By Rick Gould, CPA, JD
Our recent Economic Uncertainty Survey Report, to be released on January 11th, only confirmed what PR firm CEO’s predicted at the start of 2009: that it would be a challenging year, a year of client budget cuts, of staff layoffs, of decreased revenues and lower profit margins.
In February 2009, 65% of the 237 firms surveyed predicted major clients budget cuts, and now, the more results tabulated verify that prediction. 63.7% of the 157 firms responding showed a decrease in net revenues. My conclusion was that PR agency CEO’s are adept at predicting what lies in the future. 64% also predicted a substantial negative bottom line effect, which was also validated. The agency bottom line on an average, went from 19.2% to 11.6%; a 40% drop in profitability.
So it is with hope and confidence I predict that 2010 will be a year of rebuilding, rebounding and increased profitability. 64% of the firms currently surveyed believe revenues will increase in 2010. 22% are confident that they will remain the same. In these turbulent times “flat” is “up”.
Several of the CEO’s I interviewed added that their predictions were conservative. Many who checked off “no change” stated that they were reluctant to check “increase” in order to “play it safe”. Since when do PR CEO’s play it safe? Entrepreneurs are classic risk-takers and playing it safe was never their end game. This just goes to show the magnitude of the impact this years events have had on PR.
If firm CEO’s manage their firm using our historically validated benchmarks, hire and train quality staff, take on new clients selectively, and watch client profitability closely then the prediction of increased revenues and profitability for 2010 will be realized. I hope a year from now I will be reporting this reality to you.
Manage your firm as if you will be selling it tomorrow and you will soon see how 2010 has the potential for a banner year for your firm and the industry.
Happy Holidays and Happy New Year!!
P.S. also check out our current SGP Blog entry, “10 Predictions for 2010”.