THE AGENCY BUSINESS: Dealing in reality is vital to fulfilling entrepreneurial aspirations

In talking to PR pros who have made the successful transition from agency exec to entrepreneur, Paul Cordasco learns that the key to starting a firm lies in the details of your plan, not the dream of getting rich.

In talking to PR pros who have made the successful transition from agency exec to entrepreneur, Paul Cordasco learns that the key to starting a firm lies in the details of your plan, not the dream of getting rich.

"I decided to start my own firm when I was calculating my salary, and knew that even if I got a good promotion every year for the next 20, I'd be poor for the rest of my life," says a semi-sarcastic Jack Horner, who left Ketchum 11 years ago to found Pittsburgh-based Jack Horner Communications, which now has a staff of about 15 people and bills around $1.5 million annually. Every confident agency practitioner has shared this thought or a similar one at one time or another. So what does it really take to start a PR firm? How can you be sure you'll succeed? Can you do it too? Will you get rich? Nearly all of the successful entrepreneurs PRWeek spoke with told similar stories to Horner's. Yet they all warned that starting a firm isn't for every great account manager with a dream. "When you start out, you go to the people you know and say, 'Come do what I'm doing,' and you realize very quickly there are two types of people in this world - people who are comfortable with risk and those who aren't," explains Horner. Indeed, leaving an established firm for the great unknown can be frightening, especially when it comes time to build your own client roster. Even those execs who were regularly winning new business in their previous posts had moments of uncertainty early on. "When you work for another firm, you never know if you're winning the business because of you or because of these dots on a map," says Elliot Sloane, a former Edelman executive who founded Sloane PR in 1998, which posted $5.8 million in revenue in 2002. Sloane adds, "A big stepping-off point for any PR entrepreneur leaving a big firm is can you win it on your own?" Indeed, winning accounts might be the biggest hurdle to getting a new firm up and running. Some say prior experience at winning new business for past employers prepared them well. "I would give it a second thought if you don't have the personality to accept rejection." says PepperCom cofounder Steve Cody, who left a job at J. Walter Thompson to start his firm eight years ago. "You really need to have the tenacity of a telemarketer and the personality of a game-show host." Nearly all successful PR entrepreneurs agree that early self-promotion efforts can help put your agency on the map. Some say the perception of success can beget success. "I had worked in politics for ten years, and I learned that perception is everything," says Michael Kempner, who founded the MWW Group in the mid-1980s, and sold the firm to Interpublic Group in 2000 for a price believed to be in the tens of millions. "Although I kept my overhead low, the two things I spent money on were very nice stationery and a leased BMW, which I really couldn't afford, but I wanted people to think we were bigger than we were. I really believed in faking it until we made it." Because many PR pros come to their new venture without much business experience, some suggest setting up an informal network of confidants to help ease the transition from pure PR pro to business owner. "Create your own little informal board of directors," advises Dorothy Crenshaw, cofounder of New York-based Stanton Crenshaw Communications, who left an EVP post at GCI Group in 1995. "It's good to solicit ideas and advice from former clients, peers, and friends. By doing that, you make them a bit invested in your decision," Finally, even if you're a seasoned PR pro, starting a firm should not be considered a path to quick riches - especially in the current economic environment. Most entrepreneurs advised saving at least a year's worth of living expenses before starting and squirreling away most of any early profits. "If you're not careful, you can be seduced by the good months here and there, and end up thinking, 'Great, this is my new income,' when what you better be doing is putting that away because following that very good month could be a very bad month," explains Horner. "This still happens to me all the time. There are times when I come home and say to my wife, 'We are rich,' and then the next month I come home and say, 'We are poor, spend nothing.'" ----- Tips for starting your own agency Advice from some successful PR entrepreneurs:
  • Be prepared to build a client roster from scratch. "We spent a lot of time smiling and dialing in the beginning," says PepperCom founder Steve Cody
  • Keep your overhead low. "I went garage-sale shopping for my first desk. I had it for years," says Jack Horner, founder, Jack Horner Communications
  • Manage your own expectations early. "Be ready to not put cash in your pocket for a minimum of six to 12 months," says Cody
  • Market yourself aggressively even before you're well established. "Fake it till you make it," says MWW CEO Michael Kempner

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