When the times get tough, the tough get going. If you're a PR agency owner or principal you don't have to look far for proof.
PR agency profitability in the US dropped 20.8 percent this past year to a four-year low of 15.6 percent of revenues, according to the annual benchmarking survey from StevensGouldPincus, where I'm an adviser.
If you're an agency owner or principal, I'm sure this finding comes as no surprise. Business is rough. But the news isn't all bad. The economy is showing hints of a slow revival and account activity has picked up.
More important, the situation the SGP research reflects presents an unusual opportunity for you to engage in a reasoned analysis with yourself, your staff, and others about the state of your agency and its prospects for continued success.
Taking stock in the midst of a “recession” adds a sense of urgency, of course, but it also offers a more grounded perspective on what you have to do to strengthen what you have while preparing for the next economic upswing. If nothing else, ask yourself key questions:
Are you monitoring outlays to be sure you're not “overspending” for rent, equipment, salaries, perks, etc.?
Are you managing your profitability to minimize loss and maximize gain?
Are you collecting receivables?
Are you finding ways to assure your “stars” that their jobs are secure?
Are you preparing to make the most of what's to come?
For a more formal analysis, you need more direct action but the time and attention required is modest. Get your top people together after hours or at a weekend retreat to do the analysis. But make sure you provide for participation by all the key players. Build ownership in the discussion and outcomes.
Next, if you can't get serious traction on your own, or you feel uncomfortable handling the discussion, hire a consultant to assist you.
I'm sure you can think of other things to do that make sense for you and your agency, but do something. Position your agency for greater success in the years ahead by using the current economic weakness to forge greater long-term strength.
Don Bates teaches at George Washington University, and is a senior adviser with StevensGouldPincus, and adviser and member of the board of Digital Management, AG.