UK: Building a service company - 10 rules for starters. (2 of 2)

UK: Building a service company - 10 rules for starters. (2 of 2) - Seventh, being in business is about making money. It is not exclusively about the beauty of an advertisement, the quality of the audit, the excellence of the architectural drawing. Howeve

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Last Updated: 31 Aug 2010

Seventh, being in business is about making money. It is not exclusively about the beauty of an advertisement, the quality of the audit, the excellence of the architectural drawing. However good they are, they must make money - usually for the client but always for yourself. If not, you will not be in business for long.

Many professional people argue that the quality of service which they provide is threatened by the drive to make money. This is not true. You can provide a high quality service and still produce a fair return. If you provide a quality service then you should demand a premium price. That in turn should enable you to pay the highest salaries with a good return to your shareholders.

Eighth, service companies are cost-led businesses. If you manage the costs the revenues will look after themselves. Most people who work in service companies are optimistic. They believe that the next client will spend more money and they staff up to meet anticipated revenues. You must staff up to existing revenue streams.

Ninth, love your bank and your bank will love you. Spend real time with your bank manager - even if you are not using his money. Always give him the bad news and share your problems. The closer this relationship the better. Bank managers enjoy forecasts. Give a forecast which you are sure you will exceed - not necessarily by much, only a percentage point or two. Banks like the feeling that you always do that little bit better.

Finally, service companies are founded by one or two visionary, charismatic types who want the buzz of building a company. Running an established firm is - at least for them - relatively boring. There comes a time when founders should move on. Plan for it.

Unfortunately, we did not always obey all of these rules in building Shandwick from scratch in April 1974 to a 2,500-strong PR firm - the largest in the world - with offices throughout the UK, the United States and the Far East. If we had, I do not think that it would be a better firm but building it would have been far easier and often less painful.

But however many rules you write, there is no possible substitute for hard work, dedication and drive. If you do not love work then all of the rules in the world will be of no positive help. You must be happiest when you are at work and you must be determined to be rich. Otherwise you simply will not make it.

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