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Mayors balk at state intrusion Change in muny taxation viewed as latest threat to home rule By JAY MILLER

Mayor David Anderson stood at the podium in the Red Room at Cleveland City Hall to protest the latest assault by legislators in Columbus on his city’s well-being. “These reductions in income,

when added to the reductions we’ve all experienced over the last couple of years in local government fund receipts — and reductions we’ve yet to experience as a result of the elimination of the estate tax — would severely hamper our ability to provide the basic services our businesses and residents have

come to rely on,” he told the gathered reporters. Mayor Anderson has been a mayor for 21 years, but not the mayor of Cleveland. He and two dozen other mayors and city managers, Republicans and Democrats, representing communities from Westlake to Eastlake,

were gathered Feb. 28 in the Red Room to protest legislation that may prove to be, Mayor Anderson would say later, “the straw that broke the camel’s back.” The mayors fear House Bill 5, a municipal income tax reform bill, would take away millions upon millions of dollars in revenue from the 600 cities across the state that tax income.

INSIDE Relief could be on way Neuros Medical CEO Jon Snyder, right, believes his company has found a way to significantly reduce or eliminate chronic limb pain. The device is on its second clinical trial. PAGE 3

See MAYORS Page 5

Suburbs struggle to stand tallest


Hiring consultants, tax breaks among plans used to draw businesses to town By JAY MILLER

University Hospitals has transformed itself into a fundraising behemoth that is almost on par with the Cleveland Clinic By TIMOTHY MAGAW


ver the last decade, University Hospitals has built up not only its physical footprint but also its philanthropic muscle, morphing from a

sleepy enterprise that raised about $13 million annually in the 1990s and early 2000s into a giant that now brings in more than $100 million a year in donations. University Hospitals’ transformation into a philanthropic powerhouse was fueled by a $1 billion

fundraising effort the health system quietly launched in 2004 — the year its fundraising chief, Sherri Bishop, joined the system’s ranks. University Hospitals reached the $1 billion milestone last December, but with its donors showing no signs of See HOSPITAL Page 6

What’s does a city need to do to get expanding businesses to notice it? That’s a question that prompted public officials in Hudson to hire a marketing consultant to boost the suburb’s business attraction efforts — Currin and it’s one that’s being asked by other cities across the region, too. “Many times we don’t get looked at as we’d like to be looked at,” Hudson Mayor William Currin told Crain’s. “We felt we needed to have a stronger base of communication with site selectors,” he said.


See SUBURBS Page 7



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SMALL BUSINESS Competitions can be big break entrepreneurs need to get their companies going ■ Pages 11-16 PLUS: CELEBRITY ENDORSEMENTS ■ TAX TIPS ■ & MORE

Entire contents © 2013 by Crain Communications Inc. Vol. 34, No. 10




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WHO TO WATCH Crain’s will highlight nonprofit up-and-comers 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 in Northeast 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,, or call 216-771-5155. Please send in your suggestions no later 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 to watch in the nonprofit sector. Mark your calendars for future sections: “Who to Watch: Law,” July 15; and “Who to Watch: Finance,” Nov. 25.

REGULAR FEATURES Big Issue .......................8 Classified ....................17 Editorial ........................8


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

Ohio in 2012 relinquished its claim to the Governor’s Cup, an honor bestowed by Site Selection magazine on the state that records the most development projects with one or more of the following criteria: an investment of at least $1 million, creation of 50 or more jobs, or construction of new space of at least 20,000 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 eight states in 2012 (Virginia and Kentucky rounded out the top 10):

State Texas

Number of large projects 761











North Carolina





700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 Publisher/editorial director: Brian D. Tucker ( Editor: Mark Dodosh ( Managing editor: Scott Suttell ( Sections editor: Amy Ann Stoessel ( Assistant editor: Kevin Kleps ( Sports Senior reporter: Stan Bullard ( Real estate and construction Reporters: Jay Miller ( Government Chuck Soder ( Technology Dan Shingler ( Energy, steel and automotive Tim Magaw ( Health care and education Michelle Park ( Finance Rachel McCafferty ( Manufacturing and energy Research editor: Deborah W. Hillyer ( Cartoonist/illustrator: Rich Williams Marketing director: Lori Yannucci Grim ( Events Manager/Operations & Logistics: Christian Hendricks ( Events Manager/Promotions & Sponsor Relations: Jessica Snyder ( Advertising director: Nicole Mastrangelo ( Senior account executive: Adam Mandell ( Account executives: Dawn Donegan ( Andy Hollander ( Lindsie Bowman ( John Banks ( Sales and marketing assistant: Michelle Sustar ( Office coordinator: Denise Donaldson ( Digital strategy and development manager: Stephen Herron ( Web/Print production director: Craig L. Mackey ( Production assistant/video editor: Steven Bennett ( Graphic designer: Lauren M. Rafferty ( Billing: Susan Jaranowski, 313-446-6024 ( Credit: Todd Masura, 313-446-6097 (

Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Brian D. Tucker: Vice president Paul Dalpiaz: Chief Information Officer Dave Kamis: Vice president/production & manufacturing Mary Kramer: Group publisher G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996) Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-2912, or email to, or call 877-812-1588 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777. Reprints: Call 1-800-290-5460 Ext. 125 Audit Bureau of Circulation



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Market is ripe for more takeover tries However, hostile bids such as the attempt by A. Schulman rarely are successful By MICHELLE PARK

Hostile takeover attempts such as the one announced last week by A. Schulman Inc. toward Ferro Corp. are a rarer breed of merger and acquisition, but local dealmakers say the conditions are ripe for more to occur. Among the factors that fuel hostile takeovers are weak, undervalued

targets; a bidder’s easy access to cash; and a weak economy that has put margin and profit pressure on companies, said Marc Morgenstern, a veteran Cleveland dealmaker who handled hostile takeover preparation for several companies back when he practiced law. “All of those are present now,” he said. Today’s market certainly has its haves and have-nots, agreed Mark

A. Filippell, a managing director with Cleveland investment bank Western Reserve Partners LLC. “The haves are saying, ‘We’ve got to grow,’” Mr. Filippell said. “When things were terrible, when markets were down in the sewer, you didn’t see anybody buying anybody. But now, a certain number of people are feeling good (and) bold.” A bid to acquire a company generally is deemed hostile when the

would-be acquirer bypasses an unwilling board and takes a deal directly to the target company’s shareholders. In last week’s example, A. Schulman, an Akron-based maker of resins and plastic compounds, took public its offer to buy Ferro, a specialty chemicals maker in Mayfield Heights, for $6.50 a share after Ferro’s board rejected its February offer. “I think we’ll see all forms of this activity, whether it’s hostile or not,”

predicted Lisa Rose, who leads the investor relations practice for Cleveland communications firm Dix & Eaton, which is representing A. Schulman in its attempted purchase of Ferro. “Companies have been hanging onto cash since the recession,” Ms. Rose said. “Prices to buy things have been too high. Things are starting to turn, and the opportunity to buy companies and to sell is starting to be more attractive for both sides.” See TAKEOVER Page 5



Hitting the right notes Crain’s Cleveland Business is seeking nominations for the women it will profile in its annual Women of Note section, which is scheduled for the July 8 issue. Nominations can be submitted through by clicking on Women of Note under the Crain’s Awards tab of the toolbar. Nominations also can be sent via email to editor Mark Dodosh at,or via regular mail at 700 W. St. Clair Ave., suite 310, Cleveland 44113. Please put “Women of Note” in the subject line of email entries. The deadline for submissions is Monday, April 1.



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

STRIKING ALL THE NERVES Willoughby company believes it has found quick cure for phantom limb pain

— Hudson Mayor William Currin. Page One



euros Medical Inc. may have the cure for phantom limb pain. By zapping a bundle of damaged nerves with quick bursts of electricity, the Willoughby company can eliminate all or most of the pain that remains long after someone loses a limb, according to results from two clinical trials. See NERVES Page 9

Good news finally hits home for furniture shops As housing market rebounds, retailers say sales begin to wake from a long slumber By RACHEL ABBEY McCAFFERTY

Northeast Ohio furniture retailers were hit hard by the recession as consumers slashed spending in wants-based businesses. But some say they’re now seeing signs of a rebound, fueled in large measure by improvement in the housing market.

Wellsville Carpet Town Inc., a retailer that has expanded by opening two Ashley Furniture stores in Northeast Ohio in less than four months, is among those experiencing better sales. Timothy Quinn, owner and president of Weston Mills, N.Y.-based Wellsville, said stronger home sales in Ohio are driving more activity at

furniture retailers. Time also has turned many consumer wants — previously postponed due to the recession — into needs; he said upholstery and bedding in particular have been big sellers. “All those factors help out a lot,” Mr. Quinn said, who noted that the company had been watching the recovering Cleveland market and had been planning to expand into it for about a year. The new Cleveland-area stores — in Fairlawn and Mentor — are doing well and getting a lot of traf-

“Many times we don’t get looked at as we’d like to be looked at. We felt we needed to have a stronger base of communication with site selectors.”

fic, Mr. Quinn said, though he would not disclose sales figures. Consumers also can expect to see more Ashley Furniture stores in Northeast Ohio from Wellsville, which as a licensee owns 10 Ashley Furniture stores and one Ashley Furniture outlet in three states. Mr. Quinn said there’s growth potential in the market and he hoped to have five or six Cleveland-area locations by the end of 2014. Improvement at the Ashley stores is consistent with data from See FURNITURE Page 17

“All five entrepreneurs that won the Charter One grants in the (2011) Ohio City contest are still in business two years later. … I think that is pretty telling.” — Carrie Carpenter, senior vice president, Charter One. Page 11

“I know that when we drop our next shoe it’s going to be off the Richter scale. Now people really know who PMK Customs is, things really spiked overnight for us.” — Andre Scott, CEO, PMK Customs. Page 11




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New owners take hold of Radix


