Crain's Cleveland Business

By JAY [email protected]

What’s does a city need to do toget expanding businesses to noticeit?

That’s a ques-tion that prompt-ed public officialsin Hudson to hirea marketing con-sultant to boostthe suburb’sbusiness attrac-tion efforts —and it’s one that’sbeing asked by other cities across theregion, too.

“Many times we don’t get lookedat as we’d like to be looked at,” Hud-son Mayor William Currin toldCrain’s.

“We felt we needed to have astronger base of communicationwith site selectors,” he said.

By JAY [email protected]

Mayor David Anderson stood atthe podium in the Red Room atCleveland City Hall to protest thelatest assault by legislators inColumbus on his city’s well-being.

“These reductions in income,

when added to the reductionswe’ve all experienced over the lastcouple of years in local governmentfund receipts — and reductionswe’ve yet to experience as a resultof the elimination of the estate tax— would severely hamper our abil-ity to provide the basic services ourbusinesses and residents have

come to rely on,” he told the gath-ered reporters.

Mayor Anderson has been amayor for 21 years, but not the mayor of Cleveland.

He and two dozen other mayorsand city managers, Republicansand Democrats, representing com-munities from Westlake to Eastlake,

were gathered Feb. 28 in the RedRoom to protest legislation thatmay prove to be, Mayor Andersonwould say later, “the straw thatbroke the camel’s back.”

The mayors fear House Bill 5, amunicipal income tax reform bill,would take away millions upon mil-lions of dollars in revenue from the600 cities across the state that taxincome.

$2.00/MARCH 11 - 17, 2013

Entire contents © 2013by Crain Communications Inc.

Vol. 34, No. 10

07447083781

710 SPECIAL SECTION

SMALL BUSINESSCompetitions can be big break entrepreneursneed to get their companies going ■■ Pages 11-16PLUS: CELEBRITY ENDORSEMENTS ■■ TAX TIPS ■■ & MORE

NEW

SPAP

ER

Relief could be on wayNeuros

Medical CEOJon Snyder,right, believeshis companyhas found away to signifi-cantly reduceor eliminatechronic limb pain. The device is onits second clinical trial. PAGE 3

INSIDEMayors balk at state intrusionChange in muny taxation viewed as latest threat to home rule

Suburbsstruggleto standtallest

Currin

See SUBURBS Page 7

See MAYORS Page 5

Hiring consultants,tax breaks amongplans used to drawbusinesses to town

DONORSAUGMENTHOSPITALPROFILE

University Hospitals has transformed itself into a fundraisingbehemoth that is almost on par with the Cleveland Clinic

By TIMOTHY [email protected]

Over the last decade, Uni-versity Hospitals has builtup not only its physicalfootprint but also its phil-

anthropic muscle, morphing from a

sleepy enterprise that raised about$13 million annually in the 1990sand early 2000s into a giant that nowbrings in more than $100 million ayear in donations.

University Hospitals’ transforma-tion into a philanthropic power-house was fueled by a $1 billion

fundraising effort the health systemquietly launched in 2004 — the yearits fundraising chief, Sherri Bishop,joined the system’s ranks. UniversityHospitals reached the $1 billionmilestone last December, but withits donors showing no signs of

See HOSPITAL Page 6

20130311-NEW--1-NAT-CCI-CL_-- 3/8/2013 3:11 PM Page 1

22 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM JANUARY 7 - 13, 2013

REGULAR FEATURES

Big Issue .......................8Classified ....................17Editorial ........................8

Going Places ...............10What’s New..................18Reporters’ Notebook....18

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CAN’T WIN ’EM ALL

Ohio in 2012 relinquished its claim to the Governor’s Cup, an honor bestowedby Site Selection magazine on the state that records the most developmentprojects with one or more of the following criteria: an investment of at least $1million, creation of 50 or more jobs, or construction of new space of at least20,000 square feet. While Ohio won the title in 2011, it was second last year,with 491 such projects. Texas was the big winner. Here’s a list of the top eightstates in 2012 (Virginia and Kentucky rounded out the top 10):

Texas 761Ohio 491Pennsylvania 430Michigan 337Illinois 322Georgia 296North Carolina 280Tennessee 231SOURCE: SITE SELECTION MAGAZINE AND CONWAY DATA INC.

State Number of large projects

Crain’s Cleveland Business in 2013 is continuing its series of “Who to Watch”sections.

The next section, slated for publication April 22, will highlight up-and-comers inNortheast Ohio’s nonprofit sector.

If you think you know who will be among those leading Northeast Ohio’s nonprofit scene of the future, drop an email to sections editor Amy Ann Stoessel,[email protected], or call 216-771-5155. Please send in your suggestions nolater than noon on Monday, March 25.

There are no hard-and-fast requirements for this section, other than the candidate needs to exhibit the kind of potential that makes him or her someone towatch in the nonprofit sector. Mark your calendars for future sections: “Who toWatch: Law,” July 15; and “Who to Watch: Finance,” Nov. 25.

WHO TO WATCHCrain’s will highlight nonprofit up-and-comers


By RACHEL ABBEY McCAFFERTY [email protected]

Northeast Ohio furniture retailerswere hit hard by the recession asconsumers slashed spending inwants-based businesses. But somesay they’re now seeing signs of a re-bound, fueled in large measure byimprovement in the housing market.

Wellsville Carpet Town Inc., a re-tailer that has expanded by openingtwo Ashley Furniture stores inNortheast Ohio in less than fourmonths, is among those experienc-ing better sales.

Timothy Quinn, owner and pres-ident of Weston Mills, N.Y.-basedWellsville, said stronger home salesin Ohio are driving more activity at

furniture retailers. Time also hasturned many consumer wants —previously postponed due to the re-cession — into needs; he said up-holstery and bedding in particularhave been big sellers.

“All those factors help out a lot,”Mr. Quinn said, who noted that thecompany had been watching therecovering Cleveland market andhad been planning to expand into itfor about a year.

The new Cleveland-area stores— in Fairlawn and Mentor — aredoing well and getting a lot of traf-

fic, Mr. Quinn said, though hewould not disclose sales figures.

Consumers also can expect tosee more Ashley Furniture stores inNortheast Ohio from Wellsville,which as a licensee owns 10 AshleyFurniture stores and one AshleyFurniture outlet in three states. Mr.Quinn said there’s growth potentialin the market and he hoped to havefive or six Cleveland-area locationsby the end of 2014.

Improvement at the Ashleystores is consistent with data from

By MICHELLE [email protected]

Hostile takeover attempts suchas the one announced last week byA. Schulman Inc. toward FerroCorp. are a rarer breed of mergerand acquisition, but local dealmak-ers say the conditions are ripe formore to occur.

Among the factors that fuel hos-tile takeovers are weak, undervalued

targets; a bidder’s easy access tocash; and a weak economy that hasput margin and profit pressure oncompanies, said Marc Morgenstern,a veteran Cleveland dealmaker whohandled hostile takeover prepara-tion for several companies backwhen he practiced law.

“All of those are present now,” hesaid.

Today’s market certainly has itshaves and have-nots, agreed Mark

A. Filippell, a managing directorwith Cleveland investment bankWestern Reserve Partners LLC.

“The haves are saying, ‘We’ve gotto grow,’” Mr. Filippell said. “Whenthings were terrible, when marketswere down in the sewer, you didn’tsee anybody buying anybody. Butnow, a certain number of peopleare feeling good (and) bold.”

A bid to acquire a company gener-ally is deemed hostile when the

would-be acquirer bypasses an un-willing board and takes a deal direct-ly to the target company’s share-holders. In last week’s example, A.Schulman, an Akron-based maker ofresins and plastic compounds, tookpublic its offer to buy Ferro, a spe-cialty chemicals maker in MayfieldHeights, for $6.50 a share after Fer-ro’s board rejected its February offer.

“I think we’ll see all forms of thisactivity, whether it’s hostile or not,”

predicted Lisa Rose, who leads the in-vestor relations practice for Clevelandcommunications firm Dix & Eaton,which is representing A. Schulman inits attempted purchase of Ferro.

“Companies have been hangingonto cash since the recession,” Ms.Rose said. “Prices to buy thingshave been too high. Things arestarting to turn, and the opportuni-ty to buy companies and to sell isstarting to be more attractive forboth sides.”

By CHUCK [email protected]

euros Medical Inc. may have thecure for phantom limb pain.

By zapping a bundle of damaged nerves with quick burstsof electricity, the Willoughby

company can eliminate all or most of thepain that remains long after someone losesa limb, according to results from two clinicaltrials.

MARCH 11-17, 2013 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3

INSIGHT

THE WEEK IN QUOTES“Many times we don’tget looked at as we’dlike to be looked at.We felt we needed tohave a stronger baseof communicationwith site selectors.”— Hudson Mayor William Currin.Page One

“All five entrepreneursthat won the CharterOne grants in the(2011) Ohio City contest are still in business two yearslater. … I think that ispretty telling.”— Carrie Carpenter, senior vicepresident, Charter One. Page 11

“I know that when wedrop our next shoe it’sgoing to be off theRichter scale. Nowpeople really knowwho PMK Customs is,things really spikedovernight for us.”— Andre Scott, CEO, PMK Customs. Page 11

Market is ripe for more takeover tries

Good news finally hits home for furniture shops

JANET CENTURY

Neuros Medical CEO Jon Snyder displays his company’s Nerve Block technology.

STRIKING ALLTHE NERVES

Willoughby company believes it hasfound quick cure for phantom limb pain See NERVES Page 9

N

Hitting the right notesCrain’s Cleveland Business is

seeking nominations for the womenit will profile in its annual Women ofNote section, which is scheduledfor the July 8 issue.

Nominations can be submittedthrough CrainsCleveland.com byclicking on Women of Note underthe Crain’s Awards tab of the toolbar. Nominations also can besent via email to editor Mark Dodosh at [email protected],orvia regular mail at 700 W. St. ClairAve., suite 310, Cleveland 44113.Please put “Women of Note” in thesubject line of email entries.

The deadline for submissions isMonday, April 1.

COMING UP

However, hostile bids such as the attempt by A. Schulman rarely are successful

See TAKEOVER Page 5

See FURNITURE Page 17

As housing market rebounds, retailers saysales begin to wake from a long slumber


By MICHELLE [email protected]

Two local holding companiesformed in late 2012 with the aim ofbuying and growing Midwesternmanufacturers and distributorshave closed their first deal.

Hunter Valley Co. LLC and TheVitruvian Group acquired on March1 the assets of Euclid-based RadixEnterprises, which employs 100 andhad revenues of $36 million in 2012.Terms of the deal were not dis-closed.

If the executives of the youngholding companies find what

they’re looking for, they say they’llbuy a few more companies yet thisyear.

Vitruvian Group and Hunter Val-ley operate out of the same office inBeachwood, and executives of bothsay they have their sights on targetswithin a few-hour drive of Cleveland.

Their stated model is similar to thatof Berkshire Hathaway Inc., saidOwen Colligan, president of HunterValley: Buy companies and hold themfor long periods of time, even forever,while growing those portfolio compa-nies and the holding companies into“fairly substantial” entities.

“I don’t aspire to become a pub-

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Volume 34, Number 10 Crain’s Cleveland Busi-ness (ISSN 0197-2375) is published weekly, exceptfor combined issues on the fourth week of Decemberand fifth week of December at 700 West St. ClairAve., Suite 310, Cleveland, OH 44113-1230. Copy-right © 2013 by Crain Communications Inc. Periodi-cals postage paid at Cleveland, Ohio, and at addition-al mailing offices. Price per copy: $2.00.POSTMASTER: Send address changes to Crain’sCleveland Business, Circulation Department, 1155Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-824-9373.

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New owners take hold of RadixGoal is to grow Euclid-based wire maker

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For advertising information contact Nicole Mastrangelo at 216-771-5158 or [email protected]

lic company per say, but on a muchsmaller scale, that’s the model we’rebuilding,” Mr. Colligan said.

Berkshire Hathaway is a conglom-erate led by legendary investor War-ren Buffett with more than 50 sub-sidiaries, including Geico AutoInsurance and Wickliffe-based spe-cialty chemicals maker Lubrizol Corp.

