How to Start a Public Relations Agency

Public relations means working to build a positive reputation and image for a company. It involves working with the media and other channels to distribute favorable communications about the company. Public relations is also a huge industry, valued at more than $20 billion in the U.S. alone.

If you have a public relations background and are ready to strike out on your own, starting a public relations agency can help you get a share of that market.

But beyond public relations skills, you’ll need some business savvy. Fortunately, this step-by-step guide has all the information you need to start a successful agency. 

Step 1: Decide if the Business Is Right for You

Pros and cons

Public relations agency industry trends

Industry size and growth

• Industry size and past growth – The U.S. public relations firms industry is worth $20.3 billion in 2023 after growing 2.7% annually for the last five years.((https://www.ibisworld.com/united-states/market-research-reports/public-relations-firms-industry/))
• Growth forecast – The U.S. public relations firms industry is projected to grow .5% in 2023.
• Number of businesses – In 2023, 58,777 public relations firms are operating in the U.S.
• Number of people employed – In 2023, the U.S. public relations firms industry employs 113,547 people. 

Trends and challenges

Trends

• Promoting an image of corporate social responsibility is becoming increasingly important in public relations.
• Public relations professionals are prioritising quality over quantity in terms of communication channels.

Challenges

• Negative messages can go out and spread quickly, often forcing PR firms to go into crisis management mode.
• With so many communication channels available that allow two way engagement, PR firms are overwhelmed with managing communications with the public. 

Demand hotspots

• Most popular states – The most popular states for public relations professionals are Virginia, District of Columbia, and Rhode Island.((https://www.zippia.com/public-relations-jobs/best-states/))
• Least popular states – The least popular states for public relations professionals are Mississippi, Louisiana, and Alabama.

What kind of people work in public relations?

• Gender – 64% of public relations professionals are female, while 36% are male.((https://www.zippia.com/public-relations-jobs/demographics/))
• Average level of education – The average public relations professional has a bachelor’s degree.
• Average age – The average public relations professional in the US is 41.8 years old.

How much does it cost to start a public relations business?

Startup costs for a PR agency range from $5,000 to $11,000. Costs include a computer, design software, and marketing budget. They also include an outsourcing budget since you’ll likely need to hire a freelancer to write things like press releases or for content marketing if that’s a service that you’ll offer.

You’ll need a handful of items to successfully launch your public relations business, including: 

• Computer
• Design software

Start-up Costs	Ballpark Range	Average
Setting up a business name and corporation	$100 - $500	$300
Business licenses and permits	$100 - $300	$200
Insurance	$100-$500	$300
Website	$500 - $1,000	$750
Computer	$1,000 - $2,000	$1,500
Design Software	$300 - $700	$500
Outsourcing budget	$3,000 - $5,000	$4,000
Sales and marketing budget	$500 - $1,000	$750
Total	$5,600 - $11,000	$8,300

How much can you earn from a public relations agency business?

How much you charge will depend on the scope of work that you propose for your clients. When you’re starting small, you might get small business clients who will pay about $2,000 per month. Your profit margin should be about 60%.

In your first year or two, you might land four clients that you charge monthly, bringing in $96,000 in revenue. This would mean $57,600 in profit, assuming that 60% margin. 

As you gain traction, you might have 25 clients at a rate of $3,000 per month. At this stage, you’d have an office and staff, reducing your margin to around 20%. With annual revenue of $900,000, you’d make a tidy profit of $180,000.

What barriers to entry are there?

There are a few barriers to entry for a PR agency. Your biggest challenges will be:

• Having the required skills and experience
• Breaking into a competitive market

Step 2: Hone Your Idea

Now that you know what’s involved in starting a public relations agency, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.

Analyze your competitors 

Research PR agencies in your area and online to examine their services, price points, and customer reviews.

• Make a list of public relations firms that offer similar services. 
• Review your competitors’ services – their features, pricing, and quality – and marketing strategies
• Check out their online reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers like and dislike.
• Identify your competitors’ strengths and weaknesses. 

This should identify areas where you can strengthen your business and gain a competitive edge to make better business decisions.

Why? Identify an opportunity

You’re looking for a market gap to fill. For instance, maybe the local market is missing a PR firm that specializes in media relations, or that builds brand awareness with content marketing. 

What? Determine your products or services

You could offer one or more of any of the following services:

• Reputation Management
• Corporate Communications
• Message Development
• Community Relations
• National and Trade Media Relations
• Internal Communications
• Spokesperson Training
• Thought Leadership
• Reputational Threat Consultation
• Crisis Communications Planning
• Scenario Planning & Preparation
• Media Training
• Crisis Response
• Social Media Monitoring
• Reputation Management

You could also offer content marketing and other types of marketing. 

How much should you charge for public relations services?

Your prices will depend on the extent of services you offer and market prices in your area. They’ll also be based on your costs to complete the work each month.