Goal is to grow Euclid-based wire maker


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MARCH 11-17, 2013


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Two local holding companies formed in late 2012 with the aim of buying and growing Midwestern manufacturers and distributors have closed their first deal. Hunter Valley Co. LLC and The Vitruvian Group acquired on March 1 the assets of Euclid-based Radix Enterprises, which employs 100 and had revenues of $36 million in 2012. Terms of the deal were not disclosed. If the executives of the young holding companies find what

they’re looking for, they say they’ll buy a few more companies yet this year. Vitruvian Group and Hunter Valley operate out of the same office in Beachwood, and executives of both say they have their sights on targets within a few-hour drive of Cleveland. Their stated model is similar to that of Berkshire Hathaway Inc., said Owen Colligan, president of Hunter Valley: Buy companies and hold them for long periods of time, even forever, while growing those portfolio companies and the holding companies into “fairly substantial” entities. “I don’t aspire to become a pub-

lic company per say, but on a much smaller scale, that’s the model we’re building,” Mr. Colligan said. Berkshire Hathaway is a conglomerate led by legendary investor Warren Buffett with more than 50 subsidiaries, including Geico Auto Insurance and Wickliffe-based specialty chemicals maker Lubrizol Corp. Radix, which has been renamed Radix Wire, makes electrical wire and cable for high-temperature applications. Hunter Valley and Vitruvian wouldn’t disclose what their equal stakes are in the company, but said a handful of high net-worth individuals invested with them. Instead of raising a fund of money committed by investors as private equity firms do, the holding companies will raise equity deal by deal, said Mr. Colligan, who co-founded private equity firm Rockwood Equity Partners LLC in 1999, but left the Beachwood company last year. “I no longer wanted to be a private equity firm,” said Mr. Colligan, who remains invested in Rockwood and is a board member for a few of its portfolio companies. “I don’t like the fact that you have to recycle capital,” he said. “You can’t hold companies for long periods of time. It’s more of a buy-andflip model, which is not what I wanted to do at this point in my career.”

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The goal is to grow Radix Wire through add-on acquisitions and by developing new products and markets, such as adding high-performance wire and cable to the hightemperature wire and cable it already produces. Its wire and cable are used in consumer products such as coffee makers and dishwashers, and industrial equipment such as generators. Radix, which was founded in 1944 and has another facility in Aurora, was an attractive investment because of its dominance in the hightemperature wire and cable market and its solid management, Mr. Colligan said. “They’re sort of the Kleenex of the high-temperature market,” agreed JJ Scaravilli, president of Vitruvian Group. Like Hunter Valley, Vitruvian is seeking to invest in companies in manufacturing and distribution. While the two do not have an exclusivity agreement to consider deals only together, their executives have complementary skill sets, Mr. Scaravilli said. Mr. Scaravilli and his father, Victor J. Scaravilli, formed Vitruvian after they sold their own construction business, Mole Constructors, to a Texas company last October, so they know the operations side, Mr. Scaravilli said. And Mr. Colligan, he noted, knows finance and market analysis. Radix’s new owners have launched a search for a president to execute the growth strategy. The company’s former president left before the sale closed, Mr. Scaravilli said. ■

Volume 34, Number 10 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of December and fifth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2013 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1877-824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136



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Mayors: Jackson says proposed tax changes are ‘getting bolder’ continued from PAGE 1

It’s a bill that is uniting communities such as Cleveland, Lakewood and Shaker Heights with North Royalton, Richmond Heights and Mayor Anderson’s Willoughby — and creating similar coalitions in the Dayton area and around the state. The mayors are rallying for two reasons: They see HB 5 as the latest assault by the Legislature and the Ohio Supreme Court on local selfgovernment rights, and they are tired of the continued dominance of state government by rural interests. On the latter point, the mayors maintain that even though the majority of Ohioans now live in and around the big cities from which most of the state’s economic activity and tax payments come, state government is controlled by public officials in Columbus who lopsidedly represent rural and exurban areas.

“It’s a struggle to get them to understand” urban problems, Mayor Anderson said. “There are some downstate legislators that don’t have large cities in their district and hence don’t understand the difficulties.” Mayor Georgine Welo of South Euclid said a statewide campaign is building to reverse that thinking. “This is us mounting an Ohio campaign,” she said at the press conference.

Upset downstaters, too A few days later, on March 5, mayors and city managers from 33 communities in the Dayton area held a similar press conference, pledging to lobby their state legislators to remove the revenue-robbing sections from the muny tax reform bill. Jack Jensen, executive director of the Dayton First Suburbs Consortium, which brought 14 communi-

Takeover: Low rates play part continued from PAGE 3

If a company has set sail on a strategic plan to acquire companies but one or more of its targets are scooped up by another party, there’s a probability the company will bid on other targets, even hostilely, observed Mike Keresman, CEO of CardinalCommerce Corp. of Mentor, a private company that provides infrastructure for virtual payments. Plus, interest rates are “artificially low,” said Mr. Keresman, who previously served as chief financial officer for Steris Corp. in Mentor. “Those rates make acquisitions easier because money is cheaper,” he said. “So in normal environments, Company A couldn’t afford Company B, but with cheap money, it now can be done.”

Value propositions Also contributing to what some call a more predatory M&A environment is the inability of some companies to turn the corner following the recession. Those companies remain undervalued, which makes them attractive targets. The hedge fund investors in Ferro that have been critical of the company for months — and call themselves The Shareholder Committee for the Future of Ferro — said in a news release last week that they do not believe A. Schulman’s offer fully values Ferro. But, the manner in which Ferro’s board shut the door to further negotiations reveals that shareholders’ best interests are not the board’s priority, wrote the group led by FrontFour Capital Group LLC and Quinpario Partners LLC. “The committee supports the company fully exploring the potential sale of Ferro at a price that fully and fairly values the company, whether to A. Schulman or any other potential acquirer,” their open letter stated. Ohio-chartered companies that find themselves the targets of hostile bids enjoy an Ohio law that is “extremely protective” and affords anti-takeover protections to boards that other states do not, said John J. Jenkins, an attorney with Calfee, Halter & Griswold LLP who advises clients on mergers and acquisitions. If hostile takeover attempts increase, it likely will involve slowgrowing and asset-rich businesses, local executives speculated. “Places where the assets go down the elevator every night are not good hostile takeover targets because the people don’t have to stay, and in those instances, the people are what you’re buying,” said Mr. Morgen-

stern, founder and managing partner for Blue Mesa Partners, a private investment firm dual-headquartered in Cleveland and San Francisco. Mr. Morgenstern cited retail as one likely sector to experience more consolidation — both friendly and otherwise — as it “generally is overstored,” and many are “having a hard time adapting to the online universe.” Technology could see an increase in hostile bids, given that “the haves are sitting on literally mountains of cash,” Mr. Morgenstern said, as might manufacturing, in which historically good companies have been less profitable in post-recessionary years.

It’s easier to be friendly Just because more hostile takeovers are attempted doesn’t mean more takeovers will happen: Such attempts rarely work, observers say. The number of mergers and acquisitions involving U.S. companies completed or pending since Dec. 31, 2006, is 45,175, according to FactSet, a financial data and analytics company out of Norwalk, Conn. Of those, 33 are characterized as hostile. One reason cited for their rarity is friendly, or “white knight,” bidders that move in and purchase the target instead. Plus, hostile bids are a lot more expensive, time-consuming and risky than friendly deals, Calfee’s Mr. Jenkins said. Nevertheless, Mr. Jenkins said, “There are very few strategic buyers who won’t undertake a hostile takeover if the target or transaction rationale is compelling enough. There are also hedge funds, (which) take positions in companies with the objective of causing a transaction.” Those hostile bids that do result in deals can be positive if the acquirer puts assets that were underused or poorly managed into the hands of better management, veteran dealmaker Mr. Morgenstern said. But, “If it’s a company that has 500 jobs in the community and somebody buys the company and ships those jobs elsewhere, the local people don’t really care about the macro consequences,” he noted. While deals done because money is cheap are inherently good for an acquirer, CardinalCommerce’s Mr. Keresman argues it tends to be a net negative. “Any acquisition due to artificially low interest rates is probably not good for all of us,” he said. “You’re taking out competition. You’re not letting the free market work as it should. It creates a situation where the rich get richer. You have fewer people who own.” ■

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’re seeing everybody across the state unite,” he said. HB 5, the measure that has engendered this rare show of bipartisan and city-and-suburban unity, ostensibly is designed to make it easier for businesses to manage their local income tax filings. The legislation, which is pushed by the Ohio Society of Certified Public Accountants and other business groups, would create uniform tax forms and filing requirements for the 600 communities that levy an income tax would be required to use. The groups argue it has become onerous for companies to file different forms for each community where their employees live and where they have operations. The mayors don’t object to that streamlining. However, they do object to sections of the bill that would define for all cities what income is taxed and how it’s taxed. The changes, they say, would reduce overall the income they tax and the revenue they receive from their income tax. They also aren’t happy about what they believe is the latest intrusion on century-old self-govern-

ment rights bestowed on cities by the Ohio Constitution.

