FiftyOneZeroOne

How PR agencies survive a recession

Posted on: October 10, 2008

It’s Black Friday and if you’re running a PR business, you’ll be consulting a bottle of red wine (Australian, of course) as to how to keep the business going in the coming recession.

There’s no doubt that there will be casualties in the PR business and so you need to prepare your business for the times ahead. It’s going to be a long, tough time.

 

I ran a PR agency for eighteen years, which included three big economic downturns, and kept the show on the road. So I’d like to share my experiences with you. Obviously, take professional advice but consider this recession management action list.

 

1)      Do business with clients who pay their bills on time. Cashflow is everything to do with survival.

2)      Trust your instinct when negotiating with a new client. If you have worries about their business ethics or financial situation, don’t take them on.

3)      Take time to negotiate the commercial aspects of any appointment. Who signs off your invoices? When do they have to be submitted by? What is the payment date? Arrange payment direct to your bank account. Avoid the “the cheque is in the post” excuse.

4)      Monitor your creditors and debtors ledgers assiduously. Make account managers responsible for commercial relations with clients.

5)      Be prepared to do fixed price projects. Retainer fees dry up in a recession as clients want to limit their costs. They are thinking short term, too.

6)      Concentrate on fees. Let clients pay for print, vision, graphics and websites direct. If they go under and you’ve done the purchasing, it could break your business.

7)      It’s tough to say this, but if you have to cut staff costs to keep afloat then do it. Entrepreneurs not only have to gear up for growth but also manage in the downturn. Survival is, sadly, more important than sentiment.

8)      If times are hard, bolt expenditure to the floor but make sure staff get paid on time. No more gesture spending. Negotiate or renegotiate all consumables and fixed costs like rent, photocopiers, car leases.

9)      Use freelancers for specialist advice or when you need to grow the account team until the business environment gives you confidence to recruit.

10)    In a recession, clients want advice and action from experienced senior professionals. You may employ entrants into PR but make sure the experienced advisors lead accounts until the client has confidence in younger staff.

11)    Ensure programmes have outcomes that can be evaluated. Objectives should be measurable, so get savvy on evaluation techniques. Clients will want assurance that targets are being reached. AMEC members can advise.

12)    Build relationships with clients. In a recession, you really get to know them, their ambitions and concerns. You’ll be a valued advisor.

13)    It does get better in the end, so don’t borrow heavily to survive (that’s if you’ll find a bank to provide working capital). The cost of repayments could cripple you on the upturn.

14)    Join your national PR consultancy trade organisation. Yes it costs money to subscribe but they are great value for mutual support, business advice and marketing. PRCA in the UK and CPRF in the USA are excellent examples. Check the ICCO website for the organisation where you operate.

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2 Responses to "How PR agencies survive a recession"

[…] PR consultancy, I also thought it useful to draw your attention to a recent post by Dr Tom Watson, 'How PR agencies survive a recession'. Dr Watson is an acknowledged authority in the field of PR research and measurement, but also […]

It’s been Black Friday for us in Zimbabwe for almost a decade now, Tom! But when inflation morphed into various stages of extreme hyper-inflation (what is that called?!) in the last few years, PR firms like ours had to find ways to survive. While we were exploring ways to be prudent about operating costs and general survival, many of our clients were also looking at areas to cut, such as the usual target areas: HR, PR, Training, etc. I was, therefore, consoled to find that we used many of the suggestions you give as survival tips – and are still in business today where many colleagues have thrown in the towel and gone back into the corporate world, or a country new. The international financial crisis presents a brand new conundrum particularly for a country already in a crisis of its own (although we are still telling ourselves this is far removed from us), and I found your advice timely and pertinent indeed. Could cross-ocean/cross-border partnerships be a solution?

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