Signs of the time

Signs of the time

With sales down 30%, a Gulf

Coast entrepreneur is getting creative - and contrarian - about making

it through the tough times. He's

imposed a no-layoff rule, for instance. And he's tripled his marketing budget.

survival stories by Mark Gordon | Managing Editor

When Hidayet Kutat bought a sign company in late 2003, he thought he had a pretty good idea of what he was getting into, from meeting payroll to performance reviews. After all, Kutat had spent extensive time in both corporate America and in consulting for small businesses.

He hadn't, however, given much thought to a router, the lifeblood of a highly precise, electric sign fabricator and installer such as this one, Sarasota-based Gulf Coast Signs. That changed real quickly when the company's $50,000-plus router broke a few days before Christmas, a month into the venture. Making things worse for Kutat, a former DuPont executive, was that the few employees who knew how to fix the problem were away for the holidays.

So Kutat improvised. He called an old DuPont friend who lived in the area and the pair spent the bulk of late December in Gulf Coast Signs' workroom, fixing that router. "It was very stressful," says Kutat, a native of Turkey who immigrated to the U.S. in 1965 to attend Virginia Tech University. "I learned a hell of a lot more about that router than I care to admit."

Kutat, 61, says he also learned, or at least relearned, a valuable business lesson from that experience: Always be prepared for any kind of mishap or unforeseen situation. Kutat is now leaning heavily on that lesson as he attempts to navigate Gulf Coast Signs through the current choppy economy.

Kutat had been growing the business solidly when he first bought it five years ago, turning it from a debt-ridden enterprise into a profitable, million-dollar-plus business.

Growth was so good that the company was named to Inc. magazine's three-year list of the 5,000 fastest growing companies in the country last year, going from $2.4 million in annual revenues in 2003 to $3.5 million in 2006, a 43% increase. Gulf Coast Signs also won the Frank G. Berlin Small Business of the Year Award from the Greater Sarasota Chamber of Commerce last year.

One of the company's biggest sales boosts came in 2006, when it landed Seffner-based Rooms to Go as a client; the furniture chain had just bought Rhodes Furniture and it was seeking an electric signs designer and installer to work on an expedited signs changeover project. Dunkin Donuts, which was going through a national expansion in 2006, also hired Kutat's company for most of its Gulf Coast assignments, which was another lucrative contract.

But sales at the 28-employee company have fallen about 30% since 2007, although Kutat declines to release specific revenue figures or 2008 projections. The Rooms to Go business slowed when the Rhodes transition ended and the Dunkin Donuts jobs have mostly dried up, too.

The first step Kutat has taken in surviving the downturn has been to substantially increase the time he personally spends in the field in sales and marketing. That includes arranging partnership deals with construction and architecture firms in need of signs to go with projects. In addition, he tripled his marketing and advertising budget in 2008.

"Now I am a key salesperson, whether I like it or not," he says. "You have to do whatever you can to make the company flow.

Morale boost

Another key survival move Kutat made was to eliminate the position of operations manager. For starters, the person holding that position had become something of a micromanager, a practice that goes against Kutat's empower-employees philosophy. But past that, Kutat saw an opportunity to go leaner and become more efficient in the process.

Now, instead of one boss dictating orders and workloads, the staff is self-managed. Kutat holds a mandatory meeting every Friday afternoon, where the staff goes over the status of all the projects, from sales to receivables. Says Kutat: "We look at every single job in the shop, one by one."

Those meetings are complemented with a new software system Kutat recently implemented. The system allows every employee to see real-time progress - or delays - of projects as it happens, so time can be prioritized. Kutat says he would put a top-line software system at the top of any company's to-do list when trying to survive an economic downturn.

Kutat has also spent time on the morale of his employees as business as slowed. For instance, he has refined his rule of making sure the shop is clean at the end of the workday. "I don't want us to prepare for visitors," says Kutat, explaining how he started the idea that floors must be swept of dust and hoses must be cleaned of debris by quitting time - every day.