Hubbub over home rule During an hour-long interview last Tuesday, March 5, in his office down the hall from the Red Room, Cleveland Mayor Frank Jackson ticked off some of the measures that Cleveland and other cities have passed during the last decade that have been overruled by the Legislature or the Supreme Court. The measures include residency restrictions on city employees, an effort to rein in predatory lending, gun control, and regulation of oil and gas drilling. Mayor Jackson also cites actions by Gov. John Kasich and the Legislature to eliminate the estate taxes and the personal property tax. Most of the revenue from those taxes went to local communities. He also mentioned the loss of the Local Government Fund, a long-established state revenue-sharing program. “And now they are getting bolder,” he said of the proposed municipal tax changes. “There’s a clear policy of picking winners and losers in the tax policy,” Mayor Jackson said, making it clear that urban areas were the losers. The mayors say these changes violate the spirit of municipal home rule, which became part of the state Constitution in 1912 and gave char-

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

Urban vs. rural State Rep. Mike Foley, a Democrat from Cleveland, said the problem has been that, until now, urban issues have been viewed as solely Democratic issues. Even though cities account for much of the state’s population, Republicans representing rural areas have set legislative district boundary lines in their favor, either packing urban populations into compact districts or breaking up urban populations into small pieces of largely rural districts. “The problem is, we are just without clout; we’ve got a legislature that’s got an anti-urban bias,” Rep. Foley said. “They’re not coming from dense urban areas where there’s lot of people with lots of problems. It’s a different mindset, and those are the people who have power in the General Assembly at the present time.” But state Rep. Nan Baker, a Westlake Republican, said she thinks legislators such as her, who represent suburban cities that more and more see themselves are part of an urban population, can chip away at those preconceived notions. She also maintains the urban mayors should raise their profile in Columbus. ■




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Hospital: UH docs recruited donors continued from PAGE 1



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closing their checkbooks, the health system vowed to raise another $500 million. So far, the system has brought in $1.03 billion. “We think of it like a surfer riding a wave,� said Ms. Bishop, UH’s chief development officer. “This wave has been getting bigger and bigger, and we weren’t seeing signs of it stopping.� Given University Hospitals’ size — it posts about $2.2 billion in annual operating revenue — philanthropy experts say the breadth of its fundraising push is bold and unusual. By comparison, the nearby Cleveland Clinic, an organization with about $6.2 billion in annual operating revenue, closed a major fundraising campaign in 2010 with about $1.41 billion in its coffers. “That is very special,� said Bill McGinley, president and CEO of the Association for Healthcare Philanthropy, of the UH fundraising prowess. “What we have seen in the health care arena is that a billion-dollar campaign eight or 10 years ago was almost unheard of,� said Mr. McGinley, whose group is based in Falls Church, Va. “As they (health care institutions) have built their (clinical) programs and become more sophisticated, they’ve awakened to the fact they have to invest dollars to raise dollars.� Last year, University Hospitals brought in a staggering $159.6 million, its most impressive showing to date thanks to a handful of large gifts, including a $50 million donation from the Harrington family to launch a major drug development initiative. That successful year puts UH alongside the Cleveland Clinic, which reported raising $148 million in 2012 — a 17.5% increase over its previous year’s totals. At the height of its own capital campaign in 2008, the Clinic brought in just north of $180 million.

Proving its worth University Hospitals launched its big fundraising push as it was plotting its ambitious, $1.2 billion Vision 2010 construction initiative that inspired a bevy of new facilities, including the $298 million Ahuja Medical Center in Beachwood and the $260 million Seidman Cancer Center on Euclid Avenue in

Cleveland. UH also saw success in raising cash to recruit top-notch physicians, securing money for 46 of the system’s 65 endowed chair programs during the course of the campaign. Ms. Bishop cited the involvement of administrators and physicians in selling the community on what they thought University Hospitals could become if it could pull off its commanding construction plan. UH formed so-called leadership councils comprised of donors, physicians and administrators. On the councils, donors serve as strategic advisers for the health system and drum up philanthropic support through their connections. UH also dispatches administrators and physicians each year to Florida to rally support from local donors who move south during the winter months. With a slew of new facilities and programs to show off, the health system hasn’t seen a need to halt its appeal for more philanthropic dollars. “We had to inspire donors with facilities and programs that didn’t exist,� Ms. Bishop said. “We didn’t necessarily have the credibility to fulfill our promise because this was an extraordinarily ambitious undertaking. People didn’t have proof UH could deliver on that. When we reached 2010, we had tremendous credibility as an organization.� University Hospitals also is competing successfully with the Clinic, Case Western Reserve University and the region’s large performing arts organizations in terms of the quality of fundraising professionals it’s recruited, according to Nancy Osgood, a local consultant who works with nonprofits and lectures at Case Western Reserve. “I think they’ve joined their ranks in terms of being a very competitive buyer of development talent in the marketplace,� Mr. Osgood said. “It’s not surprising to me that they’re ramping up their fundraising machine in terms of the actual results they’re producing.�

Plenty of room in the pool Officials at both the Clinic and University Hospitals shrug off assertions either party could see dips into their own fundraising pools because of the big dollars

they’re both pursuing. They instead suggest that University Hospitals’ mounting philanthropic might and the Clinic’s continued success are evidence health care giving is on the upswing after tumbling during recession. In 2011, hospitals and health care organizations raised $8.94 billion — an 8.2% increase over the previous year’s numbers, according to the Association for Healthcare Philanthropy. While 2012’s totals aren’t yet available, the association’s Mr. McGinley expects that number to grow as the economy slowly improves and health care organizations look to offset cuts in insurance reimbursements from commercial and government payers. Other observers suggest the success is a reflection of Northeast Ohio’s growing reliance on the health care field as its economic anchor. “We were struggling for three or four decades to transform ourselves from an economy rooted in smoky industries to one based on services, and here’s an indicator we’re doing it,â€? said Stuart Mendel, director of the Center for Nonprofit Policy & Practice at Cleveland State University. University Hospitals’ concerted fundraising push hasn’t dinged the Clinic’s numbers, which have been buoyed since Armando Chardiet, a former University of Pennsylvania Health System fundraising official, took over the Clinic’s fundraising operations in 2010. Officials at both systems noted that donors aren’t typically aligned with a particular institution. Lee Seidman, founder of The Motorcars Group, and his wife, Jane, have made major financial commitments to both the Clinic and UH in recent years. The couple contributed $42 million to University Hospitals’ new cancer hospital and $6 million for a new patient tower. The couple pledged $17 million to the Clinic in 2006 to endow a chair in functional neurosurgery and to advance research in areas dealing with the heart and the brain. “Most individuals choose based upon that project in that organization,â€? said Nelson Wittenmyer, vice chairman of the Clinic’s philanthropy institute. “Donors don’t see it as one against the other.â€? â–

Film festival to host ‘satellite screenings’ Five theaters will join Tower City, feature movies with local ties By SCOTT SUTTELL

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The Cleveland International Film Festival is taking its show on the road. The festival, which runs April 3-14 and is based at Tower City Cinemas in downtown Cleveland, announced it will have “satellite screenings� in five locations during the week of April 8. Those screenings include a full day of programming in Akron and what’s billed as “An Evening at the Apollo Theatre� in Oberlin — both first-time locations for the festival,

which is in its 37th year. The “37th CIFF Day and Knight in Akron,â€? presented with support from the John S. and James L. Knight Foundation, will take place on Thursday, April 11. The day’s events will include eight screenings at the Akron Art Museum and the Akron-Summit County Public Library. The Akron lineup will include “Red, White and Blueprints,â€? directed by Cleveland native Jack Storey; “Underdogs,â€? part of which takes place in Akron; a program of Ohio short films; and five other select screenings. The Oberlin event takes place Wednesday, April 10. “Dear Mr. Watterson,â€? a documentary about Chagrin Falls cartoonist Bill Watterson, and “Survival Prayer,â€? directed by Oberlin alum Benjamin GreenĂŠ,

will screen at the just-renovated Apollo Theatre on the Oberlin College campus. Each film will have two screenings, and the directors of each will be in attendance. In addition, the festival will have screenings on Monday, April 8, at the Capitol Theatre on Cleveland’s West Side; on Tuesday, April 9, at Shaker Cinemas on Shaker Square; and on Thursday, April 11, at the Cedar Lee Theatre in Cleveland Heights — the festival’s original home. All three of those locations have hosted festival screening in the past. Tickets for all festival screenings go on sale to members this Friday, March 15, and to the general public on Friday, March 22. The festival this year will screen a total of 178 feature films and 164 short subject films, from 65 countries. â–



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Suburbs: Companies make cities compete continued from PAGE 1

“We wanted to review what our image is, how far it is extended, and if it’s meaningful with site selectors as a place to do business.” Hudson officials last month heard from a consultant the suburb hired to survey business decisionmakers and site selectors, the professionals who help companies decide where to put factories or where to move a longtime office. The consultant, Atlas Advertising of Denver, found that while Hudson has a reputation as a high-quality place to live, the business people surveyed had a different view of the suburb. Atlas reported back that Hudson was not on the radar of any of the regional and national business location executives participating in the survey. Respondents recognized Hudson when asked about the Northeast Ohio communities that came to mind as family-friendly places with high-income residents and high-end shopping. But it did not register as a place with premium professional and technical workers or modern business parks. That finding is prompting Hudson officials to build a plan of action. Hudson now is studying ways to make itself more attractive to businesses, though a decision on a specific action plan isn’t expected to come before late spring. Hudson City Council has agreed to spend $254,000 for the services of Atlas, which specializes in helping communities brand themselves for economic development purposes and creates economic development websites and marketing programs. For a peek into the future, Hudson could look at how two other communities, Avon Lake and Beachwood, grappled with the same question in recent months. Those communities decided the answer was tax breaks — even though it’s not at all clear that the small tax breaks municipalities can offer is the best way to stand out.

Check, please Avon Lake recently started handing out $215,448.72 in checks to 134 local businesses that grew their payroll. The Lorain County community last year approved legislation that looks back at what companies and their employees paid in local income tax in the previous year. If a company’s payroll grows, the business, under Avon Lake’s Job Growth Incentive Program, gets a rebate of 25% of the growth. “We wanted to find something we could do to set Avon Lake apart from others,” said Councilman Dan Bucci. “And it had to be easy for businesses to understand.” Companies need not apply for the rebate. Mr. Bucci said the city does the calculations at year’s end and sends out the checks. “If you’re paying more, you’ve done something, you’ve either hired people, they work longer hours or you’ve given raises,” he said “Whatever you’re doing, it’s improving your business and contributing more to the tax base of the city.” The payments ranged from $76,642.36 to Ford Motor Co., which has a large assembly operation in the lakefront city, to $11.13 to Fifth Third Bank’s Fountain Square Plaza branch. The rebate does not apply to home-based businesses — in part, Mr. Bucci said, because the city

Hudson mayor William Currin said a survey found business people had a different view of the suburb than those who looked at it as a good place to live.



