Proactive PR CEOs Keys to Greater Profits

By Rick Gould, CPA, JD This is a condensed version of the op-ed that appeared on on July 1, 2012. To read full article click here. I stand by my passion and conviction that PR agencies can attain at least a 20% bottom line with proper counsel and guidance, can build ongoing value in the firm, and can ultimately sell the firm for a price beyond their wildest expectations. The question many of you are asking now is “how”? The answer requires more than a “business” philosophy. PR executives don’t normally think or act from a “business,” can-do-it philosophy or standpoint. The way the 20%+ profitability is attained is by shifting to a determined, goal-oriented, can-do-it mindset. A 50-55% labor cost and 25% operating expense costs guarantees at least a 20% operating profit. You CAN do it. You SHOULD do it. You NEED to do it to survive, prosper and grow your firm the right way. For your firm to grow, to retain top talent, and to employ cutting edge technological and digital capabilities, you need to have at least a 20% operating profit. Your task is to get your clients to understand and see the win-win value in this. They should embrace this. If they don’t, then you need to work harder in building your case. I can help you do that here. Let’s start by discussing key benchmarks. Rise of the Proactive PR CEO First, what is happening in the PR industry is the transformation from the “reactive” to the “proactive” CEO. Proactive CEOs of PR agencies are shifting their thinking and priority to the business of their business. They are looking at the benchmarks more than they ever have. They are looking at productivity/utilization. They are focusing on all of the components that are needed to attain at least 20% profitability. Proactive CEOs are those wanting to make change, provide top-line service AND be rewarded for the efforts. PR Industry Benchmarks: The Survey Results This year’s Benchmarking Survey/Report results showed signs of significant improvement. Here are some key findings: Revenue Per Professional crept up from $206,000 to $210,000. Operating Profit for the