Crain's Cleveland Business

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10/9/2015

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VOL. 36, NO. 41

A CLOSER LOOK: Supply chains How companies keep auto industry running

OCTOBER 12 - 18, 2015

Business of Life:

35th Anniversary

SoLo in Ohio City

P. 3

South of Lorain district has had some ‘dynamic’ additions

ON THE RISE: Slavic Village Retail study shows encouraging results

P. 22-23

P. 4

FOCUS: Middle Market HeartLab aims to jumpstart business P. 15-21

Saving space in growing portfolio Reserve Square renovation is K&D’s latest big project

BY STAN BULLARD sbullard@crain.com @CrainRltywriter

Apartment owner and manager K&D Group of Willoughby usually is thought of as a firm that reduces the amount of office space in downtown Cleveland as it tackles residential redevelopment of old office buildings.

However, K&D Group’s growth has made it into a substantial office landlord in the city center, and it’s expanding its business to show that.

After buying the Keith, Leader and Halle buildings over the past year, K&D has a portfolio of about 1 million square feet of downtown office space that it intends to keep as offices. The company plans to convert Leader, 526 Superior Ave., and Halle, 1228 Euclid Ave., to mixed-use projects with upper-floor apartments, low-level offices and continued first-floor retail space. It intends to retain as an office property the Keith, 1621 Euclid Ave., which K&D bought as a potential home for office tenants needing to be relocated from its buildings.

Asked if he ever thought K&D would own this much office space, Price said, “Not on your life.”

As a result, K&D has formed its own commercial firm for the office and retail space called K&D Real Estate Services. That firm

The List

CLEVELAND BUSINESS

Largest colleges and universities P. 27

Chairman of the cash

BY CHUCK SODER How would you like to make $166,000 a year, working an average of five hours a week?

Sound good?

Of course, this part-time job comes with a lot of responsibility. And, odds are, you are not qualified.

The average board member in Northeast Ohio makes more than $166,000 per year, according to data Crain’s compiled on all 56 local public companies that regularly file documents with federal regulators. That equates to $670 per hour, if we assume that our average board member works 248 hours per year — the national average, according to the National Association of Corporate Directors.

And directors at the largest companies earn well over $200,000, or in some cases $300,000, though statistics suggest they probably work more, too.

It’s good money, for sure.

Are they worth it?

CONTINUED ON PAGE 12

This is the second piece of a two-part series about the people who control some of the most powerful organizations in Northeast Ohio: board members of public companies.

SEE SPACE, PAGE 8

Entire contents © 2015 by Crain Communications Inc.

RICHARD BORGE

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10/9/2015

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Small Business Matters i Want more information and resources on this week's topics, ideas and events? Go to www.cose.org/smallbizmatters.

PRESENTED BY

52 TIPS FOR YOUR BUSINESS

#40 – Small Business Lending - What You Need to Know ¸3LUKLYZ HYL WLVWSL ^OV V LY `V\ TVUL` when you don’t need it, and take it back from you when you do.�

We’ve all heard that one before, and even though it’s meant as a joke there is a kernel of truth in it. The best time to approach a lender is not when your need for capital has grown desperate. The best time is when your company is doing well, but there is an opportunity for growth. It is a delicate balancing act — you need the money, but you HSZV ULLK [V ZOV^ Z\ JPLU[ Ä UHUJPHS Z[YLUN[O How do you do it?

Let’s consider four magic numbers that should get you where you need to go.

1.2: This is the ratio of your historical cash Ă… V^ [V [OL WYVQLJ[LK KLI[ ZLY]PJL `V\ ULLK Some lenders will be more or less conservative, and SBA backing will help, but 1.2 times “cash Ă… V^ JV]LYHNLš PZ ^OH[ `V\ ZOV\SK \ZL HZ H ILUJOTHYR 7\[ HUV[OLY ^H` `V\Y JHZO Ă… V^ from last year ought to be 120% of the projected debt service you will have next year—including the new debt you are applying for.

680: A credit score around 680 is probably the minimum you can get by with and still

debt payments to be less than 35% of your personal income. Beyond that, you’re in danger of racking up credit card balances and ZVVU P[ ^PSS H LJ[ `V\Y WLYZVUHS JYLKP[ ZJVYL (see “680� above).