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

Eastern promises Beachwood has moved in a similar direction. Reacting to growing vacancy in Commerce Park, its longtime commercial and industrial neighborhood, and opportunities to grow around the new headquarters of Eaton Corp. in Chagrin Highlands, the eastern suburb 18 months ago embarked on a review of its economic development effort — and of its longstanding policy of not offering financial incentives. The result is the Job Creation Incentive Grant Program, which was approved last month by City Council. With it, Beachwood will offer eligible companies an annual grant based on a percentage of the annual payroll withholding taxes generated by new jobs in the city. “One of the key recommendations (of the suburb’s review) was that we build an incentive framework that would make Beachwood more competitive,” said Jim Doutt, the city’s economic development director, who was hired last May to implement the plan. To win a grant, a company must pledge to create a minimum of 30 jobs and $1 million in payroll over three years. The maximum grant is 50% of the new payroll taxes for five years.

they are looking for from the community is anything it can do to help them get off to a fast start.” At that point, factors such as permitting and helping ease the financial risk, perhaps with new infrastructure, are important, he said. Communities also should not underestimate the importance of calling on existing businesses and asking them what their plans are and what, if anything, the community can do to help them expand in place, Mr. Foran said. ■

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‘They buy the region’ One of the attractions of the Avon Lake and Beachwood programs is that they don’t cut into existing revenue, as a tax abatement might. However, while communities feel increasing pressure to enter bidding wars, some economic development professionals wonder if they are going in the right direction. “Incentives have gotten pretty perverse,” said Edward Hill, dean of the Cleveland State University’s Maxine Goodman Levin College of Urban Affairs. “The problem is that for companies where the city they are located in makes no difference, the companies are more than happy to let communities compete against each other.” Jay Foran, senior vice president for business attraction at Team NEO, questions the use of financial incentives by communities. Team NEO is the regional business attraction and retention nonprofit that is tied to the state’s economic development programs. He said it is state incentives, which are much larger than anything a small community could offer, that play the more important role. Besides, for most companies looking to expand or move to a new locale, “80% of the search is regional,” Mr. Foran said. “They buy the region, they don’t buy the community,” he said. “Near the end of the search, when they are down to two or three sites, what

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MARCH 11-17, 2013


Brian D. Tucker ( EDITOR:


Scott Suttell (


Sorry lot


he onset of the sequestration process represents the height of hypocrisy both by members of Congress and the Obama administration. They blame each other for this indiscriminate method of budget reduction, yet it was by mutual agreement that Congress approved and 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 time bomb. Because of its nonsensical, one-size-fits-all way of dealing with spending cuts, the sequester would force Congress and the president to come up with a reasoned and reasonable compromise for how to hold down the federal deficit, and with it the astronomical 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 Inquisition skit of the Monty Python comedy troupe. For those unfamiliar with the routine, the inquisitors who are accusing an old woman of heresy tell her she has one last chance to confess her sin … then quickly change it to two last chances … then three. Congress and the president pulled a similar “last chances” maneuver when they pushed back the original sequester deadline of Jan. 1 and moved it to March 1. Even then, they couldn’t diffuse the time bomb before it finally exploded. So now, the first stage of the sequester has kicked in, with $85 billion in spending cuts slated for this year. The cuts would be split 50-50 between defense and 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 is out of control and must be reined in if the United States 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 opinion polls indicate that a significant majority of Americans sees the need for federal spending cuts. Last Wednesday, an ABC News/Washington Post poll showed the public, by nearly a 2-to-1 margin — 61% to 33% — supports cutting the overall budget along the lines of the sequester. And, in an interesting twist, the poll found majority support for the broad spending cuts among Republicans, Democrats and independents. However, there is a catch to the poll’s findings. By a nearly identical margin as those who favor broad spending cuts, poll respondents opposed a sequester-induced 8% reduction in military spending. Taken together, the results of this poll and others scream at Congress and President Obama to ditch the 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 bankrupt the country, either. The people are waiting.


Save us the celeb fracking drivel to assemble land rights, get drilling pert’s no wonder that people tend to mits and build the needed infrastructure blindly lump actors, musicians and to process and deliver the gas and oil other celebrities into the same bin products. of ultra-liberal activism It’s a game-changer, and bilfueled by emotion rather than BRIAN lions of dollars are being spent careful thought. It’s because so TUCKER in Ohio to develop this newest often it’s true. part of our decades-old energy Case in point: Last week’s industry. As you will read in our Associated Press story about magazine next week, many celebrities such as Yoko Ono, Ohio manufacturers are already Robert Redford and others takbenefitting from this developing up the anti-fracking banner. ment, which is really in its Now, I presume all of you nascent stages. This work has who read this newspaper, and helped drop Ohio’s unemployCrain’s Shale magazine (the ment rate a full point below the national latest issue comes next week to our subaverage. scribers), know that “fracking” is the The AP story quoted these preposterslang term for horizontal hydraulic fracous statements from anti-fracking turing, a method of drilling for natural celebrities: gas and oil that blasts chemicals, sand Mr. Redford, in a radio ad, saying that and water a mile-and-a-half or so below fracking has “been linked to drinking the earth to release valuable minerals from heretofore inaccessible shale water contamination all across the counformations. try. It threatens the air we breathe.” The development along Ohio’s Utica Truth is that scientists have shown that shale is happening fast and furious, as greenhouse gases have been significantly big, out-of-state energy companies race cut because plentiful, fracked natural gas


has prompted electric utilities to shift from coal as a fuel. Alec Baldwin, writing in the Huffington Post (surprise), states that companies promise big economic benefits but “deliver a pittance in actual compensation, desecrate their environment and then split and leave them the bill.” Truth is that this new industry already has brought significant economic prosperity to Ohio’s Appalachian region, which has long suffered. Emotional anti-fracking folks keep spouting that the country can be run on renewable resources. Truth is that it’s not economically feasible to meet America’s energy needs with renewable resources, and I’d guess that smart environmentalists know that. But emotions keep the donations pouring into organizations such as the Sierra Club and others that oppose fracking. And the celebrities just babble on, mouthing the same unfounded diatribes, with no care for the thousands of jobs that are being created in America’s starved rural areas, Ohio included. ■

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






Rocky River

East Cleveland


No, I don’t. At least, I’m not worried about that initially — maybe toward the end. But I think it actually could foster creative ideas. … Can we make it safer for people to use? Can we make it, you know, not as crazy as sometimes traditional gambling is?

I would think the Internet cafes will increase the gambling issue within the Cleveland area, just because it becomes more convenient for someone.

I think a lot of that space can be used for other recreational purposes or something more positive. … They’re doing more harm than help, in my opinion.

We already have gambling in a wide variety of places and things in Ohio anyway, whether it’s going to the casino, whether you bet on sports or whether or not you actually play bingo. So I don’t think it’s going to change or affect things one way or another.

➤➤ Watch more people weigh in by visiting the Multimedia section at



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Nerves: Third trial will have 100 patients

McDonald Hopkins

continued from PAGE 3

Granted, both trials were small — combined, they included only 15 patients — and the second trial isn’t quite finished. But the results are consistent, CEO Jon Snyder said. Most of the 15 amputees reported pain levels ranging from 6 to 8 on a scale of 10. Their pain typically dropped to a 0 or a 1 shortly after using Neuros Medical’s Nerve Block technology, Mr. Snyder said. One patient told Mr. Snyder the treatment allowed him to sleep through the night for the first time in years. Another no longer needed to take pain medication. And more than one patient said they weren’t used to being pain-free. “I’d ask them, ‘When did you have zero pain before?’ They’d say, ‘never,’ � he said. The results have been so consistent that Neuros Medical’s many investors could have the option of selling the company before it starts enrolling patients in a much larger pivotal trial, said Stephen Haynes, CEO of Glengary LLC, a venture capital firm in Beachwood that is one of Neuros Medical’s many local investors. But the investors could generate a bigger payout if they retain ownership, at least until the larger, 100patient trial is complete, Mr. Haynes said. How big might that payout be? Consider two previous deals involving local neurostimulation technologies. NDI Medical LLC of Highland Hills sold its first product — an electrical stimulator designed to help people control their bladders — to Medtronic Inc. for $42 million in 2008. Another company, Intelect Medical Inc., hit it big in 2011 when it was bought by Boston Scientific Corp. for $60 million in a deal that valued the entire company at $78 million when Boston Scientific’s previous stake is included. Intelect moved from Cleveland to the Boston area just before the acquisition was announced. Neuros Medical could generate a similar payout if the larger pivot trial goes well, Mr. Haynes said. And it should go well, given how consistent the results have been so far, he said. “You don’t have the same potential risk of having a pivotal trial coming back with results that aren’t expected,� Mr. Haynes said.

More hertz where it hurts Boston Scientific sees promise in the Nerve Block technology, too. The Natick, Mass.-based medical technology company invested in Neuros Medical last year. Boston Scientific one day could buy the company or form some other partnership, Mr. Snyder said. The terms of Boston Scientific’s investment give the publicly traded company rights other potential suitors wouldn’t have, Mr. Snyder said, declining to provide details. Neuros Medical has raised a total of $7.2 million in capital, including $1.75 million in convertible debt that existing investors chipped in over the last two months. RiverVest Venture Partners of St. Louis, which has a Cleveland office, led the recent investment. Now Neuros Medical is planning to raise roughly $9 million to fund the pivotal trial, Mr. Snyder said. The technology, developed at Case Western Reserve University,


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The majority of the 15 patients who used Neuros Medical’s Nerve Block technology during trials reported a pain level of 0 or 1 on a scale of 10 after using the Willoughby company’s equipment. provides extremely fast electrical stimulation to damaged nerves, blocking the pain signals that they send to the brain. The studies suggest the relief lasts at least a few hours, Mr. Snyder said. When the pain comes back, patients can press a button on a remote control to reactivate the generator that provides the electricity, which flows through implanted leads to reach the damaged nerves. Neuros Medical in January finished developing an implantable version of the Altius generator, which is about one-third the size of an iPhone. Aside from an injectable drug called lidocaine, which numbs the damaged area, other drugs used to treat phantom limb pain mask it as opposed to getting rid of it, Mr. Snyder said. Spinal cord stimulation, a common form of neurostimulation, isn’t strong enough to stop phantom limb pain completely, he said. The Nerve Block technology is sufficiently strong because it targets the nerves that cause the problem and hits them with much faster bursts of electricity, Mr. Snyder said. “Instead of 30, 40, 50 hertz, we’re at 5,000,� he said.

