun.” This is the area where most new agencies come up short.
While Small Business for Dummies covers business areas public relations people fortunately don’t have to concern themselves with such as inventory, product turns, credit card collection and traffic patterns don’t dismiss the chapters because the information may help you help your clients.
Tyson and Schell make an interesting point early and throughout the book don’t compete on price. They stress competing on quality and service which are vital in today’s public relations activity. Cheap service is just that…cheap. If you’re considering launching your own agency, check the PRSA library. The counselor section has a number of worthwhile documents on contracts, fee structures and fee determination formulations. The key is to be fair to the client…and to yourself.
Small Business Is Big Decision
Small Business for Dummies is light, easy reading with a lot of valuable information you’ll need to consider before you launch your own agency in your spare bedroom. The one area the authors only touch on lightly which is perhaps the most important is to ensure you have the agreement and support of your significant other.
Starting your own agency because you just lost your job or know you can do it better than your boss may be part of the decision process in launching your own business but there are hundreds of points you’ll need to consider and weigh if you’re going to succeed. But be warned taking control of your future, spending more free time and making six figures by becoming an entrepreneurial public relations consultant shouldn’t be the key reasons for making the move. It is still a cold, hard world whether you’re the boss or the employee.