Radix, which has been renamedRadix Wire, makes electrical wireand cable for high-temperature applications. Hunter Valley and Vit-ruvian wouldn’t disclose what theirequal stakes are in the company, butsaid a handful of high net-worth individuals invested with them.

Instead of raising a fund of moneycommitted by investors as privateequity firms do, the holding compa-nies will raise equity deal by deal,said Mr. Colligan, who co-foundedprivate equity firm Rockwood EquityPartners LLC in 1999, but left theBeachwood company last year.

“I no longer wanted to be a privateequity firm,” said Mr. Colligan, whoremains invested in Rockwood andis a board member for a few of itsportfolio companies.

“I don’t like the fact that you haveto recycle capital,” he said. “Youcan’t hold companies for long peri-ods of time. It’s more of a buy-and-flip model, which is not what I wantedto do at this point in my career.”

Cultivating growthThe goal is to grow Radix Wire

through add-on acquisitions and bydeveloping new products and mar-kets, such as adding high-perfor-mance wire and cable to the high-temperature wire and cable italready produces. Its wire and cableare used in consumer products suchas coffee makers and dishwashers,and industrial equipment such asgenerators.

Radix, which was founded in 1944and has another facility in Aurora,was an attractive investment be-cause of its dominance in the high-temperature wire and cable marketand its solid management, Mr. Colli-gan said.

“They’re sort of the Kleenex of thehigh-temperature market,” agreed JJScaravilli, president of VitruvianGroup.

Like Hunter Valley, Vitruvian isseeking to invest in companies inmanufacturing and distribution.While the two do not have an exclu-sivity agreement to consider dealsonly together, their executives havecomplementary skill sets, Mr. Scar-avilli said.

Mr. Scaravilli and his father, VictorJ. Scaravilli, formed Vitruvian afterthey sold their own construction busi-ness, Mole Constructors, to a Texascompany last October, so they knowthe operations side, Mr. Scaravilli said.And Mr. Colligan, he noted, knows finance and market analysis.

Radix’s new owners havelaunched a search for a president toexecute the growth strategy. Thecompany’s former president left be-fore the sale closed, Mr. Scaravillisaid. ■


If a company has set sail on astrategic plan to acquire companiesbut one or more of its targets arescooped up by another party, there’sa probability the company will bidon other targets, even hostilely, ob-served Mike Keresman, CEO of Car-dinalCommerce Corp. of Mentor, aprivate company that provides infra-structure for virtual payments.

Plus, interest rates are “artificial-ly low,” said Mr. Keresman, whopreviously served as chief financialofficer for Steris Corp. in Mentor.

“Those rates make acquisitionseasier because money is cheaper,”he said. “So in normal environ-ments, Company A couldn’t affordCompany B, but with cheap money,it now can be done.”

Value propositionsAlso contributing to what some

call a more predatory M&A environ-ment is the inability of some com-panies to turn the corner followingthe recession. Those companies re-main undervalued, which makesthem attractive targets.

The hedge fund investors in Ferrothat have been critical of the com-pany for months — and call them-selves The Shareholder Committeefor the Future of Ferro — said in anews release last week that they donot believe A. Schulman’s offer fullyvalues Ferro.

But, the manner in which Ferro’sboard shut the door to further nego-tiations reveals that shareholders’best interests are not the board’spriority, wrote the group led byFrontFour Capital Group LLC andQuinpario Partners LLC.

“The committee supports the com-pany fully exploring the potential saleof Ferro at a price that fully and fairlyvalues the company, whether to A.Schulman or any other potential acquirer,” their open letter stated.

Ohio-chartered companies thatfind themselves the targets of hos-tile bids enjoy an Ohio law that is“extremely protective” and affordsanti-takeover protections to boardsthat other states do not, said John J.Jenkins, an attorney with Calfee,Halter & Griswold LLP who advisesclients on mergers and acquisitions.

If hostile takeover attempts increase, it likely will involve slow-growing and asset-rich businesses,local executives speculated.

“Places where the assets go downthe elevator every night are not goodhostile takeover targets because thepeople don’t have to stay, and inthose instances, the people are whatyou’re buying,” said Mr. Morgen-

stern, founder and managing part-ner for Blue Mesa Partners, a privateinvestment firm dual-headquarteredin Cleveland and San Francisco.

Mr. Morgenstern cited retail as onelikely sector to experience more con-solidation — both friendly and other-wise — as it “generally is overstored,”and many are “having a hard timeadapting to the online universe.”

Technology could see an increasein hostile bids, given that “the havesare sitting on literally mountains ofcash,” Mr. Morgenstern said, as mightmanufacturing, in which historicallygood companies have been less prof-itable in post-recessionary years.

It’s easier to be friendlyJust because more hostile takeovers

are attempted doesn’t mean moretakeovers will happen: Such attemptsrarely work, observers say.

The number of mergers and ac-quisitions involving U.S. companiescompleted or pending since Dec. 31,2006, is 45,175, according to FactSet,a financial data and analytics com-pany out of Norwalk, Conn. Of those,33 are characterized as hostile.

One reason cited for their rarity isfriendly, or “white knight,” biddersthat move in and purchase the tar-get instead. Plus, hostile bids are alot more expensive, time-consum-ing and risky than friendly deals,Calfee’s Mr. Jenkins said.

Nevertheless, Mr. Jenkins said,“There are very few strategic buyerswho won’t undertake a hostiletakeover if the target or transactionrationale is compelling enough.There are also hedge funds, (which)take positions in companies with theobjective of causing a transaction.”

Those hostile bids that do result indeals can be positive if the acquirerputs assets that were underused orpoorly managed into the hands ofbetter management, veteran deal-maker Mr. Morgenstern said.

But, “If it’s a company that has500 jobs in the community andsomebody buys the company andships those jobs elsewhere, the localpeople don’t really care about themacro consequences,” he noted.

While deals done because moneyis cheap are inherently good for anacquirer, CardinalCommerce’s Mr.Keresman argues it tends to be a netnegative.

“Any acquisition due to artificiallylow interest rates is probably notgood for all of us,” he said. “You’retaking out competition. You’re notletting the free market work as itshould. It creates a situation wherethe rich get richer. You have fewerpeople who own.” ■

It’s a bill that is uniting commu-nities such as Cleveland, Lakewoodand Shaker Heights with North Roy-alton, Richmond Heights and May-or Anderson’s Willoughby — andcreating similar coalitions in theDayton area and around the state.

The mayors are rallying for tworeasons: They see HB 5 as the latestassault by the Legislature and theOhio Supreme Court on local self-government rights, and they aretired of the continued dominance ofstate government by rural interests.

On the latter point, the mayorsmaintain that even though the majority of Ohioans now live in andaround the big cities from whichmost of the state’s economic activityand tax payments come, state gov-ernment is controlled by public offi-cials in Columbus who lopsidedlyrepresent rural and exurban areas.

“It’s a struggle to get them to understand” urban problems, May-or Anderson said. “There are somedownstate legislators that don’t havelarge cities in their district and hencedon’t understand the difficulties.”

Mayor Georgine Welo of SouthEuclid said a statewide campaign isbuilding to reverse that thinking.

“This is us mounting an Ohiocampaign,” she said at the pressconference.

Upset downstaters, tooA few days later, on March 5, may-

ors and city managers from 33 com-munities in the Dayton area held asimilar press conference, pledging tolobby their state legislators to removethe revenue-robbing sections fromthe muny tax reform bill.

Jack Jensen, executive director ofthe Dayton First Suburbs Consor-tium, which brought 14 communi-


Mayors: Jackson says proposed tax changes are ‘getting bolder’

Takeover: Low rates play part

continued from PAGE 1

continued from PAGE 3

ties to the Dayton press conference,said he sees this issue bringing urban areas together in Columbus,which has not happened in the past.

“On this particular issue, you’reseeing everybody across the stateunite,” he said.

HB 5, the measure that has en-gendered this rare show of biparti-san and city-and-suburban unity,ostensibly is designed to make iteasier for businesses to managetheir local income tax filings.

The legislation, which is pushedby the Ohio Society of CertifiedPublic Accountants and other busi-ness groups, would create uniformtax forms and filing requirementsfor the 600 communities that levyan income tax would be required touse. The groups argue it has become onerous for companies tofile different forms for each com-munity where their employees liveand where they have operations.

The mayors don’t object to thatstreamlining. However, they do object to sections of the bill thatwould define for all cities what income is taxed and how it’s taxed.The changes, they say, would reduce overall the income they taxand the revenue they receive fromtheir income tax.

They also aren’t happy aboutwhat they believe is the latest intru-sion on century-old self-govern-

ment rights bestowed on cities bythe Ohio Constitution.

Hubbub over home ruleDuring an hour-long interview last

Tuesday, March 5, in his office downthe hall from the Red Room, Cleve-land Mayor Frank Jackson ticked offsome of the measures that Clevelandand other cities have passed duringthe last decade that have been over-ruled by the Legislature or theSupreme Court. The measures include residency restrictions on cityemployees, an effort to rein in preda-tory lending, gun control, and regu-lation of oil and gas drilling.

Mayor Jackson also cites actionsby Gov. John Kasich and the Legisla-ture to eliminate the estate taxes andthe personal property tax. Most ofthe revenue from those taxes went tolocal communities. He also men-tioned the loss of the Local Govern-ment Fund, a long-established staterevenue-sharing program.

“And now they are getting bolder,”he said of the proposed municipaltax changes.

“There’s a clear policy of pickingwinners and losers in the tax policy,”Mayor Jackson said, making it clearthat urban areas were the losers.

The mayors say these changes vi-olate the spirit of municipal homerule, which became part of the stateConstitution in 1912 and gave char-

ter municipalities broad, but not absolute, powers of self-government,including the right to levy taxes.

Urban vs. ruralState Rep. Mike Foley, a Democ-

rat from Cleveland, said the problemhas been that, until now, urban issues have been viewed as solelyDemocratic issues. Even thoughcities account for much of the state’spopulation, Republicans represent-ing rural areas have set legislativedistrict boundary lines in their favor,either packing urban populationsinto compact districts or breakingup urban populations into smallpieces of largely rural districts.

“The problem is, we are justwithout clout; we’ve got a legisla-ture that’s got an anti-urban bias,”Rep. Foley said. “They’re not com-ing from dense urban areas wherethere’s lot of people with lots ofproblems. It’s a different mindset,and those are the people who havepower in the General Assembly atthe present time.”

But state Rep. Nan Baker, a West-lake Republican, said she thinks leg-islators such as her, who representsuburban cities that more and moresee themselves are part of an urbanpopulation, can chip away at thosepreconceived notions. She alsomaintains the urban mayors shouldraise their profile in Columbus. ■


closing their checkbooks, the healthsystem vowed to raise another $500million. So far, the system hasbrought in $1.03 billion.

“We think of it like a surfer ridinga wave,” said Ms. Bishop, UH’schief development officer. “Thiswave has been getting bigger andbigger, and we weren’t seeing signsof it stopping.”

Given University Hospitals’ size— it posts about $2.2 billion in annual operating revenue — phil-anthropy experts say the breadth ofits fundraising push is bold and unusual. By comparison, the nearbyCleveland Clinic, an organizationwith about $6.2 billion in annualoperating revenue, closed a majorfundraising campaign in 2010 withabout $1.41 billion in its coffers.

“That is very special,” said BillMcGinley, president and CEO ofthe Association for Healthcare Phil-anthropy, of the UH fundraisingprowess.

“What we have seen in the healthcare arena is that a billion-dollarcampaign eight or 10 years ago wasalmost unheard of,” said Mr.McGinley, whose group is based inFalls Church, Va. “As they (healthcare institutions) have built their(clinical) programs and becomemore sophisticated, they’ve awak-ened to the fact they have to investdollars to raise dollars.”

Last year, University Hospitalsbrought in a staggering $159.6 mil-lion, its most impressive showing todate thanks to a handful of largegifts, including a $50 million dona-tion from the Harrington family tolaunch a major drug developmentinitiative.

That successful year puts UHalongside the Cleveland Clinic,which reported raising $148 millionin 2012 — a 17.5% increase over itsprevious year’s totals. At the heightof its own capital campaign in 2008,the Clinic brought in just north of$180 million.