They have a platform Neuros Medical eventually plans to use the technology to treat other types of chronic pain caused by damaged nerves, said Dr. Amol Soin, founder and medical director of the Ohio Pain Clinic, which has four offices in the Dayton area. One big opportunity would be treating patients who suffer from a category of migraine headaches caused by damaged occipital nerves, said Dr. Soin, who led the first two studies. “This is essentially a platform technology,� he said. Dr. Soin learned about Neuros Medical because he is one of many individual investors who belong to the Ohio TechAngels investor network, which is based in Columbus. Because he knows a thing or two about treating pain — for instance, he also is president of the Ohio Society of Interventional Pain Physicians — another TechAngels member asked him to review research the group had compiled about Neuros Medical as it prepared to invest in the company. Dr. Soin was impressed, so he

made an investment of his own. He liked the technology because it provided a defined way to treat a big problem that has been around since the days of ancient Egypt, he said, noting that more than 750,000 people in the United States suffer from phantom limb pain. And few technologies are so effective at treating pain, he said. “It’s really, really tough to get the pain score down from a 7 to a 1,� Dr. Soin said.


Job stimulation? Not yet But will Neuros Medical be effective at creating local jobs? That isn’t clear. Because the business is small today, employing just seven people, it easily could be moved if it is acquired anytime soon. For instance, it could follow Intelect Medical’s lead and move if it is bought by Boston Scientific, which would not provide comments for this story. Various successful neurostimulation startups end up being bought by big players in health care, according to people in Northeast Ohio’s neurostimulation business who spoke with Crain’s for a 2012 story about the sector’s growth. However, there’s a chance an acquired company could remain in the region as a division of a larger company, according to some people interviewed. Plus, some neurostimulation businesses, such as NDI Medical, do remain independent companies. Some money Neuros Medical has raised came from sources interested in creating jobs in Ohio. Several of its investors — Glengary, RiverVest, the Ohio TechAngels, JumpStart Inc. of Cleveland, North Coast Angel Fund of Mayfield Heights and Queen City Angels of Cincinnati — have received money through either the Ohio Third Frontier economic development program or the Ohio Capital Fund, a taxpayer-backed “fund of fundsâ€? that invests in venture capital groups that commit to using at least half the money to finance Ohio-based startups. But even if the company does move, not all is lost, said Mr. Haynes of Glengary. “If investors in the region make money on investments in the region, they will make more investments in the region later on and ultimately will create jobs,â€? he said. â–

n e o m e d . e d u

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3:20 PM

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Attn: Manufacturers & Warehouses

MARCH 11-17, 2013


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


















LAKE ERIE COLLEGE: Ed Mayer to director of development.

ENGINEERING AUSTIN CO.: Salem Tawdrous to area superintendent; Adam Wix to field engineer; Susan Riffle to communications specialist; Derek Mast to mid-level architect; Jonathan Gemmen to senior facilities consultant; Mike Leonette


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

FINANCIAL SERVICE CIUNI & PANICHI INC.: Mathieu Fortin to staff accountant. KIRTLAND CAPITAL PARTNERS: Tom Littman to CEO; John Nestor to chairman and senior managing partner.


SS&G: Michael May to senior associate.

BATH FITTER: Ron Deubel to regional vice president.

TOWERS WATSON: Diane Nowak to senior consultant.


SAFEGUARD PROPERTIES: Joe Iafigliola to vice president, vendor management; Wendy Anderson to attorney.

WESTIN CLEVELAND DOWNTOWN: Alan Feuerman to director, sales and marketing.

Your business is our business.

STAFFING RESERVES NETWORK: Amie Bullard to accounting manager.

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

LEGAL HAHN LOESER & PARKS LLP: Bret A. Hrivnak, Robert B. Port and James D. Schweikert to partners; Brendan E. Clark and Joshua A. Lusk to associates. JONES DAY: Evan Hirsch to associate. KAUFMAN & CO. LLC: Lorraine E. Gaulding, Brendan P. Kelley and Ashtyn N. Saltz to associates.

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STARK & KNOLL: Ronald Lembright to of counsel; Patrick O’Connor to associate.

MANUFACTURING LINCOLN ELECTRIC CO.: Dalithia Smith to human resources director, North America.




TECQUITI LLC: Zeeba Mercer to chief operating officer; James M. Angiulo to chief technology officer.

BOARDS Angiulo BIKE CLEVELAND: Christopher Alvarado (City of Cleveland) to president; Jeffrey Sugalski to vice president; Nancy Desmond to secretary; Barb Clint to treasurer.

INTERNATIONAL SOCIETY OF CERTIFIED EMPLOYEE BENEFIT SPECIALISTS, NORTHEAST OHIO CHAPTER: Tom Scurfield (H&B Consulting Associates) to president; Randy Werner to vice president; Mark Freiman to treasurer; Kevin Burns to secretary.

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

MAXIMUM ACCESSIBLE HOUSING OF OHIO: Scott Strawn to president; Andrea Aycinena to vice president; Thomas Meyer to treasurer; Jan Hollinger Jones to secretary; Ann Russell to past-president.



GREATER CLEVELAND FILM COMMISSION: Bob Aber to vice president, finance and operations; MacKenzie Rodgers to office manager/executive assistant.

INSTITUTE OF REAL ESTATE MANAGEMENT: Brunetta Y. Harris (Forest City Enterprises) received the Certified Property Manager of the Year Award.

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SAINT LUKE’S FOUNDATION: Christie Manning to senior program officer for resilient families. VILLAGE NETWORK: Richard Graziano to president, CEO.

REAL ESTATE CUTLER REAL ESTATE: Lauren Smilan to sales associate, Fairlawn. TRANSACTION REALTY: Martin Lutz to sales associate.


TURNAROUND MANAGEMENT ASSOCIATION: Larry Goddard (SS&G Parkland Consulting LLC) received the 2012 Lifetime Achievement Award.

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MARCH 11- 17, 2013






When rapper Jay-Z wore shoes made by PMK Customs to the Brooklyn Nets’ home opener on Nov. 3, the Cleveland company saw a significant increase in visitors to its website.

Big shots can mean gigantic benefits Celebrity shout-outs are sometimes all it takes for companies to get needed boost By CHRIS SWEENEY


the Gordon Square Arts District had succeeded in creating nightlife there with restaurants, bars and art galleries, but economic developers wanted more daytime traffic to support its existing retail businesses. Enter the Gordon Square Arts District Best Business Plan Competition, which pitted would-be shop owners against one another to win free rent space in the Detroit Shoreway neighborhood.

ost companies seek the help of a celebrity to promote their brand. But the best kind of publicity comes when a celebrity genuinely loves the product and uses it when everyone is watching. That’s what happened recently to Cleveland-based PMK Customs when company partner Emory Jones, who also is Jay-Z’s right-hand man, showed one of its shoes to the rap superstar. It turns out PMK’s Brooklyn Zoo footwear was a perfect fit for the singer to wear during the Brooklyn Nets’ first game Nov. 3 at the Barclays Center. The celebrity nod has paid off big for PMK; the company experienced an increase of about 2,000 unique visitors to its website per day since Jay-Z was seen wearing the shoe. “It was unbelievable,” PMK’s CEO, Andre Scott, said. “I was speechless. It brings so much validity and press and everything to the company that we need to just keep pushing forward. This is something you can’t pay for.” PMK Customs — founded in 2004 and under Mr. Scott’s leadership since 2011 — transforms classic shoes with new colors and designs.

See FUELING Page 16

See BENEFITS Page 14


Erin Gargiulo is the owner of Honeycomb Salon in Cleveland.

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


t was a match made not in heaven, but on Cleveland’s near West Side. Aspiring salon owner Erin Gargiulo could not act on her entrepreneurial urge, unable to afford rent prices in Ohio City, where she worked, or nearby Tremont. Meanwhile, fledgling revitalization efforts in



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MARCH 11 -17, 2013



Q: Mom’s Gourmet experienced a huge year of growth in 2012. Tell me about the expansion and how it came about.

Co-founder Mom’s Gourmet, Newbury By AMY ANN STOESSEL


ith names like Black Dog Belly Rub, Rowdy Kitty Rub and Far Out Feather Dust, the products from Newbury-based Mom’s Gourmet are catching the attention of consumers nationwide. That’s the because the 5-year-old artisan seasoning and spice blends company over the past year dramatically expanded its reach and distribution, landing in 115 Fresh Market stores nationwide as well as Whole Foods Market Southwest and small market chains in New York City, Michigan and New Hampshire. “It’s kind of been like the little snowball rolling down the hill,” said Sally Koepke, who founded the company along with her mother Patsy Flattery. Ms. Koepke recently took time to answer questions from Crain’s Cleveland Business regarding the company and its recent growth. Q: How and when did Mom’s Gourmet start A: The idea sprouted in 2007 while on a trip south to train my dogs. My mom came along, and we were discussing plans for the holiday. I suggested to my mom we make handcrafted seasonings and spice blends without salt or sugar and give them as gifts to friends and family. …


Patsy Flattery, left, and her daughter, Sally Koepke, right, founded Mom’s Gourmet. They turned out to be a big hit with everyone, and they started asking for more. So back to the kitchen we went with our coffee grinders. Friends and family kept suggesting we bring them to market. In 2008, curiosity got the better of me and I started looking for co-packers. I work full-time so the weekend was the only time to research. Then my mom made the calls to potential co-packers. After a year of calls we finally found one right in our back yard, in Cleveland. We started the business with $6,000, and a whole lot of help from friends, family and wonderful retailers who wanted to support a local business: Breezewood Gardens, Chuck’s Fine Wines, Whole Foods Market locally and Heinen’s. Many independent stores, such as Miles Market, Gibbs Market, Bay Lobster Market, Portage Market and others, also sell our products.