10%: Too many small businesses and entrepreneurs are expecting the bank to cover 100% of their project costs. That can happen sometimes, but in general you ought to plan on having (saved up in the bank) 10% to 20% of your project, ready in cash, for you Raymond Graves, to inject yourself. The lenders call this “skin U.S. SBA, Lender Relations in the game� but what it really demonstrates *SL]LSHUK +PZ[YPJ[ 6 JL is you’ve been able to generate excess cash qualify for a traditional business loan. A score of historically and you’ve saved it to invest in the 700 or higher would be better. You’re in trouble business (see “1.2� above). if you’re at 650 or below. If you’re seeking a The U.S. Small Business Administration business loan, have good personal credit— provides tens of thousands of the loan as strange as that sounds, post-recession guarantees to small businesses every year, underwriting looks at both your personal and and these guarantees limit bank risk and business credit very closely. turn “no� into “yes� for many entrepreneurs.

35%: ;YLH[ `V\Y WLYZVUHS JHZO Ă… V^ SPRL However, even SBA backing does not a division of your business. This is much guarantee an approval by a lender. Use the SLZZ PTWVY[HU[ MVY SHYNL TPKKSL THYRL[ Ă„ YTZ benchmarks above to help you manage but critical for small businesses. A common your money to have the best opportunity of test lenders use is they want your personal receiving lending for your business.

October 12

By The Numbers SBA Lending

$23.1 billion Year to date SBA 7(a) lending volume through September 26, 2015.

SOURCE: SBA

ENERGY EDUCATION In recognition of National Energy Awareness Month, each week in October, Small Business Matters will publish an energy tip to help you be PRUH HÄ´ FLHQW LQ \RXU HQHUJ\ XVDJH 7RGD\Ĺ–V WLS

Install programmable thermostats that automatically adjust temperature settings based on the time of day and day of the week.

If you have multiple HVAC units, set thermostats to return to the occupied temperature. In larger facilities with energy management systems (EMS), verify that temperature set points and operating schedules are correct for the controlled equipment. For EMS systems that no longer operate as initially designed, consider a retrocommissioning project to restore the system’s functionality.

OCTOBER 21-22

BIG IDEAS

6 Steps to Trade Show Success people in. Open environments help do exactly that. Adding a large backdrop can also help build an inviting environment. “I see the Great Wall of China when I see a table,� he said. “I see a wall between you and attendees. It can prevent getting successful leads.�

not to do include: â‚” +VUÂť[ IL VU `V\Y WOVUL L_JLW[ PM `V\ HYL emailing to thank someone for stopping by your booth). â‚” +VUÂť[ IL KYLZZLK [VV JHZ\HSS` â‚” +VUÂť[ LH[ VY SLH]L MVVK H[ `V\Y IVV[O

3. Be attentive There’s a rule at Rock The House that all of its employees follow when at a convention: “There is no sitting down. You don’t get to sit 1. Be organized Make sure you have a plan for how you’re or lean against anything,� he said.

Staying attentive can also help bring going to attack the show, Radicelli advised. “Small businesses should go into a show people in. Don’t just put up a sign advertising expecting that it could and should turn free samples. Shake hands, give out business into revenue,� he said. So, how do you cards, send an immediate email from your phone after meeting someone. “You spent achieve that? ₔ *YLH[L H ZL[ ZJOLK\SL MVY ^OLU `V\Y good money on your booth,� Radicelli teammates will be at your booth to avoid said. “Get people to approach you.� Be JHYLM\S [OV\NO [V UV[ PU[LYJLW[ [YH J [OH[ PZ burnout. ₔ 9VSL WSH` ^P[O `V\Y [LHT HOLHK VM [PTL purposefully heading to another booth.

Practice what you’re going to say as 4. Be professional people approach your booth.

Too many trade show exhibitors display a ₔ +PZJ\ZZ [OL NVHSZ `V\ ^HU[ [V YLHJO during the convention ahead of time. For lack of professionalism when they’re on site. example, you want everyone to come Some examples shared by Radicelli of what away from each day with 25 business cards, or sign up a certain number of people for your service.

5. Be energetic Make sure you bring positive, energetic people with you to the show. “You can have the best trade show booth you spent $5,000 on, but if you’re a jerk and you’re constantly rolling your eyes or not engaging people, I don’t really want to talk to you,� Radicelli said. People, he added, want to do business with people they like.