Proving its worthUniversity Hospitals launched its

big fundraising push as it was plotting its ambitious, $1.2 billionVision 2010 construction initiativethat inspired a bevy of new facili-ties, including the $298 millionAhuja Medical Center in Beach-wood and the $260 million SeidmanCancer Center on Euclid Avenue in

Cleveland. UH also saw success inraising cash to recruit top-notchphysicians, securing money for 46of the system’s 65 endowed chairprograms during the course of thecampaign.

Ms. Bishop cited the involvementof administrators and physicians inselling the community on what theythought University Hospitals couldbecome if it could pull off its com-manding construction plan.

UH formed so-called leadershipcouncils comprised of donors, physi-cians and administrators. On thecouncils, donors serve as strategicadvisers for the health system anddrum up philanthropic supportthrough their connections. UH alsodispatches administrators andphysicians each year to Florida torally support from local donors whomove south during the wintermonths.

With a slew of new facilities andprograms to show off, the healthsystem hasn’t seen a need to halt its appeal for more philanthropicdollars.

“We had to inspire donors withfacilities and programs that didn’texist,” Ms. Bishop said. “We didn’tnecessarily have the credibility to fulfill our promise because thiswas an extraordinarily ambitiousundertaking. People didn’t haveproof UH could deliver on that.When we reached 2010, we hadtremendous credibility as an orga-nization.”

University Hospitals also is com-peting successfully with the Clinic,Case Western Reserve Universityand the region’s large performingarts organizations in terms of thequality of fundraising professionalsit’s recruited, according to NancyOsgood, a local consultant whoworks with nonprofits and lecturesat Case Western Reserve.

“I think they’ve joined their ranksin terms of being a very competitivebuyer of development talent in themarketplace,” Mr. Osgood said.“It’s not surprising to me thatthey’re ramping up their fundraisingmachine in terms of the actual resultsthey’re producing.”

Plenty of room in the poolOfficials at both the Clinic and

University Hospitals shrug off assertions either party could seedips into their own fundraisingpools because of the big dollars

they’re both pursuing. They insteadsuggest that University Hospitals’mounting philanthropic might andthe Clinic’s continued success areevidence health care giving is onthe upswing after tumbling duringrecession.

In 2011, hospitals and health careorganizations raised $8.94 billion —an 8.2% increase over the previousyear’s numbers, according to theAssociation for Healthcare Philan-thropy. While 2012’s totals aren’tyet available, the association’s Mr.McGinley expects that number to grow as the economy slowly improves and health care organiza-tions look to offset cuts in insurancereimbursements from commercialand government payers.

Other observers suggest the success is a reflection of NortheastOhio’s growing reliance on thehealth care field as its economic anchor.

“We were struggling for three orfour decades to transform ourselvesfrom an economy rooted in smokyindustries to one based on services,and here’s an indicator we’re doingit,” said Stuart Mendel, director ofthe Center for Nonprofit Policy &Practice at Cleveland State Univer-sity.

University Hospitals’ concertedfundraising push hasn’t dinged theClinic’s numbers, which have beenbuoyed since Armando Chardiet, aformer University of PennsylvaniaHealth System fundraising official,took over the Clinic’s fundraisingoperations in 2010.

Officials at both systems notedthat donors aren’t typically alignedwith a particular institution.

Lee Seidman, founder of TheMotorcars Group, and his wife,Jane, have made major financialcommitments to both the Clinicand UH in recent years. The couplecontributed $42 million to Univer-sity Hospitals’ new cancer hospitaland $6 million for a new patienttower. The couple pledged $17 million to the Clinic in 2006 to endow a chair in functional neuro-surgery and to advance research inareas dealing with the heart and thebrain.

“Most individuals choose basedupon that project in that organiza-tion,” said Nelson Wittenmyer, vicechairman of the Clinic’s philan-thropy institute. “Donors don’t seeit as one against the other.” ■


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Hospital: UH docs recruited donorscontinued from PAGE 1

Five theaters will joinTower City, featuremovies with local ties

Film festival to host ‘satellite screenings’

By SCOTT [email protected]

The Cleveland International FilmFestival is taking its show on theroad.

The festival, which runs April 3-14and is based at Tower City Cinemasin downtown Cleveland, announcedit will have “satellite screenings” infive locations during the week ofApril 8.

Those screenings include a fullday of programming in Akron andwhat’s billed as “An Evening at theApollo Theatre” in Oberlin — bothfirst-time locations for the festival,

which is in its 37th year.The “37th CIFF Day and Knight in

Akron,” presented with support fromthe John S. and James L. KnightFoundation, will take place onThursday, April 11.

The day’s events will include eightscreenings at the Akron Art Museumand the Akron-Summit County Public Library.

The Akron lineup will include“Red, White and Blueprints,” directedby Cleveland native Jack Storey;“Underdogs,” part of which takesplace in Akron; a program of Ohioshort films; and five other selectscreenings.

The Oberlin event takes placeWednesday, April 10. “Dear Mr. Watterson,” a documentary aboutChagrin Falls cartoonist Bill Watter-son, and “Survival Prayer,” directedby Oberlin alum Benjamin Greené,

will screen at the just-renovatedApollo Theatre on the Oberlin College campus. Each film will havetwo screenings, and the directors ofeach will be in attendance.

In addition, the festival will havescreenings on Monday, April 8, at theCapitol Theatre on Cleveland’s WestSide; on Tuesday, April 9, at ShakerCinemas on Shaker Square; and onThursday, April 11, at the Cedar LeeTheatre in Cleveland Heights — thefestival’s original home. All three ofthose locations have hosted festivalscreening in the past.

Tickets for all festival screeningsgo on sale to members this Friday,March 15, and to the general publicon Friday, March 22.

The festival this year will screen atotal of 178 feature films and 164short subject films, from 65 coun-tries. ■


“We wanted to review what ourimage is, how far it is extended, andif it’s meaningful with site selectorsas a place to do business.”

Hudson officials last monthheard from a consultant the suburbhired to survey business decision-makers and site selectors, the pro-fessionals who help companies de-cide where to put factories or whereto move a longtime office. The con-sultant, Atlas Advertising of Denver,found that while Hudson has a rep-utation as a high-quality place tolive, the business people surveyedhad a different view of the suburb.

Atlas reported back that Hudsonwas not on the radar of any of the re-gional and national business loca-tion executives participating in thesurvey. Respondents recognizedHudson when asked about theNortheast Ohio communities thatcame to mind as family-friendlyplaces with high-income residentsand high-end shopping. But it didnot register as a place with premiumprofessional and technical workersor modern business parks.

That finding is prompting Hudsonofficials to build a plan of action.

Hudson now is studying ways tomake itself more attractive to busi-nesses, though a decision on a spe-cific action plan isn’t expected tocome before late spring.

Hudson City Council has agreedto spend $254,000 for the services ofAtlas, which specializes in helpingcommunities brand themselves foreconomic development purposesand creates economic developmentwebsites and marketing programs.

For a peek into the future, Hud-son could look at how two othercommunities, Avon Lake andBeachwood, grappled with thesame question in recent months.Those communities decided theanswer was tax breaks — eventhough it’s not at all clear that thesmall tax breaks municipalities canoffer is the best way to stand out.

Check, pleaseAvon Lake recently started hand-

ing out $215,448.72 in checks to 134local businesses that grew theirpayroll.

The Lorain County communitylast year approved legislation thatlooks back at what companies andtheir employees paid in local income tax in the previous year. If acompany’s payroll grows, the busi-ness, under Avon Lake’s JobGrowth Incentive Program, gets arebate of 25% of the growth.

“We wanted to find somethingwe could do to set Avon Lake apartfrom others,” said Councilman DanBucci. “And it had to be easy forbusinesses to understand.”

Companies need not apply forthe rebate. Mr. Bucci said the citydoes the calculations at year’s endand sends out the checks.

“If you’re paying more, you’vedone something, you’ve eitherhired people, they work longerhours or you’ve given raises,” hesaid “Whatever you’re doing, it’simproving your business and con-tributing more to the tax base of thecity.”

The payments ranged from$76,642.36 to Ford Motor Co.,which has a large assembly opera-tion in the lakefront city, to $11.13to Fifth Third Bank’s FountainSquare Plaza branch.

The rebate does not apply tohome-based businesses — in part,Mr. Bucci said, because the city

wants it to be an incentive thatmight fill storefronts and other vacant space.

Eastern promisesBeachwood has moved in a sim-

ilar direction.Reacting to growing vacancy in

Commerce Park, its longtime com-mercial and industrial neighbor-hood, and opportunities to growaround the new headquarters ofEaton Corp. in Chagrin Highlands,the eastern suburb 18 months agoembarked on a review of its eco-nomic development effort — and ofits longstanding policy of not offer-ing financial incentives.

The result is the Job Creation Incentive Grant Program, whichwas approved last month by CityCouncil. With it, Beachwood will offer eligible companies an annualgrant based on a percentage of theannual payroll withholding taxesgenerated by new jobs in the city.

“One of the key recommenda-tions (of the suburb’s review) wasthat we build an incentive frame-work that would make Beachwoodmore competitive,” said Jim Doutt,the city’s economic developmentdirector, who was hired last May toimplement the plan.

To win a grant, a company mustpledge to create a minimum of 30jobs and $1 million in payroll overthree years. The maximum grant is50% of the new payroll taxes for fiveyears.

‘They buy the region’One of the attractions of the Avon

Lake and Beachwood programs isthat they don’t cut into existing rev-enue, as a tax abatement might.However, while communities feelincreasing pressure to enter bid-ding wars, some economic devel-opment professionals wonder ifthey are going in the right direction.

“Incentives have gotten prettyperverse,” said Edward Hill, dean ofthe Cleveland State University’sMaxine Goodman Levin College ofUrban Affairs. “The problem is thatfor companies where the city theyare located in makes no difference,the companies are more than hap-py to let communities competeagainst each other.”

Jay Foran, senior vice presidentfor business attraction at TeamNEO, questions the use of financialincentives by communities. TeamNEO is the regional business attrac-tion and retention nonprofit that istied to the state’s economic devel-opment programs. He said it is stateincentives, which are much largerthan anything a small communitycould offer, that play the more important role.

Besides, for most companieslooking to expand or move to a newlocale, “80% of the search is region-al,” Mr. Foran said.

“They buy the region, they don’tbuy the community,” he said. “Nearthe end of the search, when they aredown to two or three sites, what

they are looking for from the com-munity is anything it can do to helpthem get off to a fast start.”

At that point, factors such as per-mitting and helping ease the finan-cial risk, perhaps with new infra-structure, are important, he said.

Communities also should notunderestimate the importance ofcalling on existing businesses andasking them what their plans areand what, if anything, the commu-nity can do to help them expand inplace, Mr. Foran said. ■


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Suburbs: Companies make cities compete continued from PAGE 1

COURTESY WILLIAM CURRIN

Hudson mayorWilliam Currinsaid a surveyfound businesspeople had a different viewof the suburbthan those wholooked at it as a good place to live.


It’s no wonder that people tend toblindly lump actors, musicians andother celebrities into the same binof ultra-liberal activism

fueled by emotion rather thancareful thought. It’s because sooften it’s true.

Case in point: Last week’s Associated Press story aboutcelebrities such as Yoko Ono,Robert Redford and others tak-ing up the anti-fracking banner.

Now, I presume all of youwho read this newspaper, andCrain’s Shale magazine (the latest issue comes next week to our sub-scribers), know that “fracking” is theslang term for horizontal hydraulic frac-turing, a method of drilling for naturalgas and oil that blasts chemicals, sandand water a mile-and-a-half or so belowthe earth to release valuable mineralsfrom heretofore inaccessible shale formations.

The development along Ohio’s Uticashale is happening fast and furious, asbig, out-of-state energy companies race

to assemble land rights, get drilling per-mits and build the needed infrastructureto process and deliver the gas and oil

products.It’s a game-changer, and bil-

lions of dollars are being spentin Ohio to develop this newestpart of our decades-old energyindustry. As you will read in ourmagazine next week, manyOhio manufacturers are alreadybenefitting from this develop-ment, which is really in itsnascent stages. This work hashelped drop Ohio’s unemploy-

ment rate a full point below the nationalaverage.