A: We grew steadily in 2011 with the addition of the Cleveland Clinic Wellness Center Store, Whole Foods Market, mid-Atlantic, northern California and southwest regions. In 2012, I received an inquiry from our website 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 review the products and then bring them into their Ohio stores as a local vendor. I received an email from him about three weeks later and he said they loved the blends, he said, “Don’t get excited but I gave a couple samples to our grocery uyer who might consider them for all the stores.” I about fainted. Two weeks later, I received a call from Haddon House, a big East Coast distributor, who said they were bringing us in for all 124 Fresh Market stores. Needless to say, we were on Cloud Nine. Then when the purchase order came and the pickup date was in two weeks for a cajillion cases, I almost had an anxiety attack. We small-batch blend and grind to order so I had to call them and tell them we needed more time. One month later, they picked up. At the same time, Whole Foods Market, south region, brought in five SKUs (stock-keeping units), and Orvis Co. stores brought our gift sets into 100 of their stores. Then Haddon House brought us into a number of other smaller chains and


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independents, including New York City Union Markets. Needless to say, 2012 was a great year of expansion and challenges. Q: What have been the biggest challenges to building your business, especially in terms of creating a national reach? A: Our biggest challenges have been managing growth and time. Running out of product or labels or jars brought to my attention the importance of inventory management. I have spent most of my free time, including vacations, researching new opportunities or conducting demos (yep, apron and all). Mom is helping fulfill online orders, which have increased significantly. My brother has joined in and helping out with much of the day-to-day, and our co-packer, Chef2Chef Foods has been very supportive. My friends and relatives have been a huge help with demos and store sales calls. When we started the company, the goal was to provide healthier, highquality products with slow sustainable growth so that by the time I retired, I could enjoy the business. … Word-of-mouth has been incredibly helpful and social media has really helped us reach consumers far and away. The good news is we have no debt, are growing and still loving the whole experience!

had done my due diligence, I probably would have never pursued the business. The competition is fierce. The whole bringing a product to market is incredibly daunting. How do you commercialize a kitchen business, how do you price your product? Every additional layer in your model (reps, distributors, brokers) take a piece of the evershrinking pie. … Q: What are the positives and negatives of running a motherdaughter enterprise? A: The mother-daughter enterprise works for us because we have always been close, established roles, tasks and respect each others opinions. The only downside right now is mom can’t demo with me as often. We love to get out on the weekends and sample our products, interact with consumers. At one demo in Cleveland Heights, a man stopped by to sample and as our eyes met, I realized he was the surgeon who took care of my mom at Metro (well, there were several) after she had a terrible car accident on black ice. He had tears in his eyes, my mom had tears in her eyes and I did too. He couldn’t believe how well she was doing. Yep, I said at the age of 83 she started a company. Q: Any future plans?

Q: Is there anything you would have done differently in growing your business? A: I’m not sure what we would have done differently because we were not sure what the right thing would have been for us to do. Seriously, if I

A: Future plans. That’s a very good question. We have two new blends that are going to launch shortly. These are in the same healthy fashion as our other blends but with much more complexity. Variety is the spice of life. ■



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Plan contains dramatic relief for some owners


he recently unveiled two-year budget proposal for the state of Ohio contains some bold tax relief specifically targeting small business. When Gov. John Kasich proposed the 2014-2015 budget for Ohio, he included some significant tax breaks for small business owners — especially pass-through entities such as S corporations, limited liability companies, partnerships and sole proprietorships — intended to free up resources that would enable them to do some new hiring or investing. Taking note that Ohio ranks higher than most states in its marginal income tax rates, especially compared to its immediate neighboring states, Gov. Kasich has proposed a reduction in rates that is intended to help Ohio compete in jobs and investments. In fact, the governor calls his proposal for tax relief directly to small business the “centerpiece” of his tax reform proposal because academic research suggests small businesses account for the majority of new job growth over the past 20 years. Remarkably, Gov. Kasich proposes slashing in half the amount of business income to owners or investors in pass-through entities that would be subject to Ohio Kasich income tax. That would mean an owner or investor in such an entity would pay Ohio income tax on only half of their reportable income. If an owner’s normal taxable income is $100,000, under the governor’s proposal it would drop to $50,000. Recognizing that some pass-through entities actually are quite large, the governor proposes capping the income that would be eligible for the deduction at $750,000 annually. That means the maximum amount that would be excludable from taxable income for any given taxpayer would be $375,000. Gov. Kasich estimates the proposed reduction will exempt $14 billion in Ohio income from taxation, resulting in savings to those small business taxpayers of $600 million to $650 million annually. He’s banking on business owners using that money to increase their payroll, thus putting other Ohioans to work earning other taxable income. The proposed budget also would reduce state marginal tax rates in all nine tax brackets over a threeyear period, effectively reducing tax rates by some 20% by tax year 2015. The objective is to reduce Ohio’s top margin tax rate to below 5%, ranking it in the bottom half of all top state tax rates, assuming all other states held constant. For small business owners, the effect of the proposed reduction in marginal tax rates combined with the proposed relief specifically for pass-through entities is substantial. The budget proposal even provides an illustration to demonstrate.


TAX TIPS The governor imagines an Ohio LLC with three partners or owners in the business. The business is profitable and earns $1.5 million in

tax year 2015. It is divided evenly among the three partners, resulting in each owner receiving $500,000. For the sake of simplicity, the example assumes each owner is married and has a total of four exemptions. Based on the reduced marginal tax rate, each taxpayer would realize a tax savings of about $5,000 a year. Based on the 50% deduction of taxable income resulting from the LLC, the taxable income for each partner would be reduced from $500,000 to $250,000, resulting in tax savings of $12,000. That combines for a tax savings to the

business of $17,000 for each partner, or a total of $51,000 for the year — perhaps enough, Gov. Kasich surmises, for the business to consider expanding the payroll or investing in capital. It remains to be seen how Gov. Kasich’s proposal ultimately will be accepted by the Ohio Legislature, but the governor’s office makes a strong case for tax relief to spur economic growth in Ohio. The proposal notes Ohio policymakers have recognized for at least a decade that Ohio’s margin tax rates inhibit interstate compe-

tition for jobs and investment, especially when Ohio’s rates are higher than Pennsylvania, Michigan and Indiana. This is a proposal Ohio’s small business owners will want to watch closely. The impact on small business owners and their ability to plan their growth strategies could be significant. ■ Peter A. DeMarco is vice president and director of tax services for the regional accounting and business consulting firm of Meaden & Moore, headquartered in Cleveland.

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Benefits: Social media increases possibilities continued from PAGE 11

In the case of the Brooklyn Zoo, PMK took the Air Jordan 1 and gave it a makeover with nine exotic animal skins: stingray, elephant, boa, python, ostrich, crocodile, alligator, lizard and calf. (To avoid any trouble with the original shoe company, its logo remains.) The company generally sells shoes within the $150 to $500 range; Mr. Scott estimates it sells about 15 to 20 pairs per week. At $2,500, the Brooklyn Zoo is the most expensive shoe PMK has designed to date. Only 10 pairs were made, and they sold out in just over a day after being released at Unknwn, LeBron James’ boutique in the Miami area. People still are inquiring about the shoe, but PMK is committed to keeping it exclusive and will not produce beyond the initial 10. “I know that when we drop our next shoe it’s going to be off the Richter scale. Now people really know who PMK Customs is, things really spiked overnight for us,” he said.

A slice of celebrity


Celebrity endorsements have been brand components for a very long time, and Northeast Ohio businesses are no stranger to benefiting from star power. According to Elad Granot, an associate professor of marketing and the director of the executive, accelerated and mobile MBA programs at Cleveland State, unsolicited endorsements absolutely carry more weight than solicited ones. “The clutter in the marketplace has become so massive and consumers have become so jaded and also quite knowledgeable 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 and the brand. Social media, however, directly connects celebrities and consumers, giving stars a more personal identity that can enhance, or in some cases detract, their value as a company spokesperson. “Today you expect, as a consumer, public figures to have lives and to communicate about these lives,” Dr. Granot said. “It’s much more complicated, but there is a lot more promise to deliver messages more organically through various spokespeople.” Northeast Ohio’s Antonio’s Pizza received one of the most organic endorsements possible: a regular customer. Drew Carey was a frequent visitor to Antonio’s restaurant in Parma during the late ’80s and early 1990s. He mentioned the pizza company in his autobiography “Dirty Jokes and Beer: Stories of the Unrefined,” would regularly talk about Antonio’s on “The Drew Carey Show” and even did a segment that took place in a mocked-up set of Antonio’s. “It was huge, that was when Parmatown was in its prime,” said Fred LoSchiavo, the owner of Antonio’s Pizza. “It was awesome; he definitely generated a crowd any time he would come up to the mall or to our restaurant.” But Mr. Carey really gave Antonio’s publicity in 2008 after his first season hosting “The Price is Right.” He ordered 43 pizzas from Antonio’s for a year-end party in California. The cost for the pizzas plus cross-country shipment totaled $1,800. Mr. LoSchiavo said Antonio’s website hits spiked from 10,000 per week to

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

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

Creating buzz


The fruits of a celebrity partnership don’t always show in web hits or sales figures, though. Bedford-based Beecology reached out to Cleveland-area native and musician Jim Brickman in 2010 to partner for a promotion during the release of his newest CD. Mr. Brickman was intrigued by the offer and the company wound up giving him 1,000 “Brick Balms,” a spinoff its popular lip balm “Buzz Balm.” Mr. Brickman gave them away for free to the first 1,000 who bought his CD from his website. “It was a very simple promotion,” said David Rzepka, owner of Beecology. “From what I recall they went pretty quick. It was a really good thing. They’ve also given away our lip balms and packs on his cruises.” The promotion didn’t spike the company’s sales significantly, but Beecology picked up a new distributor as a result of the partnership. According to Mr. Rzepka, Beecology’s product caught the attention of MarketShare Distribution, by way of one of its clients Greenhill Music, which also partners with Mr. Brickman. As a result, the distributor offered to bring Beecology to gift and specialty stores all over the country. As for PMK, despite its 10 minutes of fame, it still will continue to produce only about 10 to 20 pairs of a particular shoe — like it did with the Brooklyn Zoo. “People are waiting for our next drop so they can cop that one because they know we put hot stuff out there,” CEO Mr. Scott said. ■

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

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■ UNDER NEW OWNERSHIP: Sims-Lohman Fine Kitchens and Granite in February acquired the cabinet and countertop division of Babin Building Solutions. Sims-Lohman currently serves the Cincinnati, Columbus, Dayton, Indianapolis and Lafayette, Ind., markets, and this acquisition allows the company to provide service to the Cleveland market. Sims-Lohman will continue to operate the former Babin showroom at 4101 Royalton Road in Broadview Heights. The Elyria showroom at 5240 Detroit Road will re-open in March after the completion of renovations. 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, which gives beauty professionals the location, tools and support to operate their own businesses. The Columbus-based company currently has 31 locations nationwide, with more than 700 loft owners operating independent businesses within the stores. Loft owners rent space and are given access to software tools and platforms for scheduling, marketing and growing their businesses. Two Cleveland locations opened in late 2012, one in Mentor and the second in Woodmere. The following locations are slated to open in April 2013: Shaker Town Center; Corporate Park of Beachwood; and Acme Montrose Plaza in Bath. The Cleveland locations will have on average 23 lofts each. All Cleveland locations have a limited level of availability for loft space. Cleveland is one of five markets in which Salon Lofts operates. The others include Columbus and Cincinnati; Tampa Bay; and Indianapolis. Including Cleveland, the company expects to open 15 to 20 new stores in 2013.