Once you know your costs, use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be business owners who you can find on LinkedIn or by calling them directly.

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office.

Choosing the right location for your PR agency is essential for brand image, client accessibility, and talent attraction. When selecting a spot, consider client proximity, ensuring you’re close to key business districts to foster credibility and facilitate meetings.

Moreover, positioning your agency in areas with a dense creative or business community can help in tapping into a rich talent pool. Lastly, the aesthetics of your office can mirror your brand, so ensure it reflects the image you want to portray, and it should be capable of accommodating future growth.

Step 3: Brainstorm a PR Agency Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “public relations” or “media relations”, boosts SEO
• Name should allow for expansion, for ex: “Broad Horizon PR” or “Nexus Wave PR” over “Tech Talk PR” or “Fashion Forge PR”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation. 

Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward. 

Step 4: Create a PR Agency Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Summarize the core objectives and value proposition of your PR agency, highlighting your unique approach and target clients.
• Business Overview: Provide a brief overview of your PR agency, outlining its mission, vision, and the types of PR services it offers.
• Product and Services: Detail the specific PR services your agency will provide, such as media relations, crisis management, event planning, and digital marketing.
• Market Analysis: Analyze the PR industry, identifying trends, client needs, and potential opportunities in your target market segments.
• Competitive Analysis: Identify key competitors in the PR industry, their strengths, weaknesses, and the areas where your agency can differentiate itself.
• Sales and Marketing: Outline your strategies for acquiring clients, including networking, pitching, digital marketing, and public relations for your own agency.
• Management Team: Introduce the key team members responsible for driving the success of your PR agency, emphasizing their relevant experience in public relations.
• Operations Plan: Describe the day-to-day operations of your agency, including client onboarding, project management, and workflow processes.
• Financial Plan: Present financial projections, including startup costs, revenue forecasts, expenses, and profitability estimates for your PR agency.
• Appendix: Include supplementary materials, such as case studies, client testimonials, PR campaign examples, and marketing collateral.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to public relations agencies. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your PR agency will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts. Here’s how to form an LLC.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation. Read how to start a corporation here.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a public relations business. You might also try crowdfunding if you have an innovative concept.  

Step 8: Apply for PR Agency Business Licenses and Permits

Starting a public relations business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your public relations business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as teamwork, KANTATA, or Scoro, to manage your quotes, projects, invoicing, and payments. 

Accounting

Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 

• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Create a website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. 

Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Schedule Consultation Now”. This can sharply increase purchases. 

Marketing

Here are some powerful marketing strategies for your future business:

1. Specialized Workshops and Webinars: Conduct workshops or webinars on PR strategies, crisis management, or media relations, positioning yourself as an industry expert and attracting potential clients seeking your expertise.
2. Content Marketing and Thought Leadership: Regularly publish insightful content on PR trends, case studies, and industry insights to showcase your expertise and build credibility within your target market.
3. Collaborate with Influencers: Partner with influencers or thought leaders in your industry to expand your reach and gain credibility, utilizing their existing audience to promote your PR services.
4. Client Testimonials and Case Studies: Feature success stories and testimonials from satisfied clients on your platforms to build trust and demonstrate the tangible results your agency can achieve.
5. Strategic Partnerships: Form partnerships with complementary businesses, such as marketing agencies or event planners, to cross-promote services and broaden your client base.
6. Community Engagement: Actively engage with local communities through sponsorships, volunteering, or participating in events, fostering a positive public image for your agency.
7. Utilize Social Media Platforms Effectively: Optimize your social media presence by sharing valuable content, engaging with your audience, and leveraging platforms like LinkedIn for professional networking and lead generation.
8. Leverage Test Projects: Offer limited-time, discounted PR services for selected clients to showcase your capabilities and generate positive word-of-mouth referrals.
9. Create a Compelling Elevator Pitch: Develop a concise and compelling elevator pitch that clearly communicates your agency’s unique value proposition, making it easier for potential clients to understand what sets you apart.
10. Attend Industry Conferences and Events: Participate in relevant industry conferences and events to network with potential clients, stay updated on industry trends, and position your agency as a key player in the PR landscape.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your public relations firm meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your public relations agency business could be:

• Build your brand reputation and elevate your business
• Public relations strategies for your purpose-driven brand
• Transformative strategies to elevate your brand image

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a public relations business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in public relations for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in public relations. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a public relations business include:

• Public Relations Strategists – create and implement PR strategies
• Writers – write press releases, articles, content
• Marketing Lead – create and implement marketing strategies
• General Manager – scheduling, accounting

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a PR Agency – Start Making Money!

Public relations agencies can lead companies to a more successful future by building a positive public image of their brand. By starting your own PR agency, you’ll be performing a valuable service, using your skills, and making a good living. There’s no limit to how large you could grow your agency over time.

You’ve gained some business savvy, so now you’re ready to hit the bricks and get your public relations agency on the road to success!