COSE’s Small Business Convention is just around the corner. Your booth is ready, your team is excited, but how can you ensure that you are going to get the most out of your SBC experience? During a recent COSE webinar, Matt Radicelli, CEO of Rock The House Entertainment Group, shared six things small businesses should do to help them achieve Z\JJLZZ VU [OL [YHKL ZOV^ Å VVY

6. Be ready to keep working after the show @V\Y ^VYR PZU[ Ä UPZOLK ^OLU [OL ZOV^ ends. Within 48 hours, you should be prepared to reach out to any prospects you TL[ @V\ ZOV\SK HSZV Ä UK [PTL [V TLL[ ^P[O your team to discuss the show. Talk about what worked, what didn’t work and whether it would be worthwhile to go to the show again next year.

COSE’S TAKEAWAY

2. Be inviting You want your team and your booth to draw

An open booth with a large backdrop and attentive staffers will help draw people over to your space on the tradeshow oor.

CONTENT PROVIDED AND PAID FOR BY THE COUNCIL OF SMALLER ENTERPRISES

The COSE Small Business Convention is the premier event for entrepreneurs and small business owners in the Midwest. The event features nationally recognized speakers, dozens of educational workshops, and plenty of networking opportunities with fellow small-business owners and entrepreneurs.

Public Auditorium and Conference Center 500 Lakeside Ave., Cleveland Tickets: $159 for members and co-presenting organizations and chambers of commerce; $310 for non-members

Register now: smallbizconvention.com

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CRAIN’S CLEVELAND BUSINESS z OCTOBER 12 -18, 2015 z PAGE 3

Expo gets NEO primed for main event Annual gathering helps vendors in region promote and sell their services prior to RNC coming to town

BY JAY MILLER jmiller@crain.com @MillerJH

You could say that for event planners, last Tuesday, Oct. 6, was the beginning of training camp, kicking off a season of work that will culminate with a Super Bowl in July, when the Republican National Convention comes to Cleveland.

That was the day when Event Expo took over Nautica in the Flats, and more than 500 people answered the call. Among them were restaurateurs and caterers, furniture rental companies, gimme cap and promotional pen sellers, audio and video rental firms, and anyone who runs a building with space for a party in Northeast Ohio.

They gathered to get acquainted

or reacquainted with each other and to show off their products, services and venues to wedding consultants and event and meeting planners.

This was the ninth annual show, and the focus, not surprisingly, was on learning how to connect with the state Republican Party delegations, media and corporate lobbyists who will be arranging meals, holding briefings and throwing parties before, during and after the four-day convention.

The Cleveland 2016 Host Committee has created a website, www.2016cle.com/become-a-supplier, for vendors who want planners to know who’s available, since as many as 1,200 events will be held.

But putting on a party requires a complex supply chain, and this show is designed to help forge the links in the chain.

Rick Turner, one of the organizers of the show, believes the city and its hospitality industry will be up to the job. Turner is business development manager for Colortone Staging and Rentals, an events production firm in Solon.

“There will be a lot of business that we’re going to see in the private events,” he said. “We’ve had a lot of folks come in from outside the region and internationally, and they are blown away by not only by the city, but by the capabilities we have in special events and hospitality services.”

During a morning meeting at the show, Chris McNulty, the Republican Party’s director of community and political affairs for the convention, explained that each state’s delegation likely will have three events a day for five days. Each day will start

with an early morning breakfast, probably at the hotel housing the delegation, where delegates will learn the agenda for that evening’s convention session. Later, they will gather for a pre-convention session that begins between 3:30 p.m. and 4 p.m. at a bar or restaurant at the hotel or elsewhere. After the evening’s convention session, they might disperse to a cocktail party or networking event.

“So you’re really talking about, with 50 delegations, about 750 events just there,” he said, not counting what the nominee, the national party and the media and lobbyists might do. “There will be a variety of events out there spread out across Northeast Ohio.”

Matt Radicelli, founder and CEO of Rock the House, a multi-media entertainment company in Oakwood Vil-

lage, said he’s already fielding calls inquiring about the availability of audio, video and lighting equipment and event production services.

“It’s very, very encouraging to get calls this far out without doing much marketing for it,” he said. “The equation is balancing supply and demand this far out.”

Rocking venues near, far Among the exhibitors at the show was the Rock and Roll Hall of Fame and Museum. Sales manager Michael Detling said the Rock Hall will keep its regular hours during the convention, but groups can rent its conference room for luncheons and its 163-seat auditorium for meetings.