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SMALL Business is

GRANDOPENINGS DISCOVER MY CLEVELAND 30799 Pinetree Road, Suite 223 Cleveland 44124 Discover My Cleveland is a destination management company that plans and manages every aspect of an organization’s visit to the area. The firm coordinates logistics from arrival to departure for group, spousal, step-on, leisure and other tours, handling details including transportation, staffing and itineraries. 216-369-9399

JENNINGS LAW OFFICES LLC 223 West Main St. Ravenna 44266-2741 Attorney Jonathan P. Jennings has opened Jennings Law Offices. The firm provides comprehensive legal services 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) with a bachelor’s in urban studies and a bachelor’s in law in society. He then earned his J.D. from Case Western Reserve University School of Law. Mr. Jennings was admitted to the Ohio Bar in 1999 and also admitted to practice before the United States Bankruptcy Court, Northern District

of Ohio and the United States Tax Court. A resident of Ravenna, Mr. Jennings is a member of the Portage County Bar Association, the Akron Bar Association, the Ohio State Bar Association and the Northeast Ohio Collaborative Law Professionals. 330-296-6300 j.jennings@jennings

CLEAN MONUMENTS CO. 13882 Cedar Road Cleveland 44118 Clean Monuments Co. specializes in providing customized gravesite services, including professional cleaning and repairing of headstones and monuments, flower delivery and cemetery transportation. A four-generation company, Clean Monuments Co. has developed Forever Clean, a seven-step approach to cleaning and maintaining headstones. Phone 216-321-6740 or 800-278-8523 Fax 216-321-6750

MONTE CIGARS 7324 Valley View Drive Independence 44131 Monte Cigars is a cigar shop and smoking lounge, offering cigar locker rental and premium cigars. Other on-site amenities include free Wi-Fi,

lounges and televisions. The business also is available for special events. 216-524-1944

MEDINA CREATIVE PET PLAY 4080 Creative Living Way Medina 44256 /site/page/pet_play Medina Creative Pet Play is a full-service pet day care that supports individuals with disabilities through its supportive employment work training program. Employees are involved in every aspect of pet pampering, including care, training, photography, spa services, treat production and retail sales. Reservations are preferred, but walk-ins are welcome. Medina Creative Pet Play is open 7 a.m. to 6 p.m. Monday through Friday. The 3,000-square-foot facility will employ 20 individuals. 330-591-4434 pam@medinacreative To submit information about a new business, opened within the past six months, send the following information for publication to Crain’s Cleveland Business sections editor Amy Ann Stoessel at astoessel business name; address; city and ZIP; website address; brief description of the business; business phone number; business fax number; and business e-mail.


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Fueling: Contests were crucial for some continued from PAGE 11

“When I found out about the business plan competition, I thought there is no better time than now,” Ms. Gargiulo said. Business plan judges must have felt the same. Last fall, Ms. Gargiulo learned she was one of the competition’s two winners. Today, clients are pouring into her Honeycomb Salon, although an official opening still is being planned. The Gordon Square competition is one of the newer business plan contests in Northeast Ohio and part of a growing crop of competitions focused on bringing businesses to specific neighborhoods. While business plan competitions are not new, the idea has picked up steam in recent years alongside a growing emphasis on entrepreneurism — both inside and outside of academia — according to Jerry Frantz, managing venture partner at

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JumpStart Inc., a Cleveland-based nonprofit focused on entrepreneurs. Often, Mr. Frantz said, contests awarding cash or other prizes to promising business ideas are an outgrowth of entrepreneurial programs, whether they be at universities, private corporations, nonprofits or community development organizations. As the popularity of such programs has swelled, so too has the number of competitions.

experience is invaluable, Mr. Frantz said. What’s more, unlike pitching a business to Uncle John or a rushed angel investor, competitors in these structured contests get vital feedback and guidance from judging panels that often include proven entrepreneurs, bankers, attorneys, investors and experts in product development and marketing. Everybody walks away with something, he said.

Pitching practice

Creating winners

JumpStart held its inaugural student business competition late last year, awarding the $1,500 firstplace prize to Miach Medical Innovations, a medical device company established by a Case Western Reserve University student. The Council of Smaller Enterprises revived and reinvented its business plan competition in 2011 after a 10-year hiatus. The contest came back as a business pitch competition, mimicking the popular TV reality show “Shark Tank,” according to Randy Carpenter, senior director of corporate communications for COSE. “We thought the mood was right to bring it back,” Mr. Carpenter said. Along with the economic downturn that put many displaced workers in a position to think about setting out on their own, he said, “things like Shark Tank on TV were bringing attention to the need to help early stage companies find funding and find the kind of expertise to support them.” In each of the last two years, the business pitch competition has awarded $40,000 to the top four winners, most recently crowning Kevin Suttman of Seven Brothers Distilling Co. in LeRoy Township as top prize winner. Other regional contests include LaunchTown and idealabs — both focused on college-student entrepreneurs — and TiE Quest, the business plan competition of TiE Ohio, part of the network of The International Entrepreneurs. The LaunchTown Entrepreneurship Award is an annual contest backed by Hudson’s Burton D. Morgan Foundation, and idealabs is a regional competition sponsored by the Entrepreneurship Education Consortium based in Ashland. All entail a cash award, but the bigger prize is being a part of the process, Mr. Frantz said. “Most business plan competitions provide some support along the way rather than just being judged competitions,” he said. Take delivering a business pitch, a necessary skill that might not come naturally to a would-be entrepreneur. Introducing the business concept in front of judges is a staple for business plan competitions and the

Mike Stanek, president of Cleveland Cycle Tours, agrees with that notion. Mr. Stanek was a runner-up in COSE’s 2012 business pitch event. Sure, the $5,000 prize is great. The money will be used to buy a power-assist device for its “group cycling” tour bike and for marketing the nascent company. More valuable, however, was the comments and suggestions received as he advanced in the competition. “It forced us to hone our business plan further,” Mr. Stanek said. “The feedback we got really made us think methodically about how to move the business forward and even got us thinking along some different lines.” Guidance and technical assistance for promising small business owners are also key assets of community-based competitions like the one in the Gordon Square Arts District last year, said Nick Fedor, economic development director for the Detroit Shoreway Community Development Organization, which held the competition. Along with free rent, the Gordon Square winners got access to more than $5,000 in grants for build-out and startup costs. The competition was backed by the Charter One Foundation as part of its “Growing Communities” initiative, which has bankrolled similar competitions for storefront openings in Cleveland’s St. Clair Superior neighborhood and Akron’s University Park neighborhood. Its newest contest is aimed at boosting occupancy rates in the 5th Street Arcades, with grants ranging from $1,500 to $20,000. Carrie Carpenter, senior vice president for Charter One, said more community business plan competitions are expected in Northeast Ohio and beyond building on the successes locally. While some might argue it is more telling for entrepreneurs to stand up to real-life market forces (without the advantage of cash prizes or free rent), Ms. Carpenter said business plan competitions are effective at weeding out good ideas and helping entrepreneurs plug holes in their business plans before there is much at stake. “All five entrepreneurs that won the Charter One grants in the (2011) Ohio City contest are still in business two years later,” she said. “I think that is pretty telling.” ■


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

the National Retail Federation, which reported U.S. furniture sales in January rose 6% from levels of January 2012. The federation says the retail furniture business has seen year-to-year sales increases for at least the past 11 months. Dan Geller, owner of Fish Furniture in Mayfield Heights and North Olmsted, said his stores saw an increase of more than 10% in sales in 2012 from 2011 after struggling during the recession, particularly in 2007 to 2009. “We’re optional,� he said, noting that consumers often wait until they feel financially comfortable to spend money on furniture. But Mr. Geller is quick to say the

company saw significant gains in sales in 2011 and 2012, and he estimated about two-thirds of the customers that stayed away during the recession now have returned. Fish even was able to keep alive its tradition of expanding every 10 years by making some renovations at the North Olmsted location last year, he said.

Slowly but surely ‌ Other local furniture retailers say sales are on the upswing, but they’re not yet ready to say the market has made a definitive turn for the better. Chris Pelcher, senior vice president of merchandising, sales and marketing for Levin Furniture, which has nine stores in Northeast

Ohio, said his company was feeling “cautiously optimistic� about the direction of sales. “We feel things are starting to turn around there,� Mr. Pelcher said of the Akron/Canton/Cleveland market. But it has been a long road. Mr. Pelcher said the company began to see evidence of a positive change in sales in the fourth quarter of 2012. The growth in sales has been conservative, but encouraging, he said. Although Levin says its gains here have been modest, it just opened a bedding store in Solon, and there are plans to open three more bedding stores this fall in the Cleveland area. Nick Dimitroff, president of Dimitroff’s Furniture and Design in

Akron, said the recession was devastating to the furniture industry, but that his store is starting to see sales growth again. Mr. Dimitroff said his store was able to maintain profitability by cutting costs, but sales have been increasing since 2010, with a marked increase in recent months. Still, the company hasn’t yet reached pre-recession levels of sales. Jan Sedlak, one of the co-owners of Sedlak Interiors in Solon, also said the store’s sales have been increasing in recent months. Even so, Ms. Sedlak said her company’s business is far from what it was 20 years ago, and the owners have struggled to find quality suppliers to fill their galleries. She said Sedlak has found new suppliers, but it

had to search hard for them.