The AP story quoted these preposter-ous statements from anti-frackingcelebrities:

Mr. Redford, in a radio ad, saying thatfracking has “been linked to drinkingwater contamination all across the coun-try. It threatens the air we breathe.”Truth is that scientists have shown thatgreenhouse gases have been significantlycut because plentiful, fracked natural gas

has prompted electric utilities to shiftfrom coal as a fuel.

Alec Baldwin, writing in the Huffing-ton Post (surprise), states that compa-nies promise big economic benefits but“deliver a pittance in actual compensa-tion, desecrate their environment andthen split and leave them the bill.” Truthis that this new industry already hasbrought significant economic prosperityto Ohio’s Appalachian region, which haslong suffered.

Emotional anti-fracking folks keepspouting that the country can be run onrenewable resources. Truth is that it’snot economically feasible to meet Amer-ica’s energy needs with renewable resources, and I’d guess that smart envi-ronmentalists know that.

But emotions keep the donationspouring into organizations such as theSierra Club and others that oppose frack-ing. And the celebrities just babble on,mouthing the same unfounded dia-tribes, with no care for the thousands ofjobs that are being created in America’sstarved rural areas, Ohio included. ■


Sorry lot

The onset of the sequestration process represents the height of hypocrisy both bymembers of Congress and the Obama administration. They blame each other for

this indiscriminate method of budget reduction, yetit was by mutual agreement that Congress approvedand the president signed the measure that calls for$1.2 trillion in automatic, across-the-board spending cuts over 10 years.

Sequestration was meant to be a ticking timebomb. Because of its nonsensical, one-size-fits-allway of dealing with spending cuts, the sequesterwould force Congress and the president to come upwith a reasoned and reasonable compromise forhow to hold down the federal deficit, and with it theastronomical federal debt.

Or so it was thought.Instead, the behavior of the sorry lot in

Washington in the months leading up to the sequester reminds us of the old Spanish Inquisitionskit of the Monty Python comedy troupe. For thoseunfamiliar with the routine, the inquisitors who areaccusing an old woman of heresy tell her she hasone last chance to confess her sin … then quicklychange it to two last chances … then three.

Congress and the president pulled a similar “lastchances” maneuver when they pushed back theoriginal sequester deadline of Jan. 1 and moved it toMarch 1. Even then, they couldn’t diffuse the timebomb before it finally exploded.

So now, the first stage of the sequester has kickedin, with $85 billion in spending cuts slated for thisyear. The cuts would be split 50-50 between defenseand domestic programs.

And the bickering over who is to blame continues.How’s that for leadership in action?The sequester is a lousy solution for a genuine

problem, which is a government where spending isout of control and must be reined in if the UnitedStates isn’t to remain a debt slave to China and Middle Eastern nations.

It’s fascinating that our elected officials must resort to a budget gimmick when public opinionpolls indicate that a significant majority of Americans sees the need for federal spending cuts.

Last Wednesday, an ABC News/Washington Postpoll showed the public, by nearly a 2-to-1 margin —61% to 33% — supports cutting the overall budgetalong the lines of the sequester. And, in an interesting twist, the poll found majority support forthe broad spending cuts among Republicans, Democrats and independents.

However, there is a catch to the poll’s findings. Bya nearly identical margin as those who favor broadspending cuts, poll respondents opposed a sequester-induced 8% reduction in military spending.

Taken together, the results of this poll and othersscream at Congress and President Obama to ditchthe sequester’s meat cleaver method of budget reduction. Instead, they must take a tactical approach to spending restraint that doesn’t jeopardize national defense but doesn’t bankruptthe country, either.

The people are waiting.

FROM THE PUBLISHER

BRIANTUCKER

Save us the celeb fracking drivel

PUBLISHER/EDITORIAL DIRECTOR:Brian D.Tucker ([email protected])

EDITOR:Mark Dodosh ([email protected])

MANAGING EDITOR:Scott Suttell ([email protected])

OPINION

MARCUS WALTERClevelandNo, I don’t. At least, I’m notworried about that initially —maybe toward the end. But Ithink it actually could fostercreative ideas. … Can wemake it safer for people touse? Can we make it, youknow, not as crazy as some-times traditional gambling is?

THE BIG ISSUEAre you concerned that the growth in Internet sweepstakes cafes will lead to more problem gambling?

SUSAN GALLAGHERRocky RiverI would think the Internetcafes will increase the gambling issue within theCleveland area, just becauseit becomes more convenientfor someone.

ERVIN HILLEast ClevelandI think a lot of that space can be used for other recreational purposes orsomething more positive. …They’re doing more harmthan help, in my opinion.

JIM FRENCHWestlakeWe already have gambling ina wide variety of places andthings in Ohio anyway,whether it’s going to the casino, whether you bet onsports or whether or not youactually play bingo. So I don’tthink it’s going to change oraffect things one way or another.

➤➤➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.


Granted, both trials were small —combined, they included only 15patients — and the second trial is-n’t quite finished.

But the results are consistent,CEO Jon Snyder said.

Most of the 15 amputees report-ed pain levels ranging from 6 to 8 ona scale of 10. Their pain typicallydropped to a 0 or a 1 shortly afterusing Neuros Medical’s NerveBlock technology, Mr. Snyder said.

One patient told Mr. Snyder thetreatment allowed him to sleepthrough the night for the first timein years. Another no longer neededto take pain medication. And morethan one patient said they weren’tused to being pain-free.

“I’d ask them, ‘When did youhave zero pain before?’ They’d say,‘never,’ ” he said.

The results have been so consis-tent that Neuros Medical’s manyinvestors could have the option ofselling the company before it startsenrolling patients in a much largerpivotal trial, said Stephen Haynes,CEO of Glengary LLC, a venturecapital firm in Beachwood that isone of Neuros Medical’s many localinvestors.

But the investors could generatea bigger payout if they retain own-ership, at least until the larger, 100-patient trial is complete, Mr.Haynes said.

How big might that payout be?Consider two previous deals involv-ing local neurostimulation tech-nologies.

NDI Medical LLC of HighlandHills sold its first product — anelectrical stimulator designed tohelp people control their bladders— to Medtronic Inc. for $42 millionin 2008.

Another company, Intelect Med-ical Inc., hit it big in 2011 when itwas bought by Boston ScientificCorp. for $60 million in a deal thatvalued the entire company at $78million when Boston Scientific’sprevious stake is included. Intelectmoved from Cleveland to theBoston area just before the acquisition was announced.

Neuros Medical could generate asimilar payout if the larger pivot trialgoes well, Mr. Haynes said. And itshould go well, given how consistentthe results have been so far, he said.

“You don’t have the same poten-tial risk of having a pivotal trialcoming back with results that aren’texpected,” Mr. Haynes said.

More hertz where it hurtsBoston Scientific sees promise in

the Nerve Block technology, too.The Natick, Mass.-based medicaltechnology company invested inNeuros Medical last year. BostonScientific one day could buy thecompany or form some other part-nership, Mr. Snyder said.

The terms of Boston Scientific’sinvestment give the publicly tradedcompany rights other potentialsuitors wouldn’t have, Mr. Snydersaid, declining to provide details.

Neuros Medical has raised a totalof $7.2 million in capital, including$1.75 million in convertible debtthat existing investors chipped inover the last two months. RiverVestVenture Partners of St. Louis, whichhas a Cleveland office, led the recent investment.

Now Neuros Medical is planningto raise roughly $9 million to fundthe pivotal trial, Mr. Snyder said.

The technology, developed atCase Western Reserve University,

provides extremely fast electricalstimulation to damaged nerves,blocking the pain signals that theysend to the brain.

The studies suggest the relieflasts at least a few hours, Mr. Sny-der said. When the pain comesback, patients can press a button ona remote control to reactivate thegenerator that provides the electric-ity, which flows through implantedleads to reach the damaged nerves.Neuros Medical in January finisheddeveloping an implantable versionof the Altius generator, which isabout one-third the size of aniPhone.

Aside from an injectable drugcalled lidocaine, which numbs thedamaged area, other drugs used totreat phantom limb pain mask it asopposed to getting rid of it, Mr. Sny-der said.

Spinal cord stimulation, a com-mon form of neurostimulation, isn’t strong enough to stop phantomlimb pain completely, he said. TheNerve Block technology is sufficient-ly strong because it targets thenerves that cause the problem andhits them with much faster bursts ofelectricity, Mr. Snyder said.

“Instead of 30, 40, 50 hertz, we’reat 5,000,” he said.

They have a platformNeuros Medical eventually plans

to use the technology to treat othertypes of chronic pain caused bydamaged nerves, said Dr. AmolSoin, founder and medical directorof the Ohio Pain Clinic, which hasfour offices in the Dayton area. Onebig opportunity would be treatingpatients who suffer from a categoryof migraine headaches caused bydamaged occipital nerves, said Dr.Soin, who led the first two studies.

“This is essentially a platformtechnology,” he said.

Dr. Soin learned about NeurosMedical because he is one of manyindividual investors who belong tothe Ohio TechAngels investor net-work, which is based in Columbus.Because he knows a thing or twoabout treating pain — for instance,he also is president of the Ohio Society of Interventional PainPhysicians — another TechAngelsmember asked him to review re-search the group had compiledabout Neuros Medical as it pre-pared to invest in the company.

Dr. Soin was impressed, so he

made an investment of his own. Heliked the technology because it pro-vided a defined way to treat a bigproblem that has been aroundsince the days of ancient Egypt, hesaid, noting that more than 750,000people in the United States sufferfrom phantom limb pain.

And few technologies are so effective at treating pain, he said.

“It’s really, really tough to get thepain score down from a 7 to a 1,”Dr. Soin said.

Job stimulation? Not yetBut will Neuros Medical be effec-

tive at creating local jobs? That isn’tclear.

Because the business is small to-day, employing just seven people, iteasily could be moved if it is ac-quired anytime soon. For instance,it could follow Intelect Medical’slead and move if it is bought byBoston Scientific, which would notprovide comments for this story.

Various successful neurostimula-tion startups end up being boughtby big players in health care, according to people in NortheastOhio’s neurostimulation businesswho spoke with Crain’s for a 2012story about the sector’s growth.However, there’s a chance an acquired company could remain inthe region as a division of a largercompany, according to some peo-ple interviewed.

Plus, some neurostimulationbusinesses, such as NDI Medical, doremain independent companies.

Some money Neuros Medical hasraised came from sources interestedin creating jobs in Ohio. Several of itsinvestors — Glengary, RiverVest, theOhio TechAngels, JumpStart Inc. ofCleveland, North Coast Angel Fundof Mayfield Heights and Queen CityAngels of Cincinnati — have received money through either theOhio Third Frontier economic development program or the OhioCapital Fund, a taxpayer-backed“fund of funds” that invests in ven-ture capital groups that commit tousing at least half the money to finance Ohio-based startups.

But even if the company doesmove, not all is lost, said Mr.Haynes of Glengary.

“If investors in the region makemoney on investments in the region, they will make more invest-ments in the region later on and ultimately will create jobs,” he said. ■


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Nerves: Third trial will have 100 patientscontinued from PAGE 3

COURTESY NEUROS MEDICAL

The majority of the 15 patients who used Neuros Medical’s Nerve Block tech-nology during trials reported a pain level of 0 or 1 on a scale of 10 after usingthe Willoughby company’s equipment.

Subscribe to Crain’s Cleveland BusinessCall toll-free at 1-877-824-9373 or on-line @

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JOB CHANGES

DISTRIBUTIONCHAS. E. PHIPPS CO.: Bill Jandecka to branch manager, Canton; Chris Hawkins to accountmanager, Cleveland East; David Koris to inside sales representative;Joel Schneiders to account manager, Cleveland West.

EDUCATIONCLEVELAND INDUSTRIAL TRAINING CENTER: Tim Duffy topresident. LAKE ERIE COLLEGE: Ed Mayerto director of development.

ENGINEERINGAUSTIN CO.: Salem Tawdrous toarea superintendent; Adam Wix tofield engineer; Susan Riffle to communications specialist; DerekMast to mid-level architect;Jonathan Gemmen to senior facilities consultant; Mike Leonette

to senior project purchasing agent;Aaron Gipson to mid-level accountant.

