Start a public relations agency by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your public relations agency. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a public relations agency?
Most of the “equity” is in your head, so out-of-pocket costs can be small at first. You could operate out of your house or apartment and use many of the tools you already have, including phone, computer and Internet service. But certain expenditures are critical.
- Graphic design services for the development of your logo, fonts, colors and the overall look of your communications
- Printing of business cards, letterheads, envelopes and other collateral sales and marketing materials
- Website development, which you should only handle yourself if you have a sophisticated understanding of digital production
- Copywriting of sales and marketing materials if writing isn’t a strength
- Membership fees for relevant trade associations and networking organizations, starting with your local chapter of Public Relations Society of America (PRSA)
These expenses might not exceed $1,000. But keep in mind that it could be a long time before you start developing a client roster and generating enough income to survive. Can you go six months without a paycheck? Your day-to-day costs while building your business are your real startup costs, so try to have savings to weather at least several months without income.
Your financial reserves can perhaps be smaller if you can start part-time (while keeping your day job), or if you will have one or more clients signed up from day one.
What are the ongoing expenses for a public relations agency?
- Client attainment – This can include everything from ads in industry publications to the cost of taking prospective clients to lunch.
- Client relations – This might involve entertainment, holiday cards, gifts and other direct costs of maintaining relationships.
- Employees – Perhaps not among your first expenses, but your goal might well be to get big enough that you need additional help or expertise in fields where you have little skill or experience
- Memberships – This can include fees for joining PRSA as well as trade associations that reflect the interests and involvement of your clients
- Typical offices expenses, including rent, phone, utilities, taxes, etc.
Who is the target market?
Try to develop a clientele that matches your background, skills, specializations or preferences. For instance, if your background is in the film industry it would make sense to make this your specialty. Contact industry peers and make sure they know how long you worked in the business and how thoroughly you understand it. If you wish to specialize in businesses in your hometown, promote your familiarity with local media and the competitive landscape confronting your clients.
Your prospective clients should be established enough to be able to afford your services or have the need to improve their image. Companies about to introduce new products or services, or who have bought other companies or are undergoing changes to leadership or business model are also good candidates.
How does a public relations agency make money?
You’ll be paid by your clients on either an hourly, project or monthly retainer basis for the effort you put into achieving their goals.
How much can you charge customers?
This sounds simplistic, but what you should charge is what you can get. That’s going to vary depending on your background and reputation, region of the country, what your clients are used to paying for similar services and what your competitors charge.
There are basically three ways for public relations firms to charge customers: at an hourly rate, per project and via monthly retainer. Let’s take a closer look at each method.
- Hourly rate – Think of this as your basis for setting prices even if you don’t charge hourly. In other words, if you charge on a per-project basis and the project is to write a news release and your best estimate is that it will take you four hours from start to finish, charge your hourly rate times four hours. That rate might range from $75 for a newcomer operating solo out of a home office to $500 or more per an hour for larger firms working in a specialized area with Fortune 1000 clients.
- Per project – Again, use your hourly rate and expectation of how long you figure the project will take. This is the least desirable way of working, especially if you’re dealing with a new client and aren’t familiar with their approval process or expectations. If you think a video production will take 40 hours from the initial client meeting to completion and approval and it actually takes 80 hours because of client changes or negative feedback, you’ve effectively made half your hourly rate. However, it’s a good way for both parties to learn whether you can work together with the investment of only a single project or two.
- Monthly retainer – Only use this method if both parties thoroughly understand the scope of responsibilities. That’s because you’ll agree to a set amount every month. Some months you might work more than your hourly expectation while other months you’ll work less, but it should roughly even out. If not, you can renegotiate the retainer down the road. PR firms and their clients typically sign six-month commitments, with a review period after three months to make sure both parties are satisfied with the arrangement. One big benefit for your firm is the predictability. You know how much you’ll make every month from that client, which can help with long-term planning and forecasting.
Whichever payment method you select, don’t forget to let your client know that you’ll add your out-of-pocket costs. For instance, you’ll seek reimbursement for travel costs, including gas mileage, meals if you have lunch meetings with media, the third-party costs of photographers, videographers, writers or other vendors, and other costs consumed on their behalf.
