Analysis & Commentary:

SURVIVING THE HIGH-TECH PLUMMET, AN INTERVIEW WITH MICHAEL BERNHARDT

This is indeed a challenging time for many marketing, advertising, and public relations agencies. Thousands of marketing professionals are being laid off around the country, and in the Portland (Oregon) area, which has been particularly hard-hit by the high-tech slump, numerous firms have felt the sting -- and some have already closed their doors.

One agency, however, is optimistic about the future, and continues to move forward.

The Bernhardt Agency, founded in 1994, is a Portland, Oregon-based strategic marketing and communications agency, offering a full range of marketing services to high-tech clients. As many companies in the high-tech sector struggle to keep their doors open, The Bernhardt Agency has survived a breathtaking roller coaster ride. Last year, the firm rocketed to a year of 300% growth, only to plummet during the first quarter of 2001 all the way down to a 70% decline in revenue.

The agency's high-spirited founder, Michael Bernhardt, met the challenge of survival head-on. Not a surprise to his friends and colleagues who proclaim, "nothing can shake this guy." Now The Bernhardt Agency is once again finding itself in demand. What is the secret to this firm's endurance and success?

How has The Bernhardt Agency been impacted by the downturn in the high-tech sector?

It was like someone pulling a rug out from under our feet. Within the first few weeks of the year, we had clients around the country canceling marketing programs, slashing budgets, and even canceling advertising programs. The first reaction of course when you lose some business is to go out and find some new business. But that proved to be an impossible task during the first few months of the year. We were faced with the difficult situation of a company infrastructure that we could no longer support.

And while our advisors told us we had to react quickly and make some drastic reductions of our own, the last thing I wanted to do was to start laying off people on our staff.

It was stressful all around. The staff knew the situation and we all worked hard to try turning things around. It was a great team effort. But it wasn't enough. We ultimately had to lay off four people. Four very good people. But we no longer had the work to support them, and cash was bleeding out of the company at a dangerous rate.

As a result, we tightened our focus -- escalated our networking activities -- and met regularly to keep ourselves functioning as a team. We started having frequent, open discussions about the business situation. I made it clear that anyone who wanted to jump ship -- to try finding a more stable environment -- would have my full support. We even voted as a team to skip a payroll. This is an agency with an unswerving team spirit and a strong desire for success. While we all recognized the seriousness of the situation, we managed to maintain our enthusiasm and belief in our own success.

One thing that has really helped us is our virtual environment. While most other agencies have the added burden of expensive leases on office space, all of our employees work from their homes. That's a huge expense we have not had to worry about each month. It's probably helped us more than we know.

So, you ask me how we've been impacted? We experienced a huge setback. We lost some good people. But our remaining team is better and stronger and more dedicated than ever. As an agency, we are a team…and we're definitely a survivor -- and now we're starting to rebuild and I believe we will be right back on top by year-end.

Were you surprised as clients started to cut budgets and cancel projects?

Yes...and no. We saw the signs. We knew our clients were suffering from declining revenue and we were anticipating some budget reductions. What we never imagined was the severity of the cuts, and the fact that multiple clients would slash their budgets all at the same time.

What were some of the toughest decisions you had to make?

Certainly the decision to lay off employees. Having been through this before, I knew that it would be a mistake to drag out such a decision, but part of me refused to believe we'd have to go that far. We've never had to go look for new business - it's always found us. So, to suddenly lose a large chunk of business and not have anything to back it up meant that we couldn't afford our existing staff. That was very hard to accept. I tried everything I could think of, including an investment of more of my personal money. But, ultimately, that wasn't enough and we had to downsize. I think we've now leveled out. We worked hard to build an elite team, so letting any of the team members go was a very difficult, but necessary decision.

What do you think has attributed most to your firm's endurance?

I think more than anything it's reputation. We have a well-respected name, a reputation for excellent service, and a strong list of references. Those three factors certainly combine to make us a partner that brings value to our clients. But it's also our attitude. We don't take anything for granted. We strive for excellence in everything we do. And we work well as a team. When agencies start to see their clients as just a source of monthly income, or start to function as individuals and not as teams, they lose their ability to weather the difficult times.

What tips do you have for other firms facing such drastic revenue changes?

Don't wait for new business to find you. Keep your name out there. Keep servicing your existing clients to the highest level of satisfaction. And, be willing to go the extra yard to show a new prospect that you want their business. My tips for survival during these challenging times are:

• Maintain strong networking contacts; maintain visibility
• Market to your strengths (don't try to be everything to everybody)
• Focus your marketing on the needs of the prospects - not on your services
• Be prepared to react quickly to changes in revenue and make the difficult decisions
• Offer something unique

So, are things looking up for the remainder of 2001?

Most definitely. We're already starting to see some budgets coming back -- slowly -- but that's a very good sign. We've been receiving a steady number of inquiries from companies looking for more specialized support such as speaker training and media training. There's fresh activity in certain markets such as HPC, BioTech, and IT Outsourcing. The challenge in managing our business has been to react quickly and appropriately, without impacting our ability to deliver for our existing clients. As new business comes along, we'llbe rebuilding our team and will come out of this wiser and stronger.

Michael Bernhardt is a high technology industry veteran with 30 years of technical marketing and communications experience. He is a former Intel marketing executive. The Bernhardt Agency was recently cited by Oregon Business Magazine as the top marketing agency to work for in Oregon.

Bernhardt serves as a board member with a number of emerging technology organizations and advises top-level executives on corporate and personal image enhancement, as well as public speaking and media interview techniques.

Bernhardt can be reached at michaelb@bernhardtagency.com

The Bernhardt Agency Inc, Strategic Marketing & Communications, Phone: 503-384-0220, Fax: 503-384-0735, www.bernhardtagency.com.