FINANCIAL SERVICECIUNI & PANICHI INC.: MathieuFortin to staff accountant. KIRTLAND CAPITAL PARTNERS:Tom Littman to CEO; John Nestorto chairman and senior managingpartner. SS&G: Michael May to senior associate.TOWERS WATSON: Diane Nowakto senior consultant.

HOSPITALITYWESTIN CLEVELAND DOWNTOWN: Alan Feuerman todirector, sales and marketing.

INSURANCEHOFFMAN GROUP: James M. Kahoe to account executive/transportation services.

LEGALHAHN LOESER & PARKS LLP:Bret A. Hrivnak, Robert B. Portand James D. Schweikert to partners; Brendan E. Clark andJoshua A. Lusk to associates. JONES DAY: Evan Hirsch to associate. KAUFMAN & CO. LLC: Lorraine E.Gaulding, Brendan P. Kelley andAshtyn N. Saltz to associates. STARK & KNOLL: Ronald Lembright to of counsel; PatrickO’Connor to associate.

MANUFACTURINGLINCOLN ELECTRIC CO.: DalithiaSmith to human resources director,North America.

MEDIAWESTERN RESERVE PUBLIC MEDIA: Toni Kayumi to chief business development officer.

NONPROFITGREATER CLEVELAND FILMCOMMISSION: Bob Aber to vicepresident, finance and operations;MacKenzie Rodgers to office manager/executive assistant. SAINT LUKE’S FOUNDATION:Christie Manning to senior programofficer for resilient families. VILLAGE NETWORK: RichardGraziano to president, CEO.

REAL ESTATECUTLER REAL ESTATE: LaurenSmilan to sales associate, Fairlawn.TRANSACTION REALTY: MartinLutz to sales associate.

SERVICEBATH FITTER: Ron Deubel to regional vice president.SAFEGUARD PROPERTIES: JoeIafigliola to vice president, vendormanagement; Wendy Anderson toattorney.

STAFFINGRESERVES NETWORK: AmieBullard to accounting manager.

TECHNOLOGYTECQUITI LLC: Zeeba Mercer tochief operating officer;James M. Angiuloto chief technology officer.

BOARDSBIKE CLEVELAND:Christopher Alvarado(City of Cleveland) to president; Jeffrey Sugalski to vice president;Nancy Desmond to secretary;Barb Clint to treasurer.INTERNATIONAL SOCIETY OFCERTIFIED EMPLOYEE BENEFITSPECIALISTS, NORTHEAST OHIOCHAPTER: Tom Scurfield (H&BConsulting Associates) to president;Randy Werner to vice president;Mark Freiman to treasurer; KevinBurns to secretary. MAXIMUM ACCESSIBLE HOUSINGOF OHIO: Scott Strawn to president; Andrea Aycinena to vicepresident; Thomas Meyer to treasurer; Jan Hollinger Jonesto secretary; Ann Russell to past-president.

AWARDSINSTITUTE OF REALESTATE MANAGEMENT:Brunetta Y. Harris(Forest City Enterprises) receivedthe Certified PropertyManager of the YearAward. TURNAROUND MANAGEMENT ASSOCIATION:Larry Goddard (SS&G ParklandConsulting LLC) received the 2012Lifetime Achievement Award.

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MARCH 11- 17, 2013 CRAIN’S CLEVELAND BUSINESS 11

13 TAX TIPS:GOVERNOR’SPROPOSAL HAS ITS PERKS.

FUELING THESTARTUP ENGINE

MCKINLEY WILEY

Erin Gargiulo is the owner of Honeycomb Salon in Cleveland.

By JUDY [email protected]

It was a match made not in heaven, but onCleveland’s near West Side. Aspiring salonowner Erin Gargiulo could not act on herentrepreneurial urge, unable to afford rent

prices in Ohio City, where she worked, or nearby Tremont.

Meanwhile, fledgling revitalization efforts in

the Gordon Square Arts District had succeededin creating nightlife there with restaurants, barsand art galleries, but economic developerswanted more daytime traffic to support its existing retail businesses.

Enter the Gordon Square Arts District BestBusiness Plan Competition, which pitted would-beshop owners against one another to win free rentspace in the Detroit Shoreway neighborhood.

Business plan competitions help drive entrepreneurs toward their goals with cash, strong support

See FUELING Page 16 See BENEFITS Page 14

PHOTO PROVIDED

When rapper Jay-Z wore shoes madeby PMK Customs to the Brooklyn Nets’home opener on Nov. 3, the Clevelandcompany saw a significant increase invisitors to its website.

Big shotscan meangiganticbenefitsCelebrity shout-outsare sometimes all ittakes for companiesto get needed boostBy CHRIS [email protected]

Most companies seek thehelp of a celebrity topromote their brand.But the best kind of

publicity comes when a celebritygenuinely loves the product anduses it when everyone is watching.

That’s what happened recently toCleveland-based PMK Customswhen company partner EmoryJones, who also is Jay-Z’s right-hand man, showed one of itsshoes to the rap superstar.

It turns out PMK’s Brooklyn Zoofootwear was a perfect fit for thesinger to wear during the BrooklynNets’ first game Nov. 3 at the Barclays Center.

The celebrity nod has paid off bigfor PMK; the company experiencedan increase of about 2,000 uniquevisitors to its website per day sinceJay-Z was seen wearing the shoe.

“It was unbelievable,” PMK’sCEO, Andre Scott, said. “I wasspeechless. It brings so much validity and press and everything tothe company that we need to justkeep pushing forward. This issomething you can’t pay for.”

PMK Customs — founded in2004 and under Mr. Scott’s leadership since 2011 — transformsclassic shoes with new colors anddesigns.


12 CRAIN’S CLEVELAND BUSINESS WWW.CRAINSCLEVELAND.COM MARCH 11 -17, 2013

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THEINTERVIEWSALLY KOEPKECo-founderMom’s Gourmet, Newbury

By AMY ANN [email protected]

With names like BlackDog Belly Rub, RowdyKitty Rub and Far OutFeather Dust, the

products from Newbury-basedMom’s Gourmet are catching the attention of consumers nationwide.

That’s the because the 5-year-oldartisan seasoning and spiceblends company over the pastyear dramatically expanded itsreach and distribution, landing in115 Fresh Market stores nationwideas well as Whole Foods MarketSouthwest and small marketchains in New York City, Michiganand New Hampshire.

“It’s kind of been like the littlesnowball rolling down the hill,”said Sally Koepke, who foundedthe company along with hermother Patsy Flattery.

Ms. Koepke recently took timeto answer questions from Crain’sCleveland Business regarding thecompany and its recent growth.

Q: How and when did Mom’sGourmet start

A: The idea sprouted in 2007 whileon a trip south to train my dogs. Mymom came along, and we were dis-cussing plans for the holiday. I sug-gested to my mom we make hand-crafted seasonings and spice blendswithout salt or sugar and give themas gifts to friends and family. …

They turned out to be a big hitwith everyone, and they startedasking for more. So back to thekitchen we went with our coffeegrinders. Friends and family keptsuggesting we bring them to market. In 2008, curiosity got thebetter of me and I started lookingfor co-packers. I work full-time sothe weekend was the only time toresearch. Then my mom made thecalls to potential co-packers. Aftera year of calls we finally found one right in our back yard, in Cleveland. We started the business with $6,000, and a wholelot of help from friends, family andwonderful retailers who wanted to support a local business: Breezewood Gardens, Chuck’sFine Wines, Whole Foods Marketlocally and Heinen’s. Many independent stores, such as MilesMarket, Gibbs Market, Bay LobsterMarket, Portage Market and others, also sell our products.

Q: Mom’s Gourmet experienced ahuge year of growth in 2012. Tellme about the expansion and howit came about.

A: We grew steadily in 2011 with theaddition of the Cleveland ClinicWellness Center Store, Whole FoodsMarket, mid-Atlantic, northern California and southwest regions. In2012, I received an inquiry from ourwebsite from the buyer at Fresh Market. He said one of their customers suggested they carry our products. After he visited our website he felt they should as well.He said they were going to reviewthe products and then bring theminto their Ohio stores as a local vendor. I received an email fromhim about three weeks later and hesaid they loved the blends, he said,“Don’t get excited but I gave a couple samples to our grocery uyer who might consider them forall the stores.” I about fainted.

Two weeks later, I received a callfrom Haddon House, a big EastCoast distributor, who said theywere bringing us in for all 124 FreshMarket stores. Needless to say, wewere on Cloud Nine. Then when thepurchase order came and the pick-up date was in two weeks for a cajil-lion cases, I almost had an anxietyattack. We small-batch blend andgrind to order so I had to call themand tell them we needed more time.One month later, they picked up.

At the same time, Whole FoodsMarket, south region, brought infive SKUs (stock-keeping units), andOrvis Co. stores brought our gift setsinto 100 of their stores. Then Haddon House brought us into a number of other smaller chains and

independents, including New YorkCity Union Markets. Needless tosay, 2012 was a great year of expansion and challenges.

Q: What have been the biggestchallenges to building your business, especially in terms ofcreating a national reach?

A: Our biggest challenges have beenmanaging growth and time. Run-ning out of product or labels or jarsbrought to my attention the impor-tance of inventory management. Ihave spent most of my free time, in-cluding vacations, researching newopportunities or conducting demos(yep, apron and all). Mom is helpingfulfill online orders, which have in-creased significantly. My brotherhas joined in and helping out withmuch of the day-to-day, and our co-packer, Chef2Chef Foods hasbeen very supportive. My friendsand relatives have been a huge helpwith demos and store sales calls.When we started the company, thegoal was to provide healthier, high-quality products with slow sustain-able growth so that by the time I re-tired, I could enjoy the business. …

Word-of-mouth has been incredi-bly helpful and social media has really helped us reach consumers farand away. The good news is we haveno debt, are growing and still lovingthe whole experience!

Q: Is there anything you wouldhave done differently in growingyour business?

A: I’m not sure what we would havedone differently because we werenot sure what the right thing wouldhave been for us to do. Seriously, if I

had done my due diligence, I proba-bly would have never pursued thebusiness. The competition is fierce.The whole bringing a product tomarket is incredibly daunting. Howdo you commercialize a kitchenbusiness, how do you price yourproduct? Every additional layer inyour model (reps, distributors, brokers) take a piece of the ever-shrinking pie. …

Q: What are the positives and negatives of running a mother-daughter enterprise?

A: The mother-daughter enterpriseworks for us because we have always been close, establishedroles, tasks and respect each othersopinions. The only downside rightnow is mom can’t demo with me asoften. We love to get out on theweekends and sample our products, interact with consumers.

At one demo in ClevelandHeights, a man stopped by tosample and as our eyes met, I real-ized he was the surgeon who tookcare of my mom at Metro (well,there were several) after she had aterrible car accident on black ice.He had tears in his eyes, my momhad tears in her eyes and I did too.He couldn’t believe how well shewas doing. Yep, I said at the age of83 she started a company.

Q: Any future plans?

A: Future plans. That’s a very goodquestion. We have two new blendsthat are going to launch shortly.These are in the same healthyfashion as our other blends butwith much more complexity. Variety is the spice of life. ■

PROVIDED PHOTO BY JOHN TILLOTSON

Patsy Flattery, left, and her daughter,Sally Koepke, right, founded Mom’sGourmet.


The recently unveiled two-year budget proposalfor the state of Ohio contains some bold tax

relief specifically targeting smallbusiness.

When Gov. John Kasich proposedthe 2014-2015 budget for Ohio, heincluded some significant taxbreaks for small business owners— especially pass-through entitiessuch as S corporations, limited lia-bility companies, partnershipsand sole proprietorships — intended to free up resources thatwould enable them to do somenew hiring or investing.

Taking note that Ohio rankshigher than most states in its marginal income tax rates, espe-cially compared to its immediateneighboring states, Gov. Kasichhas proposed a reduction in ratesthat is intended to help Ohio compete in jobs and investments.

In fact, the governor calls hisproposal for tax relief directly tosmall business the “centerpiece”of his tax reform proposal becauseacademic research suggests smallbusinesses account for the majorityof new job growth over the past 20years.

Remarkably, Gov. Kasich proposes slash-ing in half theamount of business in-come to ownersor investors inpass-throughentities thatwould be subject to Ohioincome tax.

That would mean an owner orinvestor in such an entity wouldpay Ohio income tax on only halfof their reportable income. If anowner’s normal taxable income is$100,000, under the governor’sproposal it would drop to $50,000.

