The dos and don'ts of starting up your own agency

According to January’s CIPR State of the Profession survey, almost a fifth of respondents (18 per cent) have set themselves the goal of one day owning their own PR company – being the boss, making their own decisions.

That is the beauty of PR, or so it seems. If you have the talent, experience and little more than a laptop and a mobile phone then it often appears that there is little to stop you cutting the agency apron strings and going it alone. But is it really as simple as that?

For a start you will need cash, plenty of cash. Even if you are not planning on employing people straight away, you will still need to support yourself through those first weeks and months until client fees begin to flow. At the very least that cash will have to cover your accounting and legal obligations, along with watertight staff contracts should your venture continue to grow.

Gerry Hopkinson and Nik Done founded their agency Unity in 2005 after working together at Band & Brown (now Citizen Relations), where Hopkinson was CEO and Done the brand director. Luckily for them their families were both emotionally and materially supportive: "We were in a good place financially in that we didn’t have to make any money for the first 12 months. We really didn’t want to go after just any business that came along because it’s our firm belief that it is your first few clients that define you."

Their experience mirrors that of other start-ups where savings and/or understanding partners carried them through the early, uncertain period when overheads were low and the business ran either from a spare room at home or a rented desk in serviced offices.

Palm PR founder Emily Keogh lived on savings for the first few months after starting up. Together with her brother Liam, the pair worked from her house and from Home House private members club for six months before moving to a shared space for the next phase of growth: "As a service industry, we didn’t need specialist or expensive equipment, so it can be comparatively inexpensive to start an agency." She adds: "It was great to actually win Home House as a client a few years later as it felt like we had come full circle."

Not for the faint-hearted

So far, so good but being a talented PR does not necessarily make someone a talented business person.

Keogh warns that there is much more to running a business than meeting PR objectives: "New business owners will often find themselves managing finances, HR, recruitment, operations and business development as well as PR and potentially with less support at the outset than they had at their previous agency. You have to be entrepreneurial, not afraid of setbacks and be incredibly passionate about what you do at every level of the business. It’s not for the faint-hearted."

Sarah Wrixon co-founded her second start-up, health agency Salix & Co, with her partner Angus in 2008. Her first was Pomegranate PR, which she describes as a "kitchen table" agency launched in 1998 when her children were young. "In the early stages of Salix, as one woman, one man and a dog, we did everything from high-level strategy development to day-to-day filing ourselves. However, I did learn from Pomegranate how important a good bookkeeper is, so our first hire for Salix was a part-time one. Five years later Antonia Previte is still with us as operations director and is an invaluable mainstay of the business," she says.

If you do decide to go it alone and start a business you will need to plan where your clients will come from. Read your contracts carefully and seek legal advice about any non-compete clauses.

Emma Crozier and Jennie Talman set up Just::Health Communications on Valentine’s Day 2006 after working together at Chandler Chicco Agency. Crozier believes the best thing to do is to set up with a clean slate, without clients. "It isn’t as scary as it sounds, and the alternative is terrifying (especially if you’ve worked for a US company). We started with a small amount of capital and spent half our cash on branding and half on the legals. We didn’t want to get distracted by legal wrangling. So, there were ex-clients and ex-colleagues whom we couldn’t approach for a number of months and we played by the rules."

While some might baulk at the prospect of inviting clients to join them in their venture, John Lehal, who founded Insight Public Affairs in 2006, decided the risk was worth taking. "I had taken informal soundings [from clients] and it was obvious they were up for it, plus I could give them a 20 per cent discount on the fees they were already paying. Non-compete clauses are very hard to enforce," he says. The gamble paid off. Turnover now stands at £2m, there are 20 employees and last year Insight was named PRWeek Specialist Consultancy of the Year.

When it comes to setting fees most start-ups use past experience as the basis for pricing. However, what many do is hone their offer so clients are not presented with a flat, take-it-or-leave-it day rate. Says Crozier: "We used experience from the range of agencies we had both worked for and sourced outside insights from other industries to challenge our thinking.

"We ended up designing a billing structure that is a bit different, but that can easily be translated into the most commonly used structure so that clients’ procurement departments can make easy comparisons with other agencies."

Nowhere to hide

And what of the pitfalls of setting up your own business? Unity’s Hopkinson says: "There’s nowhere to hide. You cannot blame anyone else if things don’t work and you have to take on all the roles, even being your own PA. It can be a rude awakening." According to Hopkinson, the hardest thing is doing the accounting. It can take 30 per cent of your time doing stuff that is not client facing. "That’s the reality for anyone running their own business," he says.

Wrixon also sums up the pitfalls. "Lying awake at night worrying about any or all of the following: cash flow, failed bids, people issues, cash flow, challenging clients, the next big campaign. And did I mention cash flow?"

While the minimum barriers to entry are very low, many agencies agreed that to truly class yourself as a business you need offices and employees. Anything else is just freelancing. They also warn against being wrongly seduced by dreams of overnight success.

Wrixon concludes: "At an industry lunch recently almost everyone agreed that it takes five years to establish a new business (only one in five businesses survives beyond five years) and there were some pretty grown-up leaders in that room." 

Starting up: the basics

Drew Benvie MD of Battenhall (founded March 2013), shares his tips for agency start ups.

Behind the latest start-up on the block

Mitchell Kaye is an old hand when it comes to start-ups. He was the brains behind Mischief PR, launched in 2006, and during March cut the ribbon on his new venture, consumer PR agency The Academy.

Despite being known for his single-minded approach, when asked what spurs growth Kaye attributes business success to the drive of those around him.

"With Mischief, I never had a certain agency size in mind; it grew because of the ambition of its staff. As ambitious people get promoted we had to bring in new staff to fill those roles."

He says the The Academy name means not just offering clients "the highest possible standard" but also offering staff "a place where they can be taught and inspired."

When it comes to staffing at The Academy, so far Kaye has stuck close to home, launching with ex-Mischief creative director and co-owner Daniel Glover, and hiring Gemma Vardon, who spent more than five years at his former agency.

"We wanted our first hire to be someone we knew shared our values," he says.

With a team in place, the focus will now be on responding to what Kaye sees as a gap in the market. "Too many agencies focus on strategy without the ideas to do it justice, or offer creativity without the strategic framework."

And despite praising the role of Engine, the group that snapped up Mischief in 2011, he is happy to launch independently. "We’ve had a couple of excellent offers of investment but we felt it was important for a start -up business to back ourselves," he adds.