It also will lure convention visitors with a weekly pass that allows them SEE EXPO, PAGE 25

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z OCTOBER 12 -18, 2015 z CRAIN’S CLEVELAND BUSINESS

Slavic Village is on the comeback trail

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Less than a decade ago, Slavic Village was the poster child for the housing foreclosure crisis, the nadir of a long neighborhood decline.

With that low point past, some of the neighborhood’s leaders are plotting a way to repopulate the storefronts along Broadway and Fleet avenues. With other Cleveland ethnic neighborhoods like Tremont, Detroit-Shoreway and Waterloo finding new life, they think their neighborhood, too, can make a comeback.

A retail study of Slavic Village by Cleveland State University contends that the purchasing power of residents and workers in the neighborhood is higher than any of those other neighborhoods, despite a higher unemployment rate and a lower proportion of families with incomes

over $100,000 annually. That greater buying power stems in part from a larger population than those neighborhoods, and from the presence of several large employers including Third Federal Savings and MetroHealth’s Broadway Health Center.

The study’s population analysis found that the neighborhood’s employers brought in nearly 13,000 workers every day. “For the last several years, for good reason, we’ve been focusing on housing stabilization, because if you don’t have that, you don’t attract commercial development,� said Chris Alvarado, executive director of Slavic Village Development, the neighborhood’s development nonprofit. He noted at one time less than a decade ago, one-quarter of the area’s 12,000 homes were vacant, many waiting to be demolished. “But I think we’re at a point where we’re ready for commercial development again,� Alvarado said.

A public-private partnership has begun a demolition/rehab program, and Third Federal Savings is backing Trailside Homes, a neighborhood of new homes across Broadway from its operations headquarters, the largest employer in the neighborhood.

And at least one developer is jumping in. “This is the most challenging and rewarding endeavor I have ever embarked on, and that includes law school and passing the bar exam,� said Anthony Trzaska, who grew up along Fleet. “I feel a groundswell shifting, and I’d like to think I’m a part of it.�

Trzaska’s family still owns the Fortuna Funeral Home on Fleet, and the young lawyer has formed a development company, Sonny Day Development, and acquired several properties in the neighborhood that he hopes to redevelop. He’s also development director of the hall of the SEE COMEBACK, PAGE 25

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CRAIN’S CLEVELAND BUSINESS z OCTOBER 12 -18, 2015 z PAGE 5

Tech Elevator promise: Learn to code, get a job

BY CHUCK SODER csoder@crain.com @ChuckSoder

Anthony Hughes is confident that Tech Elevator can take students with little-to-no software development experience and quickly turn them into professional coders — coders with jobs.

Students, however, may not have that same confidence level. Which is why the new software development bootcamp is offering a money-back guarantee.

Two weeks ago, Tech Elevator’s first six students began taking Java classes in a tiny room on the second floor of Cleveland’s Baker Electric Building. There’s a professional saxophonist in the group. One guy managed a bar. Another worked at Target.

It’s a small class, but Tech Elevator has big goals: Hughes, the CEO, says the company aims to graduate more than 100 students from the 14week-long program during 2016 — and help them land jobs. It aspires to produce a total of 1,500 graduates by 2020.

There’s no way to know whether Tech Elevator will hit those goals, but Hughes does have experience helping another bootcamp scale up.

He previously spent 10 months as president of the Software Guild in Akron. Students from that bootcamp often found coding-related jobs before graduating from the threemonth-long program. That company was acquired by The Learning House — an online education company in Louisville, Ky. — in April, roughly two years after it opened its doors.

So Hughes believes he knows what Tech Elevator needs to do to turn students into coders and help them find jobs.

He’d better be right. If students don’t get a job offer within 120 days of graduating, Tech Elevator promises to refund their $14,000 tuition.

The average program costs about $10,000 but only lasts 10 to 11 weeks, according to a 2014 survey by Course Report.

Hughes is OK with that risk. He argues that he’s “not inventing a particle transporter.� Dozens of other bootcamps have proven that you can make money by training people to become software developers and helping them find one of the many job openings in the field.

Sure, there will be challenges. For instance, in a few weeks, the company plans to hire a second instructor who specializes in Microsoft’s .Net programming framework, and it will have to hire many more instructors thereafter. Hughes said that could be hard considering that the company is “fishing from the same depleted pond that we’re supplying.� However, he already has relationships with lots of local software developers and tech companies. “It’s an execution risk, but the beauty is, I’ve already done it,� said Hughes, who ran JumpStart’s mentoring program for local entrepreneurs before joining the Software Guild in 2014.