Recognizing that some pass-through entities actually arequite large, the governor proposescapping the income that would beeligible for the deduction at$750,000 annually. That means themaximum amount that would beexcludable from taxable incomefor any given taxpayer would be$375,000.

Gov. Kasich estimates the proposed reduction will exempt$14 billion in Ohio income fromtaxation, resulting in savings tothose small business taxpayers of$600 million to $650 million annu-ally. He’s banking on businessowners using that money to increase their payroll, thus puttingother Ohioans to work earningother taxable income.

The proposed budget also wouldreduce state marginal tax rates inall nine tax brackets over a three-year period, effectively reducingtax rates by some 20% by tax year2015. The objective is to reduceOhio’s top margin tax rate to below5%, ranking it in the bottom half ofall top state tax rates, assuming allother states held constant.

For small business owners, theeffect of the proposed reduction inmarginal tax rates combined withthe proposed relief specifically forpass-through entities is substantial.The budget proposal even providesan illustration to demonstrate.

The governor imagines an OhioLLC with three partners or ownersin the business. The business isprofitable and earns $1.5 million in

tax year 2015. It is divided evenlyamong the three partners, resultingin each owner receiving $500,000.For the sake of simplicity, the exam-ple assumes each owner is marriedand has a total of four exemptions.

Based on the reduced marginaltax rate, each taxpayer would real-ize a tax savings of about $5,000 ayear. Based on the 50% deductionof taxable income resulting fromthe LLC, the taxable income foreach partner would be reducedfrom $500,000 to $250,000, result-ing in tax savings of $12,000. Thatcombines for a tax savings to the

business of $17,000 for each partner, or a total of $51,000 forthe year — perhaps enough, Gov.Kasich surmises, for the businessto consider expanding the payrollor investing in capital.

It remains to be seen how Gov.Kasich’s proposal ultimately willbe accepted by the Ohio Legisla-ture, but the governor’s officemakes a strong case for tax reliefto spur economic growth in Ohio.The proposal notes Ohio policy-makers have recognized for atleast a decade that Ohio’s margintax rates inhibit interstate compe-

tition for jobs and investment, especially when Ohio’s rates arehigher than Pennsylvania, Michigan and Indiana.

This is a proposal Ohio’s smallbusiness owners will want towatch closely. The impact onsmall business owners and theirability to plan their growth strategies could be significant. ■

Peter A. DeMarco is vice presidentand director of tax services for theregional accounting and businessconsulting firm of Meaden & Moore,headquartered in Cleveland.

MARCH 11 -17, 2013 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 13

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In the case of the Brooklyn Zoo, PMKtook the Air Jordan 1 and gave it amakeover with nine exotic animal skins:stingray, elephant, boa, python, ostrich,crocodile, alligator, lizard and calf. (Toavoid any trouble with the original shoecompany, its logo remains.)

The company generally sells shoeswithin the $150 to $500 range; Mr. Scottestimates it sells about 15 to 20 pairs perweek.

At $2,500, the Brooklyn Zoo is themost expensive shoe PMK has designedto date. Only 10 pairs were made, andthey sold out in just over a day after being released at Unknwn, LeBronJames’ boutique in the Miami area.

People still are inquiring about theshoe, but PMK is committed to keepingit exclusive and will not produce beyondthe initial 10.

“I know that when we drop our nextshoe it’s going to be off the Richterscale. Now people really know who PMKCustoms is, things really spikedovernight for us,” he said.

A slice of celebrityCelebrity endorsements have been

brand components for a very long time,and Northeast Ohio businesses are nostranger to benefiting from star power.

According to Elad Granot, an associ-ate professor of marketing and the di-rector of the executive, accelerated andmobile MBA programs at ClevelandState, unsolicited endorsements absolutely carry more weight than solicited ones.

“The clutter in the marketplace hasbecome so massive and consumershave become so jaded and also quiteknowledgeable about what they’re being sold that authenticity goes a long

way,” he said.Before Twitter and Facebook, a

company could better control the connection between the celebrity andthe brand.

Social media, however, directly con-nects celebrities and consumers, givingstars a more personal identity that canenhance, or in some cases detract, theirvalue as a company spokesperson.

“Today you expect, as a consumer,public figures to have lives and to com-municate about these lives,” Dr. Granotsaid. “It’s much more complicated, butthere is a lot more promise to delivermessages more organically through various spokespeople.”

Northeast Ohio’s Antonio’s Pizza received one of the most organic en-dorsements possible: a regular customer.Drew Carey was a frequent visitor to Antonio’s restaurant in Parma duringthe late ’80s and early 1990s.

He mentioned the pizza company inhis autobiography “Dirty Jokes andBeer: Stories of the Unrefined,” wouldregularly talk about Antonio’s on “TheDrew Carey Show” and even did a segment that took place in a mocked-upset of Antonio’s.

“It was huge, that was when Parma-town was in its prime,” said FredLoSchiavo, the owner of Antonio’s Pizza.“It was awesome; he definitely generateda crowd any time he would come up tothe mall or to our restaurant.”

But Mr. Carey really gave Antonio’spublicity in 2008 after his first seasonhosting “The Price is Right.” He ordered43 pizzas from Antonio’s for a year-endparty in California. The cost for the pizzas plus cross-country shipment totaled $1,800.

Mr. LoSchiavo said Antonio’s websitehits spiked from 10,000 per week to

100,000 in a day and nearly half-a-millionthe week after the story.

Creating buzzThe fruits of a celebrity partnership

don’t always show in web hits or salesfigures, though.

Bedford-based Beecology reached outto Cleveland-area native and musicianJim Brickman in 2010 to partner for apromotion during the release of hisnewest CD.

Mr. Brickman was intrigued by the offer and the company wound up givinghim 1,000 “Brick Balms,” a spinoff itspopular lip balm “Buzz Balm.” Mr.Brickman gave them away for free to thefirst 1,000 who bought his CD from hiswebsite.

“It was a very simple promotion,”said David Rzepka, owner of Beecology.“From what I recall they went prettyquick. It was a really good thing.They’ve also given away our lip balmsand packs on his cruises.”

The promotion didn’t spike the company’s sales significantly, but Beecology picked up a new distributoras a result of the partnership.

According to Mr. Rzepka, Beecology’sproduct caught the attention of Market-Share Distribution, by way of one of itsclients Greenhill Music, which also partners with Mr. Brickman. As a result,the distributor offered to bring Beecologyto gift and specialty stores all over thecountry.

As for PMK, despite its 10 minutes offame, it still will continue to produceonly about 10 to 20 pairs of a particularshoe — like it did with the BrooklynZoo.

“People are waiting for our next dropso they can cop that one because theyknow we put hot stuff out there,” CEOMr. Scott said. ■


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Benefits: Social media increases possibilitiescontinued from PAGE 11

■■ WHAT THEY’RE ALL ABOUT: Tire Source’s five locallyowned auto service centers have a new identity, designed byAkron marketing communications firm Kleidon & Associates.Under the same ownership, the new look aims to help con-sumers better understand Tire Source’s offerings, according toowners Drew Dawson and Tom White. The company’s newtrademark, logo and tagline — “Neighborhood Car Care” —strives to communicate the core message, while reading moreclearly at any size. The new symbol is a stylized wrench within acircle, alluding to the range of auto maintenance and repair services available at the tire retailers.

■■ UNDER NEW OWNERSHIP: Sims-Lohman Fine Kitchensand Granite in February acquired the cabinet and countertop division of Babin Building Solutions. Sims-Lohman currentlyserves the Cincinnati, Columbus, Dayton, Indianapolis andLafayette, Ind., markets, and this acquisition allows the companyto provide service to the Cleveland market. Sims-Lohman willcontinue to operate the former Babin showroom at 4101 Royalton Road in Broadview Heights. The Elyria showroom at5240 Detroit Road will re-open in March after the completion ofrenovations. It also is evaluating options for an East Side showroom, which would be targeted to open this summer.

■■ A LOFTY IDEA: Salon Lofts has targeted the Greater Cleveland market for an expansion of its salon concept, whichgives beauty professionals the location, tools and support to operate their own businesses. The Columbus-based companycurrently has 31 locations nationwide, with more than 700 loftowners operating independent businesses within the stores. Loftowners rent space and are given access to software tools andplatforms for scheduling, marketing and growing their businesses. Two Cleveland locations opened in late 2012, onein Mentor and the second in Woodmere. The following locationsare slated to open in April 2013: Shaker Town Center; Corporate Park of Beachwood; and Acme Montrose Plaza inBath. The Cleveland locations will have on average 23 loftseach. All Cleveland locations have a limited level of availabilityfor loft space. Cleveland is one of five markets in which SalonLofts operates. The others include Columbus and Cincinnati;Tampa Bay; and Indianapolis. Including Cleveland, the companyexpects to open 15 to 20 new stores in 2013.

IN BRIEFTire Source’s new logo was designed by Kleidon & Associates.



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GRANDOPENINGSDISCOVER MY CLEVELAND30799 Pinetree Road, Suite 223Cleveland 44124www.discovermycleveland.comDiscover My Cleveland is a destinationmanagement company that plans andmanages every aspect of an organi-zation’s visit to the area. The firm coordinates logistics from arrival todeparture for group, spousal, step-on, leisure and other tours, handling details including transporta-tion, staffing and [email protected]

JENNINGS LAW OFFICES LLC223 West Main St.Ravenna 44266-2741www.jenningslawofficesllc.comAttorney Jonathan P. Jennings hasopened Jennings Law Offices. Thefirm provides comprehensive legalservices for clients on a variety of legal matters, including bankruptcy,criminal/traffic defense, civil litigation,document preparation, family law,mediation, probate and tax law. Mr.Jennings graduated from Malone College (now Malone University) witha bachelor’s in urban studies and abachelor’s in law in society. He thenearned his J.D. from Case WesternReserve University School of Law.Mr. Jennings was admitted to theOhio Bar in 1999 and also admittedto practice before the United StatesBankruptcy Court, Northern District

of Ohio and the United States TaxCourt. A resident of Ravenna, Mr.Jennings is a member of the PortageCounty Bar Association, the AkronBar Association, the Ohio State BarAssociation and the Northeast OhioCollaborative Law [email protected]

CLEAN MONUMENTS CO.13882 Cedar RoadCleveland 44118www.cleanmonuments.comClean Monuments Co. specializes inproviding customized gravesite ser-vices, including professional cleaningand repairing of headstones andmonuments, flower delivery andcemetery transportation. A four-gen-eration company, Clean MonumentsCo. has developed Forever Clean, aseven-step approach to cleaning andmaintaining headstones.Phone 216-321-6740 or 800-278-8523Fax [email protected]

MONTE CIGARS7324 Valley View DriveIndependence 44131www.montecigars.comMonte Cigars is a cigar shop andsmoking lounge, offering cigar lockerrental and premium cigars. Other on-site amenities include free Wi-Fi,

lounges and televisions. The businessalso is available for special [email protected]

MEDINA CREATIVE PET PLAY4080 Creative Living WayMedina 44256www.medinacreativehousing.com/site/page/pet_playMedina Creative Pet Play is a full-ser-vice pet day care that supports indi-viduals with disabilities through itssupportive employment work trainingprogram. Employees are involved inevery aspect of pet pampering, including care, training, photography,spa services, treat production and retail sales. Reservations are pre-ferred, but walk-ins are welcome.Medina Creative Pet Play is open 7a.m. to 6 p.m. Monday through Friday. The 3,000-square-foot facilitywill employ 20 [email protected]

To submit information about anew business, opened within thepast six months, send the followinginformation for publication toCrain’s Cleveland Business sectionseditor Amy Ann Stoessel at [email protected]: business name; ad-dress; city and ZIP; website address;brief description of the business;business phone number; businessfax number; and business e-mail.


“When I found out about thebusiness plan competition, Ithought there is no better timethan now,” Ms. Gargiulo said.

Business plan judges must havefelt the same. Last fall, Ms. Gargiulolearned she was one of the compe-tition’s two winners. Today, clientsare pouring into her HoneycombSalon, although an official openingstill is being planned.

