Starting a Public Relations Firm- The Business Side of ThingsI remember when I started Arment Dietrich. I was way too young to be starting a public relations firm. I had no idea how little I knew and how much growing up I had to do.

But not one to do things the easy way, I figured the school of trial and error would show me the way (plus that whole problem with authority thing that kept getting me in trouble with employers).

And show me the way it did. Not only did I have NO idea about the business side of things, we went through the Great Recession while I was learning and it nearly put us out of business.

I remember reading things about running a business. I even joined Vistage to help me learn how to do it.

But nothing quite hit me smack in the face like good old experience and failing so badly I almost had to go back to work for someone.

I also didn’t have a mentor or the foresight to ask someone in the business for help. Call it pride or stubbornness or plain, old I didn’t think anyone would take the time.

So last week, when I wrote about the importance of tracking time and my dear friend Kate Finley asked some additional questions about running the business of a PR firm, I decided I would share some of the answers with you.

Retainer Too Low

We’ve all been there. We propose a program for a new client, we budget it out, and then we get to work and find a ton of things we didn’t expect that are creating more work or putting obstacles in the way of getting things done.

There are a few things you can do upfront to protect you if that happens:

  • Be extremely clear about the work you’re doing and detail it in your proposal.
  • Put in writing what is included and what is not.
  • Explain what a scope of work change is and what will trigger one.
  • You can even detail how many hours each week the client gets from you. This is important if you’re doing a retainer or flat rate. Some people think retainer means you’ll do as much work as it takes.

Then be very diligent about not overservicing on projects not included in the scope of work and coach your team on how to politely, but firmly, tell the client they’re asking for something not included.

We had a situation where, after working with a client for two years, we knew exactly how much time things would take to accomplish. Going into year three, we budgeted based on our experience with them the previous two years.

But they hired someone new and she created three times more work for us. About four months in, I had to have a conversation with the CEO about how this new person was eating away at our budgets by requiring nearly daily meetings, constant phone calls in between, and urgent emails late at night (midnight our time).

I handled it in this way: I explained how much we enjoyed working with them and that year three’s budget had been created based on our past experience with them. I explained why things had changed, but also that we were super happy to work with this person.

In order to do that, though, we’d have to increase our budget to include all of this extra meeting time and hand-holding she needed.

About a week later, they brought back our old day-to-day person and things went back to normal.

Letting a Client Go

When you are starting a business, this is the hardest thing in the world to do. You don’t want to give up the revenue, but you also know they’re not a good fit.

When you let a client go who is toxic or isn’t a good fit, it rewards you in double the revenue later.

I know. I know. Easier said than done. But I’ve seen it over and over again in our business.

Every year (it’s happening here in about a month), we sit down and determine which clients are profitable and which are not. Then we also discuss the pros and cons of working with that client.

Are they high-maintenance? Do they have unrealistic expectations? Do they refuse to work with anyone but me? Are they toxic or mean or rude?

If the answer is yes to any of those questions, we then discuss whether or not we think it’s worth trying to save the relationship or if we should fire them.

Typically, we fire the bottom 10 percent of our clients every year. Which means two or three good clients are let go. Every year.

It’s really scary and, as the business owner, I have to take a deep breath and show no fear.

But I have truly found, once you do that, it frees up your time to work with the already existing good clients or to find the ones you want to work with, who appreciate you.

None of us go into a client relationship thinking it’s going to turn sour, but it happens.

We’ve let three clients go already this year and the collective sighs I’ve heard from my team are pretty incredible.

It’s hard to do, but it’s very well worth it.

Starting a Public Relations Firm

It’s not easy – this whole business side of things.

Most of us go out on our own because we think we have a better way of doing things. Some of us are extremely good PR professionals and the logical next step is starting a public relations firm.

What we quickly realize, though, is running a business takes us away from our craft.

We have to keep a clean balance sheet, we have to understand and manage a profit and loss statement, we have to budget to profitability, we have to know when it’s time to hire new employees and how to attract – and retain – them, we have to create process and procedure, we have to worry about things such as paid time off and holidays and covering for someone when they’re sick, and we lay in bed at night wondering how we’re going to make payroll.

It’s not the easiest job in the world, but it’s one of the most rewarding.

Gini Dietrich

Gini Dietrich is the founder, CEO, and author of Spin Sucks, host of the Spin Sucks podcast, and author of Spin Sucks (the book). She is the creator of the PESO Model and has crafted a certification for it in partnership with Syracuse University. She has run and grown an agency for the past 15 years. She is co-author of Marketing in the Round, co-host of Inside PR, and co-host of The Agency Leadership podcast.

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