That rule dovetails into one of Kutat's more unusual downturn-surviving philosophies: With the exception of the operation manager, he hasn't laid off any employees because of the slowdown - and pledges he won't do that in the future, no matter how long the slump lasts. The job losses instead stem through not filling open positions caused by attrition, in addition to a few cutbacks he made in 2003 when he first bought the business.

Kutat reasons that good employees in a technical business like his are so hard to come by that he wants to make sure they are there when the economy returns to more prosperous times. So the would-be idle employees have been assigned to projects such as shop clean up or refurbishing machines. He's even had a few mow the lawn around the company's building, in an industrial park a few miles north of downtown Sarasota.

One final morale booster came simply from Gulf Coast Sign's clients: The company worked on a project for the Daytona 500 last year, building signs for the race's sponsors. Employees, many of which are big NASCAR fans, relished the idea of helping put together the sport's Super Bowl.

Further ahead

The NASCAR moment was lost on Kutat, who grew up a soccer fan in Turkey, the son of a junior high school math teacher. Kutat, whose first name is pronounced 'he-diet,' moved to the U.S. in 1965 both to be with his cousin who was already living here and to attend college.

After graduating Virginia Tech with a degree in chemical engineering, Kutat took a job with DuPont, the Wilmington, Del.-based chemical company. Kutat moved up the company ranks in 23 years with DuPont, working in outposts such as Niagara Falls, Cleveland and Corpus Christi, Texas. He eventually made his way to the company's headquarters in a mid-level executive role, but he soon realized more growth would be hard to come by. "DuPont was a great company," says Kutat, "but I wasn't going to get any further ahead."

So Kutat spent the next seven years as a small business consultant for companies he came across while with DuPont, first in Memphis, Tenn., and later in Sarasota. But while that job provided Kutat entrepreneurial freedom, it also saddled him with a Monday-Friday nationwide travel schedule that grew grating, on both him and his wife and kids. "The only way I could solve this problem," Kutat remembers thinking, "is if I buy my own business and become my own consultant."

Through a business contact in Pinellas County, Kutat heard the owners of Gulf Coast Signs were looking to retire. He met the owners and worked out a leveraged buyout deal in which he put 10% down and took on the owners' debt, which reached into the six figures. Kutat borrowed from his bank and reached into his retirement savings to buy the business and begin the turnaround process.

Kutat might have had almost three decades of business experience when he bought Gulf Coast Signs, but he was novice reincarnated when it came to the nuts and bolts of what the business did. Says Kutat: "I didn't know anything about the signs business before buying this company."

And the router experience in his first month proved he couldn't be shy about reinvesting in the company. For example, he soon bought a pair of trucks armed with cranes that could reach heights 62 feet high at a cost of about $100,000. A new router, which he bought in 2006, cost $70,000.

What's more, with competition forcing prices down industry wide, Kutat realized early on he would have to charge more for his products. In return, he wanted to make sure the quality was top-notch, a mantra he preached to the staff early and often. Says Kutat: "I had to differentiate us with something that would cause our customers to pay us more."

His next big step early on in the business was to give employees a lot of room for creativity to make their own decisions. If and when a problem came up, he would put it back on the employee, asking what they would do if they owned the company.

REVIEW SUMMARY

Businesses. Gulf Coast Signs, Sarasota.

Industry. Construction, manufacturing

Key. The company is using a get-lean, but stay-efficient strategy to survive the economic downturn

Expertise

In a difficult economy, some entrepreneurs and small business owners feel like they are forced to cut back on their marketing and advertising budgets.

Not Hidayet Kutat. The owner of Sarasota-based Gulf Coast Signs says he's more than tripled his marketing and advertising budget in 2008 and he's even currently looking to hire a marketing assistant. Kutat, whose company manufactures and installs electric and other large signs, has renewed or started up ads or partnerships with several organizations in recent months.

Those groups include the Yellow Pages, the Gulf Coast Builder's Exchange and the Associated Builders and Contractors, a nationwide lobbying association. "This is not a time to cut that budget," says Kutat, a former DuPont executive and small business consultant. "The more you market and advertise, the better off you are."