He’s also confident in his team.

Chief academic officer and cofounder David Wintrich came from

the Federal Reserve Bank of Cleveland. He led the software development team that rebuilt Pay.gov, a U.S. Treasury department website that processes more than $100 billion each year.

The third cofounder, Aaron Cornell, had been the chief financial officer at Explorys, a Cleveland-based health care software company that was bought by IBM in April. And community manager Andria Trivisonno has worked for multiple startup companies, including a few of her own.

Serendipity Hughes had planned to leave the Software Guild if it was ever acquired, so when that happened, he started looking for something to do with the money he made on his stake in the company.

He figured out what he wanted to do after participating in a panel discussion on workforce development at a networking event called TechniCLE Speaking this past May. Afterward, he ran into the city of SEE TECH ELEVATOR, PAGE 26

Tech Elevator co-founder David Wintrich talks with students Elizabeth Mis and Seth Pickney, right. (McKinley Wiley photo)

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z OCTOBER 12 -18, 2015 z CRAIN’S CLEVELAND BUSINESS

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The company that just acquired Movable is putting the Breckvillebased fitness technology company in charge of a new product designed to help people become better stewards of their health.

Movable was acquired by DHS Group of Houston in an all-stock deal.

DHS provides software and consulting services designed to help large employers and health insurance companies monitor the health of their employees and plan members.

Movable sells a wrist-worn activity tracker called the Movband that is part of a broader wellness program it offers to companies and schools.

The employees of Movable will remain in Brecksville, according to executives from both companies.

They’ll also be put in charge of DHS’ new HealthSpective Engage software, which is designed to give individuals information about their

health and suggestions on how to improve it.

Movable’s founder, Blake Squires, voluntarily left the company in September, but he continues to lend assistance. DHS CEO Jim Pritchett will lead the combined company.

DHS was looking for way to gather data from fitness tracking devices like the Fitbit and encourage people to get active. So Pritchett visited a trade show in Las Vegas six months ago looking to form relationships with the companies that make those devices. Then he met an employee from Movable in an elevator.

“He said, ‘You need to meet this guy who’s coming in tomorrow,’ ” Pritchett recalled.

That guy was Jeff Scott. Movable hired him six months ago to explore strategic alternatives: Movable wanted to find “an older sibling” with expertise related to population health analytics, said Scott, who serves as vice president of business development for the company.

At the time, the company was about to release a wireless version of

the Movband as well as updated software that would let organizations compile data from other fitness tracking devices. Those moves were designed partly to make the company more attractive to a potential buyer, Scott said.

Movable chairman Christopher Celeste will join the board at DHS, which has just over 20 employees, making it slightly larger than Movable.

The Brecksville company is slightly smaller today than when Crain’s last wrote about it six months ago.

Including Squires, at least nine employees have left Movable since July, according to their LinkedIn profiles.

Pritchett and Scott said they wouldn’t discuss human resources issues. Pritchett noted, however, that the two companies didn’t have many employees performing similar functions — jobs that are sometimes cut after mergers.

“Usually the biggest rub comes from duplication of jobs. … We really had none of that in this situation,” Pritchett said.

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CRAIN’S CLEVELAND BUSINESS z OCTOBER 12 -18, 2015 z PAGE 7

The Week SEEING THE LIGHT General Electric is creating a company called Current that will house its developing energy businesses, be based in the Boston area and be led by the president and CEO of GE Lighting in Cleveland. The company said Current will encompass GE’s LED, solar, energy storage and electric vehicle businesses.

Maryrose Sylvester, president and CEO at GE Lighting, will lead Current and will remain as head of GE Lighting. GE said Current “will begin with more than $1 billion of revenue.” It’s “too soon to tell” what, if any, impact the formation of Current will have on GE Lighting operations in Northeast Ohio, said Christopher Augustine, a spokesman for the business.

CUTS BY CRAFTING CO. Hudson-based Jo-Ann Fabric and Craft Stores restructured its operations to create a “leaner, more nimble” organization — a move that will result in 103 individuals losing their jobs. JoAnn said the layoffs represent less than 1% of the company’s total workforce. Those affected will receive severance and job-placement services.

