Reflecting on my work advising PR businesses on growth and profitability, and on the firms I have been part of and have run, it strikes me that firms in need of improvement tend to have the same three major problems crop up at Board level, time and again.

The number one mistake is Boards believe their own PR – specifically, they believe their firm is far better than is objectively the case.

In a way, it’s not surprising. If you spend every day telling people – prospective clients, staff, journalists, etc – how wonderful your firm is, after a while the indoctrination works and you start to believe it, yourself. 

This corporate narcism is a serious problem (compounded enormously if you have poor accounting systems and cannot entirely rely on your numbers) as it blinds you to shortcomings in the business. Fortunately there is a simple cure. Just compare your firm’s Productivity (£ annual revenue divided by FTE total staff) and see how you compare with the rest of the market.

Truly exceptional firms generate ~£200K per person; those which are held by the marketplace to be generic, manage about £80K. Less than that and your business is in serious trouble.

Mistake number two is not to have a clear, living, written, thought-through plan. One that’s not just a wish-list; or is done once, put in a drawer and forgotten; but has responsibilities, milestones and £-values attached. 

The start point is generally, what are you aiming for? Sale in X years, perhaps?

Well, if you are aiming for the big time, you need to be generating >£1 million EBITDA before the major acquirers will even consider you, and for big multiples you need to be growing consistently with profits of ~20%. 

So what’s your profit now, and by how much would you have to grow it each year, in order to get to the magic number (and remember, the number is a necessary but not sufficient factor in a successful sale).

From that flows other considerations:

  1. How are you going to create the top-line growth you need, considering the % success you have in generating contacts, converting them to leads, and from there to clients. The precise nature of the calculation will vary by business; what doesn’t work is to pluck a growth number out of the air and assume that’s your new business planning done. You need a thoughtful, practical marketing plan that fills the hopper and drives prospects through it.
  2. Staffing is always a challenge. You need to plan how to get the most recoverable, billable hours out of your people (do you have accurate numbers?); how you are going to develop them; what skills and levels of seniority you have to  hire or buy, and when. And how are you going to keep the staff cost / income ratio at 50% – 60%?
  3. Importanty,you need to plan how you are going to develop your offer in light of a changing market (or weak productivity). What services will you add (or shed, the better to specialise); what geographies will you expand into; etc. Businesses don’t stand still, and so if your offer is unchanged from, say, five years ago, you may have a problem.
  4. Infrastructure. When does your office space come up for review? Do you need additional IT? Do you have the right IP, systems and processes in place? There’s often a lot here that is overlooked.

Hard on the heels of planning is decision-making; especially decisions concerning people and/or non-compliance with plans, budgets and targets.

 In my experience, poorly-run firms are bad at making decisions. A decision is taken, then re-opened, changed, re-opened again, before being forgotten. Or a decision is made without reference to the necessary information; or a decision is fudged. Or, the worst, decisions are simply ducked.

This is sometimes a failure of moral courage, sometimes an inability to understand how to make good decisions in complicated or confusing circumstances. For the former, you have to grow a backbone; for the latter, read ‘Decisive’ by C&D Heath, which shows you hard-nosed processes to improve objective decision-making.

That may have sounded flip, but in my experience one of the defining characteristics of a well-run business is a Board (and especially the CEO) with the ability to take difficult decisions carefully, and to stick with them despite the personal discomfort it may bring.


Beyond these three, there are any number of challenges that you find to a greater or lesser extent in firms that are not fulfilling their potential:

  • Poor accounting systems, which fail to give complete and accurate information, promptly. Client profitability is not examined; hours reported are as accurate as a horoscope are the top two I encounter in this category.
  • Lifestyle-like culture, where commercial imperatives (such as committing to achieving a budget, and the consequences which should flow from that) take second place to a “nice” working environment.
  • Poor rhythm of meetings – too few to run the place properly, or too many, overlapping, badly-run meetings. Either way, they get in the way of decent growth.
  • And the list goes on…

As always, there’s much to do and time is short, so good luck and get cracking.