The Gordon Square competitionis one of the newer business plancontests in Northeast Ohio andpart of a growing crop of competi-tions focused on bringing busi-nesses to specific neighborhoods.

While business plan competitionsare not new, the idea has picked upsteam in recent years alongside agrowing emphasis on entrepre-neurism — both inside and outsideof academia — according to JerryFrantz, managing venture partner at

JumpStart Inc., a Cleveland-basednonprofit focused on entrepreneurs.

Often, Mr. Frantz said, contestsawarding cash or other prizes topromising business ideas are anoutgrowth of entrepreneurial pro-grams, whether they be at universi-ties, private corporations, nonprof-its or community developmentorganizations. As the popularity ofsuch programs has swelled, so toohas the number of competitions.

Pitching practiceJumpStart held its inaugural stu-

dent business competition late lastyear, awarding the $1,500 first-place prize to Miach Medical Inno-vations, a medical device companyestablished by a Case Western Reserve University student.

The Council of Smaller Enter-prises revived and reinvented itsbusiness plan competition in 2011after a 10-year hiatus. The contestcame back as a business pitchcompetition, mimicking the popu-lar TV reality show “Shark Tank,”according to Randy Carpenter, senior director of corporate communications for COSE.

“We thought the mood was rightto bring it back,” Mr. Carpentersaid. Along with the economicdownturn that put many displacedworkers in a position to thinkabout setting out on their own, hesaid, “things like Shark Tank on TVwere bringing attention to theneed to help early stage compa-nies find funding and find the kindof expertise to support them.”

In each of the last two years, thebusiness pitch competition hasawarded $40,000 to the top fourwinners, most recently crowningKevin Suttman of Seven BrothersDistilling Co. in LeRoy Townshipas top prize winner.

Other regional contests includeLaunchTown and idealabs — bothfocused on college-student entre-preneurs — and TiE Quest, thebusiness plan competition of TiEOhio, part of the network of TheInternational Entrepreneurs.

The LaunchTown Entrepreneur-ship Award is an annual contestbacked by Hudson’s Burton D.Morgan Foundation, and idealabsis a regional competition sponsoredby the Entrepreneurship EducationConsortium based in Ashland.

All entail a cash award, but thebigger prize is being a part of theprocess, Mr. Frantz said. “Mostbusiness plan competitions provide some support along theway rather than just being judgedcompetitions,” he said.

Take delivering a business pitch,a necessary skill that might notcome naturally to a would-be entrepreneur.

Introducing the business conceptin front of judges is a staple for busi-ness plan competitions and the

experience is invaluable, Mr. Frantzsaid. What’s more, unlike pitching abusiness to Uncle John or a rushedangel investor, competitors in thesestructured contests get vital feed-back and guidance from judgingpanels that often include provenentrepreneurs, bankers, attorneys,investors and experts in product development and marketing.

Everybody walks away withsomething, he said.

Creating winnersMike Stanek, president of Cleve-

land Cycle Tours, agrees with thatnotion. Mr. Stanek was a runner-upin COSE’s 2012 business pitchevent. Sure, the $5,000 prize is great.The money will be used to buy apower-assist device for its “groupcycling” tour bike and for marketingthe nascent company. More valu-able, however, was the commentsand suggestions received as he advanced in the competition.

“It forced us to hone our busi-ness plan further,” Mr. Staneksaid. “The feedback we got reallymade us think methodically abouthow to move the business forwardand even got us thinking alongsome different lines.”

Guidance and technical assis-tance for promising small businessowners are also key assets of com-munity-based competitions like theone in the Gordon Square Arts Dis-trict last year, said Nick Fedor, eco-nomic development director for theDetroit Shoreway Community De-velopment Organization, which heldthe competition. Along with freerent, the Gordon Square winners gotaccess to more than $5,000 in grantsfor build-out and startup costs.

The competition was backed bythe Charter One Foundation aspart of its “Growing Communities”initiative, which has bankrolledsimilar competitions for storefrontopenings in Cleveland’s St. ClairSuperior neighborhood andAkron’s University Park neighbor-hood. Its newest contest is aimedat boosting occupancy rates in the5th Street Arcades, with grantsranging from $1,500 to $20,000.

Carrie Carpenter, senior vice pres-ident for Charter One, said morecommunity business plan competi-tions are expected in Northeast Ohioand beyond building on the success-es locally. While some might argue itis more telling for entrepreneurs tostand up to real-life market forces(without the advantage of cashprizes or free rent), Ms. Carpentersaid business plan competitions areeffective at weeding out good ideasand helping entrepreneurs plugholes in their business plans beforethere is much at stake.

“All five entrepreneurs that wonthe Charter One grants in the(2011) Ohio City contest are still inbusiness two years later,” she said.“I think that is pretty telling.” ■


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Fueling: Contests were crucial for somecontinued from PAGE 11


the National Retail Federation,which reported U.S. furniture salesin January rose 6% from levels ofJanuary 2012. The federation saysthe retail furniture business hasseen year-to-year sales increasesfor at least the past 11 months.

Dan Geller, owner of Fish Furni-ture in Mayfield Heights and NorthOlmsted, said his stores saw an increase of more than 10% in salesin 2012 from 2011 after strugglingduring the recession, particularly in2007 to 2009.

“We’re optional,” he said, notingthat consumers often wait untilthey feel financially comfortable tospend money on furniture.

But Mr. Geller is quick to say the

company saw significant gains insales in 2011 and 2012, and he esti-mated about two-thirds of the cus-tomers that stayed away during therecession now have returned. Fisheven was able to keep alive its tra-dition of expanding every 10 yearsby making some renovations at theNorth Olmsted location last year,he said.

Slowly but surely …Other local furniture retailers say

sales are on the upswing, but they’renot yet ready to say the market hasmade a definitive turn for the better.

Chris Pelcher, senior vice presi-dent of merchandising, sales andmarketing for Levin Furniture,which has nine stores in Northeast

Ohio, said his company was feeling“cautiously optimistic” about thedirection of sales.

“We feel things are starting toturn around there,” Mr. Pelchersaid of the Akron/Canton/Cleve-land market.

But it has been a long road. Mr.Pelcher said the company began tosee evidence of a positive change insales in the fourth quarter of 2012.The growth in sales has been con-servative, but encouraging, he said.

Although Levin says its gains herehave been modest, it just opened abedding store in Solon, and there areplans to open three more beddingstores this fall in the Cleveland area.

Nick Dimitroff, president of Dim-itroff’s Furniture and Design in

Akron, said the recession was devas-tating to the furniture industry, butthat his store is starting to see salesgrowth again. Mr. Dimitroff said hisstore was able to maintain profitabil-ity by cutting costs, but sales havebeen increasing since 2010, with amarked increase in recent months.Still, the company hasn’t yet reachedpre-recession levels of sales.

Jan Sedlak, one of the co-ownersof Sedlak Interiors in Solon, alsosaid the store’s sales have been increasing in recent months. Evenso, Ms. Sedlak said her company’sbusiness is far from what it was 20years ago, and the owners havestruggled to find quality suppliersto fill their galleries. She said Sed-lak has found new suppliers, but it

had to search hard for them.

Fill those housesThe primary factor aiding furni-

ture retailers is the healthier state ofthe Northeast Ohio housing market.

The Ohio Association of Realtorsreported that about 2,200 homeswere sold in January in a 17-countyregion of Northeast Ohio, up 8.4%from January 2012. For all of 2012,there were about 38,000 homessold in the region, up 14.5% fromthe number sold in 2011.

Pending sales also were up inJanuary, which indicates the hous-ing market continues to build momentum.

“It’s all connected to housing,”Levin’s Mr. Pelcher said. ■


INVESTMENT OPPORTUNITY

AUCTION

BUSINESSES FOR SALE

BUSINESS OPPORTUNITIES

FOR RENT

BUSINESSSERVICES

REAL ESTATEFOR SALE

REAL ESTATE CLASSIFIEDPhone: (216) 522-1383 Fax: (216) 694-4264

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RECEIVER CONTROLLEDTHREE INVESTMENT OPPORTUNITIES

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“Get-GO” Ground Lease, Leased thru

2022 w/Rent Increase NOI: $72,000



Retail Strip Center 22,500 SF, 65% Leased

Tenants Include: Sherwin-Williams, Charter One Bank

Free-Standing, Fully Leased Bank Branch.

NOI: $150,000

GATES MILLS ESTATE FOR SALE

• 4.5 Acres on secluded hilltop,4,500 S.F.

• remodled in/out, all new HVAC &Electrical

• Completing remodel now withTravertine polished tile, italianmarble & custom Shrock cabinets

• Hardwood floors• walk out basement & 7 car garage

w/loft• Pick your finishing touches,

Move in in spring• Poss owner financing or poss

trade for other realestate

For more info visit:www.1289chagrinriverroad.com

Inquiries please call216-701-7448 or email

[email protected]

Mayfield Hts, 5200 sq ft,stand alone bldg, $100k spentin build out for Medical, Den-tal, Veterinary. 10 separateexam rooms w/ sinks & securedoc storage on Mayfield Rd.Tom Seaman 216.469.7081Keller Williams Gr Clev

FOR LEASE

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Make BIGGER profits in the Coin Laundry Business!

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Email:[email protected]

We also have aCNC Machine Shop

Well established for sale

FOR SALECINCI-225 Ton Press, 12’ Brake, Verson25 Ton Brake; Trumpf TruMatic; CINCI1/4” x 10 B/S Univer. C40 Grinder. Westill have Forklifts. All makes, models.

STYS INC.216-641-7897 or 440-382-8694

Want to Buy or Sella Business?

Free Seller Market AnalysisSee our listings at

www.empirebusinesses.com

440-461-2202

Business for SaleWell established Ohio retailer, with 2 prime locations withinCleveland metro, specializing in army-navy surplus, workwear,and outdoor products. Company has clean financials and stronggrowth potential. Price: $575K Terms: Cash. May consider partialowner finance over two years. Seller will stay on as consultant for3 months. Only pre-qualified buyers will be considered.

Email: [email protected] or call 800-880-2485

Car WashFOR SALE

Located in Lake County,state of the art full servewash, detail bays, 5 self

serve bays, gas station, onbusy street, 80,000 cars a

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Please email inquiries [email protected]

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BUSINESSSERVICEOWNERS!

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Call Denise Donaldsonat 216.522.1383

NE OHIO COMMERCIAL, OFFICE & DEVELOPMENT PROPERTIES

For Brochure & Terms of Sale, Call: Mark Abood, OH RE Salesperson or Mike Berland216-360-0009 www.ChartwellAuctions.com

Chartwell Group, LLC / Chartwell Auctions, LLCMichael Berland, OH Auctioneer

REAL ESTATE AUCTION | APR 11

PARCEL 1

7,000 SF Car Wash & C-Store, Gas Station with 4-Pumps, 1,200 SF Detail Shop on 1 Acre. Excellent Highway Visibility and access off I-90/OH Rt. 2 with Daily Traffic Counts of 120,000 Vehicles. Excellent Opportunity for New Owner Operator. Current Annual NOI: $100,000+.

BIDDING TO COMMENCE AT ONLY $185,000!

AMERICA’S CAR WASH, GAS STATION, C-STORE & DETAIL SHOP

20500 Lakeland Boulevard, Euclid, OH 44119

2057 E. AURORA RD., UNIT B, TWINSBURG, OH 44087

Built in 1978, this Unit is Part of a 15-Unit Complex Located less than 1-Mile from I-480. Completely Remodeled, Move-In Ready and has 26 Designated Parking Spaces. Excellent Opportunity for a Variety of Businesses and Services.

PARCEL 2

5,750 SF OFFICE CONDO

OFFERED WITH A PUBLISHED RESERVE PRICE OF ONLY $79,500

EXCELLENT SELLER FINANCING AVAILABLE!

Former Dentist’s Office with Several Private Offices, 2-Private Restrooms, Reception Area, Lobby Area and Basement Storage. Shaker Square Location with Adjacent 10-Car Parking Lot. Excellent Opportunity for Continued Med/Dental Office, as well as Residential Apartments Opportunity.