How much profit can a public relations agency make?
Gould+Partners, a consulting firm for the industry, conducts an annual survey of profitability for public relations firms doing at least $10 million in net revenue. For the 2015 report, Gould+Partners found that this group earned a 19.5 return on investment in 2015. That’s derived from revenue remaining after all expenses are paid.
How can you make your business more profitable?
As you gain experience and expertise and your reputation grows, you can raise your hourly rate. You can also take on more work by hiring account people who already have or can quickly attain a clientele. And, finally, explore such closely associated side businesses as media training, in which you show clients how to properly conduct interviews and otherwise interact with the media.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Public Relations Agency Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your public relations agency is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a public relations agency. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
In addition, certain local licensing or regulatory requirements may apply. For more information:
- Check with your town, city or county clerk’s office for information about local permits and licenses
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
PR firms should require clients to sign a services agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership (who will ultimately own the app). Here is an example of one such services agreement.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
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How to promote & market a public relations agency
Can you describe your expertise in a dozen words or less? Try to distill what you do and who you do it for in as few words as possible, and use that theme or signature to justify everything you do to promote your business.
Once you’ve figured out your message, think like your prospective clients to find them. What do they read? Which associations have they joined, and what events do they attend? You want to be where they are. You want to have their eyes on content you wrote and to meet them where they hang out.
If able, advertise in their trade publications, buy booths at conventions and explore advertising opportunities in digital or offline publications that draw their interest.
How to keep customers coming back
Think of your firm as one of your clients. Your goal in working with your clientele is to bring them to the attention of their various publics with the communications they want to share. That’s exactly what you should be doing for your own firm on an ongoing basis.
Start a blog or e-newsletter and ask every potential customer if you can include them on your subscription list. (Never send anyone unsolicited content or it will be treated like spam.) Write content that’s informative and of value and interest to them—in other words, not sales pitches. Communicate in a way that will make you an industry thought leader and a valuable resource.
Much of this can be done at little cost except for a significant investment in time.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Public Relations Agency In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Public relations professionals are typically adept at communicating verbally and through various media. You should be a good writer and have a background in journalism or business. An instinct for sales is also important since you’ll need that tool to establish client relationships, bring your message to the attention of the media and create messaging that advances the viewpoint of your clients. Related to your sales skills, you should have a thorough understanding of how company practices, policies and culture impact customer relationships and be able to help your clients make positive change in this area.
Working in a public relations firm before starting your own business can help you gain better insight into the process, enhance your credibility and maybe put you in touch with future clients.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a public relations agency?
Your day will likely be filled with some or all of the following activities:
- Generating client business through phone calls, written communication and attendance at events
- Networking with industry peers to explore partnership opportunities and stay abreast of industry trends and gossip
- Nurturing working relationships with members of the media that affect your clients, pitching story ideas and serving as spokesperson on behalf of your clients
- Creating communications materials
- Conducting the everyday activities of business owners, including billing clients and paying bills, overseeing employees and interviewing prospective new hires
- Advising your clients on how they interact with their audiences
What are some skills and experiences that will help you build a successful public relations agency?
You might not consider yourself a salesperson, but you must become one fast. You’ll need this skill to attract clients, nurture media relationships and convince reporters that you have client stories that should be told. You should be a persuasive people-person who genuinely likes interacting with others.
Writing skills and versatility are also critical. Your business could be enlisted to create news releases, press kits, sales and marketing materials, speeches, video scripts, websites and web content, feature articles, white papers and countless other pieces.
What is the growth potential for a public relations agency?
Public relations firms range in size from sole proprietors working from home offices or kitchen tables to global public enterprises. Focus on delivering exceptional service and results and growth will come organically.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
How and when to build a team
Unless you launch with significant client activity or buy an existing business, you’ll probably start solo. As you gain clients and win new business, you might feel a pressing need to add staff. Your first hire might be an experienced account person with a following who can quickly usher in new business. Perhaps you’ll seek less experienced—and less costly—help just to get the work done. Or maybe you need expertise beyond your capabilities. For instance, if you wanted to branch out into media training, you might wish to hire someone with a media background or an experienced educator.