No other details of the restructuring were provided other than to say it was done “to better position resources to meet the needs and desires of customers.”

CHANGING THE LINEUP Shortly after Mark Shapiro’s tenure as president of the Cleveland Indians officially ended, the team announced changes in its organizational structure. Chris Antonetti was promoted to president of baseball operations, and assistant general manager Mike Chernoff will fill Antonetti’s former GM role.

The Indians also named Derek Falvey assistant GM. The 32-year-old had been the director of baseball operations. Antonetti will run the baseball side of things, and Shapiro’s business responsibilities will be assumed by owner Paul Dolan.

LEARNING HER LESSON Former Chicago Public Schools chief Barbara Byrd-Bennett, who previously led Cleveland’s schools, was indicted Thursday, Oct. 8, on 23 counts of alleged federal and mail fraud. That afternoon, her lawyer issued a statement that read, “Barbara Byrd-Bennett will plead guilty to charges in the indictment. As part of accepting full responsibility for her conduct, she will continue to cooperate with the government, including testifying truthfully if called upon to do so.” The indictment involved her relationship with Supes Academy, a training organization for which ByrdBennett worked immediately before she became superintendent of the Chicago schools.

LISTEN UP The founder and CEO of Theranos — one of the most-promising health care startups in the country — will deliver the keynote address at the Cleveland Clinic’s 2015 Medical Innovation Summit, which kicks off Oct. 25 in downtown Cleveland. Theranos’ Elizabeth Holmes will address attendees on Oct. 26 and “discuss how innovators and investors can capitalize on an era of health care transformation,” according to the Clinic. Holmes launched Theranos in 2003 after dropping out of Stanford University at

age 19. Today, the Palo Alto-based company, according to some estimates, is valued at $9 billion.

KNIGHT VISION The Northeast Ohio Media Group named a new president to replace Andrea Hogben. He’s Timothy Knight, CEO of Wrapports LLC, parent company of the Chicago Sun-Times. NEOMG operates cleveland.com and the weekly Sun newspapers and is responsible for all advertising and marketing for The Plain Dealer. In August, NEOMG announced Hogben would step down by the end of the year, though she would stay on until a replacement takes over.

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SPACE continued from page 1

K&D co-founder Karen Paganini said having office tenants at Reserve Square helps the building as a whole. (Stan Bullard photo)

has been installed on Keith’s third floor with a staff of five. Dyann Davison, a veteran downtown office broker, handled leasing at Leader and stayed on with K&D after the purchase as the company’s commercial leasing manager. “She’s been off-the-hook busy,�

Price said, noting that K&D has executed 160,000 square feet of leases this year alone.

K&D also shows its growing office chops with a construction project it is undertaking at Reserve Square, a massive apartment, office and retail complex built in 1975 that K&D bought a decade ago to enter the downtown market.

The firm is investing about $2 mil-

lion in first-floor offices on the east side of the building at 1700 E. 13th St. to “bring them into this century,�

Price said. “It was either sit on it as a big old place and find someone who needs a lot of space or modernize it.�

On a tour of the property last Tuesday, Oct. 6, construction workers have gutted the space from floor to ceiling. The plan calls for modernizing all the basics, from heating, cooling, electrical and plumbing to installing energy-efficient LED lights.

The space also will be transformed when it’s finished. K&D is moving the office of its corporate apartment leasing business into part of the space in order to provide a new hallway off the mall in the build-

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ing’s north end.

Workers will construct a bridge over an open staircase behind that space to connect to a new glasswalled corridor reaching the redone offices.

The firm is following a plan developed for it by Vocon Architects to make the space more contemporary and appealing, Price said. A common area with new bathrooms and a lunch room serving multiple tenants also is going in, which allows prospects to lease just the space they need for their offices.

On the move K&D has leased the Reserve Square space it is redoing to three tenants who will move over from Leader: Pinkney Perry Insurance Co., the Cleveland Business Consultants employment and staffing firm and the Cleveland office of Gonzales, Saggio & Harlan law firm, a minority-owned law firm based in Milwaukee.

The Presidents’ Council Business Chamber, a member-based organization that promotes business opportunities, economic development and entrepreneurship in the AfricanAmerican community, is hammering out final designs to move its offices from Leader.

