Today's post is not about marketing, but I want to drop a bit of business wisdom on you. Hopefully I may save a few of you some serious capital.
I meet a lot of small businesses and start-ups in an average month and I'm always curious to hear what they're doing. Recently I have spoken to a couple of principals at start-ups who had gotten some funding - both were tech firms. The first one went out and hired a "marketing firm" with a retainer north of $10,000 a month. The second hired one of the biggest law firms in the city of Boston, and I don't even want to think about their retainer.
The perception here is that these big firms are going to give you the best service and make your business a ton of money. In my experience, that's rarely true.
Personally I have had the same attorney for probably 7 years. He's a one-man show and really knows his stuff. He specializes in what I need, and has actual litigation experience. He's a trusted friend and I can always get him on the phone. His billing rate is about 1/2 of the large firms, and he doesn't always bill me for every second I'm in contact with him. He is extremely responsive to my needs.
If you hire a gigantic law firm, as a small business, their goal is to bill you as much as humanly possible. They are going to kick most of your work to people fresh out of law school, who you can expect to pay $350 an hour and up. Those freshman lawyers are going to run everything they do for you past a senior associate who is going to bill you a minimum of $500 per hour. If you need anything complex, or have to go to court, a partner is going to bill you maybe $750-1000 per hour. Oh yeah, you'll have multiple people working on your case at the same time, and they'll even charge you for photocopies.
Don't get me wrong, there's a place for the gigantic firms, but small businesses that blow this much capital unnecessarily are crazy. My lawyer gave me the "office test" to check out potential firms. If you walk in and they have an opulent office with a great view - remember that you are paying for that.
I know that many start-ups get some money and go hunting for "brand-name" firms. The perception may be that you get what you pay for, and it's cool to say your lawyer is xyz LLP. Mostly, this is a mistake and simply contributes to the burn-rate of many firms.
Big marketing firms are the same way. First, most of them do not do marketing, most are PR firms that say they do everything so they can get most of your money. For your retainer, you're most likely to get handed off to some junior affiliates who don't understand marketing. This is unfortunate because there are many good small marketing firms that are great at what they do.
Before you make the leap to hire any big firm, and spend big-firm money, think twice. It doesn't matter who the firm's clients are, understand what you're getting for your money.
J D Moore - Marketing Comet