Fill those houses The primary factor aiding furniture retailers is the healthier state of the Northeast Ohio housing market. The Ohio Association of Realtors reported that about 2,200 homes were sold in January in a 17-county region of Northeast Ohio, up 8.4% from January 2012. For all of 2012, there were about 38,000 homes sold in the region, up 14.5% from the number sold in 2011. Pending sales also were up in January, which indicates the housing market continues to build momentum. “It’s all connected to housing,â€? Levin’s Mr. Pelcher said. â–

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MARCH 11-17, 2013




MARCH 4 - 10

Falls makes leap into investor relations

The big story: A. Schulman Inc. of Akron, a

■ Falls Communications is launching an investor relations practice to meet growing demand from companies that want to reach the investment community while navigating ever-changing technology and regulations, and it has hired an executive who led the IR practice of a competitor to do just that. Rob Berick, who worked for Dix & Eaton in Cleveland for 11 years and led its IR practice for three years, joined Falls, a Cleveland-based pub- Berick lic relations and marketing communications firm, as a managing director in late January. The formation of the IR practice is driven by the frequency with which Falls found itself turning down requests to do investor relations for clients, said Rob Falls, Falls president and CEO. “It’s been a missing piece,” Mr. Falls said. The new practice offers investor engagement strategy and counsel, quarterly and annual reporting and market intelligence. The firm also will help clients manage the flow of information during high-stakes special situations such as proxy contests, shareholder activism campaigns and merger and acquisition activity. Now is “the perfect time” to launch an IR practice, Mr. Falls said, given that the firm anticipates more activity this year in terms of mergers and acquisitions and companies

maker of resins and plastic compounds, made a hostile bid to acquire specialty chemicals maker Ferro Corp. in Mayfield Heights for about $855 million, including debt. Under the proposal made to Ferro’s board, A. Schulman would pay $6.50 a share for all of Ferro’s common stock outstanding. Payment would consist of $3.25 in cash and $3.25 of A. Schulman common stock for each Ferro share. See more, Page 3.

Head of the class: The headquarters of the Cleveland Metropolitan School District stands to become a hotel after Drury Hotels of St. Louis was deemed the winning bidder in an auction of the building in downtown Cleveland that sits across from the underSTAN BULLARD construction Cleveland Convention Center. The $4.5 million bid of Drury’s DSW Inns LLC bet the closest competitor’s offer of $4.35 million. Reflecting on the new prize his company won after placing the high bid in the March 7 auction of the 1930-vintage school headquarters, Rick Drury of the family-owned Drury Hotels said, “This fits perfectly with our portfolio of historic hotels.”

New McDonald: The Cuyahoga County-subsidized MetroHealth System appointed Thomas McDonald — founder of McDonald Partners LLC, a brokerage and investment advisory firm in Cleveland — as its new board chairman. Mr. McDonald, who was appointed to the health system’s board in 2008, replaces Ronald Fountain, who had served as the board’s chairman since 2010. Public-private partnership: Northeast Ohio Medical University and the private Hiram College signed an agreement that will allow the two Portage County institutions to work together to produce new physicians. NEOMED and Hiram will work in tandem to recruit students who want a liberal arts education that leads to a medical degree. Officials expect the program to yield up to five students per year beginning in fall 2014. Gone too soon: Telemarketer InfoCision Management Corp. said its founder, Gary L. Taylor, died March 3, at age 59. His death came just over three years since he initially fell ill after a heart attack in 2009. Mr. Taylor spent his entire life in Akron. He earned bachelor’s and master’s degrees from the University of Akron, which is where he met his wife of 34 years, Karen. Mr. and Mrs. Taylor later became large donors to the university; the football stadium bears the InfoCision name, and their $3.5 million donation established The Taylor Institute for Direct Marketing at the school. Change at the top:

Great Lakes Science Center named a museum and STEM education veteran as its new president. The board of the Cleveland institution said Kirsten Ellenbogen will take over as president starting May 6. She replaces Linda Abraham-Silver, who announced last July that she would step down due to family health issues. Dr. Ellenbogen has worked at five museums during the last two decades. Most recently, she served as senior director for lifelong learning 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 Costner and directed by Ivan Reitman. The movie, which was to depict Mr. Costner as a fictitious Buffalo Bills general manager trying to restore his team to past glory, now will be shot in Cleveland instead, with the actor portraying the Cleveland Browns’ GM.


going public. Mr. Berick said in an age where information is coming “at the speed of light,” it’s important for companies “to be aware of what’s influencing your valuation and to make sure you’ve established a credible channel direct to market for yourself.” Falls is talking with a couple people it may hire to join its IR team, Mr. Falls said. Volume of work will dictate when additions to the team are made, he noted. — Michelle Park

Chicago’s BMO looks to deal with Ohio car dealers ■ Drawn by the hundreds of car dealerships and six “nice-size” markets in Ohio, BMO Harris Bank has expanded its dealership finance team into the state by snagging a FirstMerit Bank executive. Brad Isaly’s reputation preceded him, said Ghram Debes, managing director and head of dealership finance for BMO Harris, a Chicago-based institution with $91 billion in assets. “When (we) talked to dealers and industry contacts, his name kept coming up,” Mr. Debes said. “He’s got industry expertise. He’s got many industry contacts. He’s very well-liked.” Mr. Isaly, who most recently was vice president in wholesale dealer service for FirstMerit, assumed his new role as BMO Harris’ vice president of dealership finance in January, but the hiring wasn’t announced until late February. Working from an Akron home office, Mr. Isaly is responsible for developing full-service banking relationships with domestic and

The rich get richer — literally

PRODUCT: Liebherr LTM 1750-9.1 crane All Erection & Crane has fortified its fleet with 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 second crane of its type to come to the United States and it “looks to be a game-changer for large mobile cranes, both on the road and on the 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 a 600-ton crane,” according to All Erection. It can travel at less than 155,000 pounds GVW (gross vehicle weight) by removing the complete telescopic boom, the upper engine and the rear outriggers. When the crane reaches a job site, “the shorter but strongerthan-average boom can be self-installed with the aid of an auxiliary rolling power pack and without the use of a specialized boom launch trailer,” the company says. The crane “will be a boon in wind farm work, where it can take over the job of a typical 900-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

Setting sail on a river of his own ■ Here’s a sign things are looking up in the commercial real estate lending arena: Mark Vogel, a 10-year veteran of Pinnacle Financial Group, has exited the mortgage brokerage firm to start his own outfit, RiverCore Capital. Mr. Vogel said he felt it was a good time to launch his own ship. “Risk is minimal and reward is substantial,” said Mr. Vogel, who has set up shop in an office in the 55 Public Square building in downtown Cleveland. Mr. Vogel said he also wanted to work downtown rather than remain in the suburbs: Pinnacle is based in Independence. RiverCore will offer commercial loanplacement services and, if needed, help raise equity. Mr. Vogel said he has worked on projects that needed loans totaling billions of dollars at Pinnacle for a developerclient list including Wolstein Group, First Interstate Properties and Geis Cos. — Michelle Park

BEST OF THE BLOGS Excerpts from recent blog entries on

COMPANY: All Erection & Crane Rental Corp., Cleveland

import dealers in Ohio, southeast Michigan and western Pennsylvania, Mr. Debes said. Akron marks the 10th market in which BMO Harris’ dealership finance team has an office. Mr. Debes said other large financial institutions are expanding their dealership finance teams, too, given the economy’s improvement and auto dealer performance following the recession and the bankruptcies of Chrysler and General Motors. “You see financial institutions becoming more attracted to this type of business,” he said. — Michelle Park

■ It was a good year for billionaires, according to the latest list of people who measure their wealth in 10 figures. There are a record 1,426 billionaires globally, up 16% from 1,226 last year, and their average net worth rose to $3.8 billion from $3.7 billion. Added together, said, the total net worth for this year’s billionaires is $5.4 trillion, up 17% from $4.6 trillion last year. The United States leads the list, with 442 billionaires, followed by Asia-Pacific (386) and Europe (366). Ohio lists only three billionaires: retail magnate Leslie Wexner of Columbus, at No. 276 on the list with a fortune of $4.5 billion; Dayton’s Clayton Mathile, who built a pet food empire that made him worth $1.9 billion, No. 792 on the list; and Denise DeBartolo York of Youngstown, who has a fortune worth $1.1 billion, good for No. 1,268 on the list, stemming from her real estate holdings. Cleveland sports team owners Dan Gilbert (No. 348 on the list, worth $3.5 billion) and Jimmy Haslam (No. 831, worth $1.8 billion) are listed in their home states of Michigan and Tennessee, respectively. The world’s richest person, once again, is Carlos Slim Helu of Mexico, who is worth $73 billion. No. 2 on the list, and the richest American, is Bill Gates, whose fortune is at $67 billion.

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

maker of welding equipment, landed on the new Motley Fool list of America’s 25 best public companies. The Fool said it analyzed data for more than 1,700 companies to come up with the elite 25, measured by “their success in serving investors, customers, employees and the world at large.” Here’s how the website described some of Lincoln Electric’s virtues: “No one has been laid off for more than 65 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 from having 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 effective for the multiple purposes it must serve, Lincoln Electric builds loyalty among those who use its products, making it more likely that they’ll come back as repeat customers.”

Freeze frame ■ The Cleveland Cavaliers are among the early adopters of a gaming app from Krossover, a New York City-based startup, that lets the user freeze real basketball video action — and then guess how the play ends. The app “obviously could be used simply for recreation,” USA Today reported. But it’s being tested by the Cavs to analyze their play as well as evaluate opponents. Cavaliers analytics head Ben Alamar tells the newspaper that the app has “the added benefits of forcing players to watch film.” USA Today said Krossover hopes to go on to create similar apps for sports such as football and soccer. The app also was demonstrated at the recent MIT Sloan Sports Analytics Conference in Boston.



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2:17 PM

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Crain's Cleveland Business  

March 11 -17, 2013 issue

Crain's Cleveland Business  

March 11 -17, 2013 issue