N. Michael Obi, the council’s chairman, said in an email that while the move may have been prompted

by K&D’s plan to add residences to Leader, the group decided to make it strategic. “In this move, we are doubling our space to provide our chamber members the use of a satellite office, meeting space, and conference room,� Obi wrote. “The renovated Reserve Square provides state of the art facilities and amenities that serve well in The Presidents’ Council’s mission of supporting, developing, and advocating for our region’s current and future generations of African-American entrepreneurs and business leaders.

Reserve Square has another 20,000 square feet on the north side of the mall that’s vacant, but K&D hopes to fill that former charter school space with another private school. If it does not make that deal, Price said K&D will update that space as well.

The first-floor space on Reserve Square’s east side will be devoted to offices, while the East 12th Street side of the complex will continue to have a retail focus, Davison said.

K&D also is following the market as it makes its plans for its downtown buildings. Price said demand from office tenants has been so strong that it has changed its plans for the former Halle Brothers department store. It has decided to keep five floors of the office building as offices — a total of 160,000 square feet — and trim the number of residential suites by about 38%, to 150 from 240.

Karen Paganini, K&D president and co-founder, said having office tenants in the space helps the complex as a whole by adding more activity during the day.

Office tenants and employees also make use of the 1,000-car parking garage during the day when downtown residents leave for their reverse commute.

Paganini said the company did not require a financial analysis to determine to invest in the space. “We never want to let anything sit,� she said.

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Opinion From the Publisher

Starting a conversation about issues

Editorial

Yes on Issue 1 This November, Ohio voters can finally bring a degree of

majority party and two from the minority party in the Ohio

sanity and fairness to how boundaries are drawn for state

House and Senate. It would bring a refreshing air of compro-

legislative districts.

mise because at least two of the votes for approval would have

These districts are redrawn every decade to account for

to come from the minority party to set the legislative map for

population changes revealed in the U.S. Census. Since the

the full 10 years. Without the minority party buy-in, the map

mid-1960s, redistricting has been a partisan jackpot in the

has only a four-year life span. Then the whole thing gets

Buckeye State. If your party has landed two out of three

drawn again.

executive seats — governor, auditor and secretary of state —

The issue has bipartisan support: The state’s Democratic

you’ve been the lucky winner who gets to run the state

Party and the Republican Party support it. Business and labor

Apportionment Board. Tack on a member of each major

groups support it. The Ohio League of Women Voters and the

political party in the legislature, and you’ve been handed the

Ohio State Bar Association do, too.

tools to gerrymander General Assembly districts that pretty

Our current era of polarized politics is an off-shoot of

much ensure your party’s candidates will win election to the

redistricting as legislators lack the incentive to compromise

Statehouse.

because they know their re-election is all but guaranteed back

It’s not surprising that both parties have gamed the system

home. Competition is healthy in any business, and that

for almost a half century. When the Democrats were in

certainly includes politics. When there’s no real choice at the

control in the 1970s and 1980s, they shaped electoral

ballot box, voters — and ultimately democracy — lose.

outcomes. Ever since, the Republicans have reaped the

Any effort that encourages, or, if necessary, compels com-

ridiculous benefits of redistricting. None of it, though,

promise and competition is good. Our hope is that Ohio vot-

benefits the citizens of Ohio.

ers will approve Issue 1 on Nov. 3. And we hope the Ohio Leg-

Issue 1 would create an independent, seven-member

islature then uses the statewide vote as an example and takes

committee that would consist of the governor, auditor,

the next step, reforming the way we draw congressional

secretary of state and four legislators — two from the

districts here, too.

PUBLISHER: John Campanelli (jcampanelli@crain.com) EDITOR: Elizabeth McIntyre (emcintyre@crain.com)

CLEVELAND BUSINESS

MANAGING EDITOR: Scott Suttell (ssuttell@crain.com)

Last week, we published some fascinating — and sobering — coverage on the makeup of the boards of directors at Northeast Ohio’s public companies.

Women hold just 13% of the seats.

Minority representation is almost certainly less than that.

We don’t know the exact numbers because fewer than half of the 56 local public companies we surveyed responded to our requests for the racial makeup of their boards.

Two weeks from now, Crain’s Cleveland Business will publish its first-ever list of the 100 Most Connected people in Northeast Ohio. It’s a ranking created with the help of a third-party tech company using more than two dozen algorithms measuring business leaders’ reach, influence, strength of connections and more. That list of 100 contains only 19 women and six minorities. Yikes. Successful business leaders know that diversity is good for business.

The recognition is there. The execution isn’t. So how can we change that?

