I regularly speak to groups of business owners about how public relations can help them. I like to open with this question:
“How many of you think public relations is only for large corporations with big budgets?”
About half the crowd raises their hands. Then I ask:
“How many of you would like to implement a public relations program but don’t think you can afford it?”
This time, approximately three-quarters of the crowd raises their hands. I end by asking:
“How many of you are planning to wait a couple of years, when you have more cash flow, before starting a PR program?”
By this time, those who want to grow their business but are not generating enough revenues raise their hands—which amounts to the majority of the room!
“Well, I have some disturbing news for you. If your business isn’t generating more than a 2 percent increase each year, then your business is about to hit the wall. You are on your way to becoming another Small Business Administration (SBA)statistic of businesses that fail within the first five years.”
The room falls silent.
I’ve just confirmed to many business owners what they already suspected but were afraid to admit. Yet they are unsure of which steps to take to ensure their future success.
That’s when I explain how PR can work for them.
A Closer Look at Small Business
Starting a business is an opportunity to provide a better product or service than what is already available in the marketplace. Many people leave their jobs to do just that—and to afford themselves the freedom to work from home or create their own schedule. Starting a business offers them the chance to liberate themselves and control their earning potential. The sky is the limit, and with a little ingenuity and a lot of hard work, they can achieve great things.
At the same time, many would-be entrepreneurs are not aware that they will have to wear many hats for their business to succeed. Aside from doing what they do best, these business owners will also need to handle everyday operations, including technical issues and administrative duties. They’ll have to implement an accounting system to track the money coming in and out, and employ marketing strategies. They’ll also need to make their company dynamic and handle change. The reality of owning a business can quickly become overwhelming.
According to the SBA, roughly half of new startups fail within the first five years. Reasons for failure include:
• Lack of experience
• Insufficient capital
• Poor location
• Over-investment in fixed assets
• Poor handling of finances
• Competition
• Low sales
The SBA’s studies are useful, but I like to simplify things. Small businesses fail for three main reasons: improper planning, financial or otherwise; improper management; and improper marketing. Lack of experience, insufficient capital, and poor location all fall under improper planning; while over-investment in fixed assets and poor handling of finances fall under improper management.
Competition and low sales fall under improper marketing, which I’ll deal with in this book. Both can result in any business closing its doors. But with the proper structure in place and a well-planned public relations campaign, a business can overcome these obstacles by:
1. Differentiating itself from the competition
2. Branding
3. Ensuring that products and services exceed customers’ needs and expectations
Despite the potentially powerful effects of a public relations campaign, few small businesses create one, and many don’t even understand the benefits of implementing one. According to an SBA report conducted by an independent firm, small business owners tend to budget only for their sales revenue, cost of goods, overhead, salaries, and gross profit. Only if there is money available will funds be used for marketing. This neglect leads to failure time and time again.
Most of the entrepreneurs I meet fall under this category. During startup, many of them say they were apt to spend money on website creation; joining and attending meetings of networking groups and professional organizations; promotional flyers; and, for some, experimental advertising. Only about 1 percent budget for public relations, with or without the assistance of a professional. In those rare cases, the majority did PR on their own, yielding disappointing results. Eventually, they find that:
• Networking and promotional flyers do a good job, but the exposure is limited. Many have to network for a while with different groups before they find one or two effective contacts. Once they do find the right groups, they have to network for a while before obtaining a lead, and then they have to continue networking to keep their company prominent. Those who are introverted or shy usually have a hard time.
• The time and effort of creating a website does not create new business for them. Many are disappointed when they get only a few hits a day. Furthermore, many are frustrated when even the most probing search engines fail to find their websites.
• Advertising seldom yields a good return on investment. Many times, advertising doesn’t even conjure enough business to pay for the cost of producing and placing the ad.
For the most part, these businesses aren’t doing anything wrong, but after a while, their ability to get new clients becomes a tedious second job that doesn’t produce the expected results. When things get busy, its seems like the marketing stops, and when things begin to slow down, an alarm reminds them that they better start marketing again if they want to keep sales up.
After a few years of this rollercoaster marketing, many conclude, “There’s got to be a better way.”