Many people in PR think about going solo, or starting their own agency or PR services business.
For many it’s a rewarding career move. I made the entrepreneurial decision 20 years ago to produce interactive multimedia programs and then started CyberAlert, Inc. with venture capital in 1999. I’m delighted I did.
I can promise that owning and managing your own company is challenging, rewarding, and quite different from what many expect. I’m sharing here some of my insights about starting and running your own business, along with a few pointers I’ve gleaned from articles on start-ups.
1. Start-up costs are usually substantially higher than expected.
Before you venture out on your own, develop a list of start-up expenses and do some research into how much each will cost. Consider the following expenses: Rental and security deposits
- Corporate or LLC filing fees
- Technology equipment: computer/,software/printer/fax/etc.Business phone and cell phone (and business phone numbers)
- Office furniture
- Accounting services or software
- Media database
- Liability insurance
- Errors and omissions insurance
- Networking costs
- Advertising / PR / branding / marketing
- Office supplies
- Travel/entertainment to meet prospects
2. Employers get very irritated when you take their employees or clients.
If you expect to take current clients with you to your start-up, or if you solicit business for your new agency while employed, plan on legal pushback from your current employer. Taking co-workers with you will almost certainly burn bridges to your current employer. Check that non-compete agreement you signed upon employment.
3. Paperwork and accounting require more time than you anticipate.
Office services require substantial time commitment. The time-sinks include payroll, taxes, banking, invoicing, vendor payments and other government filings including equipment lists for property assessments.
4. First, you need to understand your industry, your strengths and how they mesh.
Sounds obvious, but a comprehensive understanding of your market, competitors and clients requires a great deal of thought and investigation.
You must know where your skills and new business will fit in the market, including prices, offers, services and technology. A tip from very successful entrepreneur James Altucher: don’t be greedy. If your product is good and you price it below competition, people will buy. Once you start to see cash flow, then you can add features and increase prices.
6. A network is crucial.
Before you start, you must build a list of strong contacts who can help get you where you want to go. Consider how your current contacts can help you or connect you to the people you need. This may include writers, graphic designers, website developers, an attorney, an accountant – and, of course, potential clients.
7. The owner is the chief “rainmaker.”
All owners are “rainmakers” — the individuals who bring in the business. The more time and effort you devote to sales the more likely you are to succeed. Corollary: businesses with the owner as sole sales representative usually fail. Hire sales personnel as soon as finances allow and stretch to do it.
While your network is the primary sales channel at the outset, you should also use other channels, including online business outsourcing services such as freelancer.com, guru.com, and odesk.com.
Apply all the PR and marketing strategies and techniques you’ve learned to your own business venture. Let your media contacts know about your new business; they are well-connected to local businesses that may need PR or marketing services.
8. Managing your business cycle is crucial to success.
Upon start-up of a service business, owners focus their time and effort primarily on getting new clients. Then, after securing a client or two, the temptation is to do the very best you can for them by investing all your time in delivering top-notch services for them.
The danger is that you’ll stop your sales efforts. Mismanaging that sales/service cycle has killed many businesses — and was a serious problem for my interactive multimedia production business
9. It’s not a 9 to 5 job.
Owning your own business demands lots of hours, especially at the outset. Typically, owners of small businesses are the first to arrive at work and the last to leave each day.
As an entrepreneur, you’re tasked with creating, marketing, building and selling, and all the details in between — so don’t expect a typical 8-hour workday. As Marianne Cantwell puts it, you’ll “sweep the floors and meet the clients.”
10. You’ll hear “No!” a lot.
If you’re in PR, it’s likely you’re steeled to rejection from the media. People in marketing and sales are also familiar with “no.” Whatever process you’ve learned for dealing with “No,” be prepared to apply it. You’ll hear “No” over and over from prospects, vendors, and investors.
11. Now is a good time to start a business.
You can always think of an excuse not to start your new business. There’s never a good or bad time to launch your startup, so ignore these excuses.
As Altucher puts it: “Depressions, recessions don’t matter. There’s $15 trillion in the economy. You’re allowed a piece of it.”
12. It can take several years to make a profit.
It’s uncommon for any business to skyrocket to profitability. Brian Hamilton of Sageworks has found that the more complicated the business, the longer it takes to make a profit.
When starting out, then, be careful of all expenses and, especially, hire only absolutely essential employees. Choose people with a broad range of skills that complement your own – and treat them well.
13. Clients don’t always pay on time.
Even when you choose clients wisely, there’s no guarantee how reliable they will be when it comes to paying your invoices. Late payments cause cash flow problems in paying your employees and vendors. The owner of a small business is usually last to get paid, so prepare a plan for cash shortages at home too.
14. Service business ownership seldom creates exceptional wealth
Successful owners of service businesses can achieve a comfortable life. But very few become truly wealthy. Have realistic goals and expectations.
Many of these truths may seem foreboding, but there’s enormous upside to owning your own business.
The reward I most like in running my own business is the freedom to make the final decision. That psychic reward comes immediately and stays forever. Only business owners enjoy that prized perk.
The other rewards and success come only after you plan, set realistic expectations, plan more, and work harder than you ever have before.
This article originally appeared on the CyberAlert Blog and can be viewed here.
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