PARCEL 3

OFFERED WITH A PUBLISHED RESERVE PRICE OF ONLY $50,000

12808 Drexmore Rd., Cleveland, OH 44120

3,200 SF OFFICE BUILDING

At Royalton & Marks Rds., Strongsville, OH 4413616 ACRE DEVELOPMENT PARCEL

16-AcresMarks Rd

Zoned General Industrial, this 16-Acre Parcel has 200’ Frontage on Royalton Road. & 999’ Frontage on Marks Road. Currently a Salvage Yard, there are many other Potential Uses for this Property. Ideally Located in the Heart of the Strongsville Industrial Parkway.

OFFERED ABSOLUTE, REGARDLESS OF PRICE!Suggested Opening Bid: $48,000 ($3,000/Acre)

PARCEL 4

Suggested Opening Bid: $26,000 ($4,000/Acre)OFFERED ABSOLUTE, REGARDLESS OF PRICE!

6.5-Acres250

PARCEL 5

Located Directly Across the Street from the Famous Kalahari Water Park/Resort. This Dev. Site is Rectangular with 1,000’ of Frontage on SR 250 and is 1 Mile North of SR 2. Zoned Commercial, this Property Offers a Wide Variety of Possible uses Including: Retail, Restaurant, Movie Theater, Bowling, Miniature Golf, etc.

6.5 ACRE DEVELOPMENT PARCEL SR 250, SANDUSKY, OH

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Furniture: U.S. sales rose 6% in January compared to like month in 2012continued from PAGE 3


Falls makes leap intoinvestor relations■ Falls Communications is launching an investor relations practice to meet growingdemand from companies that want to reachthe investment community while navigatingever-changing technology and regulations,and it has hired an exec-utive who led the IRpractice of a competitorto do just that.

Rob Berick, whoworked for Dix & Eatonin Cleveland for 11 yearsand led its IR practice forthree years, joined Falls,a Cleveland-based pub-lic relations and market-ing communications firm, as a managing director in late January.

The formation of the IR practice is drivenby the frequency with which Falls found itself turning down requests to do investorrelations for clients, said Rob Falls, Fallspresident and CEO.

“It’s been a missing piece,” Mr. Falls said.The new practice offers investor engage-

ment strategy and counsel, quarterly andannual reporting and market intelligence.The firm also will help clients manage theflow of information during high-stakes spe-cial situations such as proxy contests, share-holder activism campaigns and merger andacquisition activity.

Now is “the perfect time” to launch an IRpractice, Mr. Falls said, given that the firmanticipates more activity this year in termsof mergers and acquisitions and companies

going public.Mr. Berick said in an age where informa-

tion is coming “at the speed of light,” it’s important for companies “to be aware ofwhat’s influencing your valuation and tomake sure you’ve established a crediblechannel direct to market for yourself.”

Falls is talking with a couple people it mayhire to join its IR team, Mr. Falls said. Vol-ume of work will dictate when additions tothe team are made, he noted.

— Michelle Park

Chicago’s BMO looks to deal with Ohio car dealers■ Drawn by the hundreds of car dealershipsand six “nice-size” markets in Ohio, BMOHarris Bank has expanded its dealership finance team into the state by snagging aFirstMerit Bank executive.

Brad Isaly’s reputation preceded him,said Ghram Debes, managing director andhead of dealership finance for BMO Harris,a Chicago-based institution with $91 billionin assets.

“When (we) talked to dealers and indus-try contacts, his name kept coming up,” Mr.Debes said. “He’s got industry expertise.He’s got many industry contacts. He’s verywell-liked.”

Mr. Isaly, who most recently was vicepresident in wholesale dealer service forFirstMerit, assumed his new role as BMOHarris’ vice president of dealership financein January, but the hiring wasn’t announceduntil late February.

Working from an Akron home office, Mr.Isaly is responsible for developing full-servicebanking relationships with domestic and

import dealers in Ohio, southeast Michiganand western Pennsylvania, Mr. Debes said.Akron marks the 10th market in which BMOHarris’ dealership finance team has an office.

Mr. Debes said other large financial insti-tutions are expanding their dealership finance teams, too, given the economy’s improvement and auto dealer performancefollowing the recession and the bankrupt-cies of Chrysler and General Motors.

“You see financial institutions becomingmore attracted to this type of business,” hesaid. — Michelle Park

Setting sail on a river of his own■ Here’s a sign things are looking up in thecommercial real estate lending arena: MarkVogel, a 10-year veteran of Pinnacle Finan-cial Group, has exited the mortgage broker-age firm to start his own outfit, RiverCoreCapital.

Mr. Vogel said he felt it was a good time tolaunch his own ship.

“Risk is minimal and reward is substan-tial,” said Mr. Vogel, who has set up shop inan office in the 55 Public Square building indowntown Cleveland. Mr. Vogel said he alsowanted to work downtown rather than remain in the suburbs: Pinnacle is based inIndependence.

RiverCore will offer commercial loan-placement services and, if needed, helpraise equity. Mr. Vogel said he has workedon projects that needed loans totaling bil-lions of dollars at Pinnacle for a developer-client list including Wolstein Group, FirstInterstate Properties and Geis Cos.

— Michelle Park

WHAT’S NEW

COMPANY: All Erection & CraneRental Corp., Cleveland PRODUCT: Liebherr LTM 1750-9.1crane

All Erection & Crane has fortified its fleetwith the acquisition of seven Liebherr cranes,including the new LTM 1750-9.1., a 900-ton,all-terrain crane.

The company says this is the secondcrane of its type to come to the UnitedStates and it “looks to be a game-changer forlarge mobile cranes, both on the road and onthe job site.”

The Liebherr LTM 1750-9.1 is a nine-axle,18-wheeler that offers “unprecedented mobility, transportability, and quick assembly— all on a chassis no longer than that of a600-ton crane,” according to All Erection.

It can travel at less than 155,000 poundsGVW (gross vehicle weight) by removing thecomplete telescopic boom, the upper engineand the rear outriggers. When the cranereaches a job site, “the shorter but stronger-than-average boom can be self-installed withthe aid of an auxiliary rolling power pack andwithout the use of a specialized boom launchtrailer,” the company says.

The crane “will be a boon in wind farmwork, where it can take over the job of a typical900-ton crawler with greater directional mobility along with the ability to traverse uneven, rutted, and often muddy terrain,” according to the company.

For information, visit www.allcrane.com.

REPORTERS’ NOTEBOOKBEHIND THE NEWS WITH CRAIN’S WRITERS

THEINSIDER

THEWEEK MARCH 4 - 10

The big story: A. Schulman Inc. of Akron, amaker of resins and plastic compounds, made ahostile bid to acquire specialty chemicals makerFerro Corp. in Mayfield Heights for about $855million, including debt. Under the proposalmade to Ferro’s board, A. Schulman would pay$6.50 a share for all of Ferro’s common stockoutstanding. Payment would consist of $3.25 incash and $3.25 of A. Schulman common stockfor each Ferro share. See more, Page 3.

Head of the class: The headquarters of theCleveland Metropolitan School District standsto become a hotel after Drury Hotels of St. Louiswas deemedthe winningbidder in anauction of thebuilding indowntownClevelandthat sitsacross fromthe under-constructionCleveland Convention Center. The $4.5 millionbid of Drury’s DSW Inns LLC bet the closestcompetitor’s offer of $4.35 million. Reflecting onthe new prize his company won after placing thehigh bid in the March 7 auction of the 1930-vin-tage school headquarters, Rick Drury of the fam-ily-owned Drury Hotels said, “This fits perfectlywith our portfolio of historic hotels.”

New McDonald: The Cuyahoga County-subsi-dized MetroHealth System appointed ThomasMcDonald — founder of McDonald Partners LLC,a brokerage and investment advisory firm inCleveland — as its new board chairman. Mr. Mc-Donald, who was appointed to the health system’sboard in 2008, replaces Ronald Fountain, who hadserved as the board’s chairman since 2010.

Public-private partnership: NortheastOhio Medical University and the private HiramCollege signed an agreement that will allow thetwo Portage County institutions to work togetherto produce new physicians. NEOMED and Hiramwill work in tandem to recruit students who wanta liberal arts education that leads to a medical degree. Officials expect the program to yield up tofive students per year beginning in fall 2014.

Gone too soon: Telemarketer InfoCision Man-agement Corp. said its founder, Gary L. Taylor,died March 3, at age 59. His death came just overthree years since he initially fell ill after a heart attack in 2009. Mr. Taylor spent his entire life inAkron. He earned bachelor’s and master’s degreesfrom the University of Akron, which is where hemet his wife of 34 years, Karen. Mr. and Mrs. Tay-lor later became large donors to the university; thefootball stadium bears the InfoCision name, andtheir $3.5 million donation established The TaylorInstitute for Direct Marketing at the school.

Change at the top: Great Lakes ScienceCenter named a museum and STEM educationveteran as its new president. The board of theCleveland institution said Kirsten Ellenbogenwill take over as president starting May 6. She re-places Linda Abraham-Silver, who announcedlast July that she would step down due to familyhealth issues. Dr. Ellenbogen has worked at fivemuseums during the last two decades. Most re-cently, she served as senior director for lifelonglearning at the Science Museum of Minnesota.

Another new GM?: Cleveland beat out Buffalo as the shooting location for “Draft Day,”a football-themed movie starring Kevin Costnerand directed by Ivan Reitman. The movie, whichwas to depict Mr. Costner as a fictitious BuffaloBills general manager trying to restore his teamto past glory, now will be shot in Cleveland instead, with the actor portraying the ClevelandBrowns’ GM.

BEST OF THE BLOGSExcerpts from recent blog entries onCrainsCleveland.com.

The rich get richer — literally■ It was a good year for billionaires, accordingto the latest Forbes.com list of people whomeasure their wealth in 10 figures.

There are a record 1,426 billionaires glob-ally, up 16% from 1,226 last year, andtheir average net worth rose to$3.8 billion from $3.7 billion.Added together, Forbes.com said,the total net worth for this year’s billionaires is $5.4 trillion, up17% from $4.6 trillion lastyear. The United Statesleads the list, with 442billionaires, followed byAsia-Pacific (386) andEurope (366).

Ohio lists only three billionaires: retailmagnate Leslie Wexner of Columbus, at No.276 on the list with a fortune of $4.5 billion;Dayton’s Clayton Mathile, who built a petfood empire that made him worth $1.9 billion, No. 792 on the list; and Denise DeBartolo York of Youngstown, who has afortune worth $1.1 billion, good for No.1,268 on the list, stemming from her real estate holdings.

Cleveland sports team owners DanGilbert (No. 348 on the list, worth $3.5 billion) and Jimmy Haslam (No. 831, worth$1.8 billion) are listed in their home statesof Michigan and Tennessee, respectively.

The world’s richest person, once again, isCarlos Slim Helu of Mexico, who is worth$73 billion. No. 2 on the list, and the richestAmerican, is Bill Gates, whose fortune is at$67 billion.

No foolin’■ Lincoln Electric Co., the Euclid-based

maker of welding equipment, landed on thenew Motley Fool list of America’s 25 bestpublic companies.

The Fool said it analyzed data for morethan 1,700 companies to come up with theelite 25, measured by “their success in servinginvestors, customers, employees and theworld at large.”

Here’s how the website described some ofLincoln Electric’s virtues:

“No one has been laid off for more than65 years,” according to Motley Fool. “Holding

onto its experienced work force allows Lincoln to retain the human capital it

has trained and developed, saving it fromhaving to reinvest in bringing new

employees up to speed.“Lincoln Electric makes its

products an essential part of its customers’ work. By

keeping its equipment easy to use yet effec-tive for the multiple purposes it must serve,Lincoln Electric builds loyalty among thosewho use its products, making it more likely that they’ll come back as repeat customers.”

Freeze frame■ The Cleveland Cavaliers are among theearly adopters of a gaming app fromKrossover, a New York City-based startup,that lets the user freeze real basketball videoaction — and then guess how the play ends.

The app “obviously could be used simplyfor recreation,” USA Today reported. But it’sbeing tested by the Cavs to analyze theirplay as well as evaluate opponents.

Cavaliers analytics head Ben Alamar tellsthe newspaper that the app has “the addedbenefits of forcing players to watch film.”

USA Today said Krossover hopes to go onto create similar apps for sports such asfootball and soccer. The app also wasdemonstrated at the recent MIT SloanSports Analytics Conference in Boston.


Berick

STAN BULLARD


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