John I asked that question to Darrell McNair, CEO of MVP Plastics and one of the reCampanelli gion’s top African-American business leaders. Simply asking the question, he says, is a great start.

“It’s about awareness,” he says. “It’s about adding peer pressure, and this data elicits peer pressure.”

In other words, the business leaders who get it and work to build a diverse workforce, c-suite and board of directors put pressure on those who haven’t made it a priority. But for that to work, the pressure has to be constant.

“The discussion on this has to be continuous,” McNair says.

“It can’t be once a year.” It’s also not enough to just keep diversity on the front burner with conversations. There needs to be a commitment from the established business community — white guys like me — to do things differently and not fear stepping away from what’s comfortable.

Nominating board members and filling management positions are some of the most important decisions business leaders make. So it’s no surprise that we often choose candidates we already know well, people within our networks. And chances are our network looks like we do. We’ve heard it a thousand times: It’s who you know. While working years to build a diverse network of engaging people, male and female, of varying ages, opinions, backgrounds and races is a really smart thing to do (it makes life way more interesting), there’s a short cut: reaching out to someone who’s already done it.

McNair says he’s taken calls from business leaders looking for diverse candidates for leadership positions. They often admit to him that they simply don’t know anyone who fits the bill.

“They’re not bashful about calling,” he says. “That’s what you want. You want someone to call you and reach out.”

Having a trusted leader with a different network suggest candidates and vouch for their skills, personality and intellect — that’s as good as pulling a name from your own Rolodex.

And McNair and others in town love to do it.

“You want those calls,” he says. McNair also points out that many women and minorities are already proving themselves on the boards of local nonprofits. Savvy business leaders, he says, are doing reconnaissance, identifying the best and getting ready to grab them when the opportunity arrives.

Someday soon, let’s hope it’s not just the savvy business leaders, but every business leader.

WRITE US: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH., 44113, or by emailing letters@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

SOUND OFF: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.

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CRAIN’S CLEVELAND BUSINESS z OCTOBER 12 -18, 2015 z PAGE 11

WELCOME TO

Letters to the Editor

Web Talk Re: Northeast Ohio corporate boards An important point overlooked in Crain’s Oct. 5 story, “Building a better board,” is that people under 50 who are not already an established CEO-CFO-CTO-level executive with a major company (and there are few of those) are rarely in a position careerwise to take on the commitment of a corporate board seat.

Moreover, their employers are unlikely to allow a key person to take on such a major outside commitment.

— Pat Gallagher

Re: CWRU, Clinic break ground on health education campus The best part of this announcement illustrates the marriage of one of the top international design firms with probably the region’s most outstanding local design firm.

It is not unusual to see teaming on projects of this magnitude, so I am just thrilled to see a high degree of local involvement.

I believe the Clinic is one of the few entities in Cleveland that appreciates the high caliber of our local design community. We should give a shoutout to both the Clinic and Case.

— Neil Dick

On three recent visits to downtown Cleveland, about a third of parking meters on the street that I tried were broken.

On a trip to the West Side Market on a crowded August day, I decided to park on Lorain Avenue next to the market despite the meter flashing error (broken). I should have known better. What a surprise it was to receive a $35 ticket in the mail for a “Meter Expired.”

I am a Greater Cleveland fan, but not a fan of downtown. City Hall can come up with millions of dollars to do an unnecessary redesign of Public Square but can’t keep something as simple as its parking meters in good repair.

Was it dumb to park in a space with a broken meter? Obviously, yes. Is Cleveland leaving meters broken to cash in on suckers like me who attempt to find working meters only to use the spaces with broken ones?

Got to make you wonder, but it doesn’t look like they’re that smart. And Mayor Frank Jackson wonders if people avoid downtown … and why?

— Russ Hill, Berea Your opinion piece in the Sept. 7-13 issue is spot on, but for one thing. You wrongly finger xenophobia as a prime motivation for anti-immigrant sentiment.

Virtually no one is against immigrants. A long history of value given this country by its immigrants is all the evidence any thinking person needs to put that in perspective.

It is not immigration that is the problem. It is ILLEGAL immigration, which is not immigration at all, that is of concern.

Politicians from the president on down on the Democratic side of the aisle and most in the media almost never make that distinction, instead choosing to paint us all as paranoid, xenophobic knuckle-draggers, famously depicted in memes that run rampant on the Internet and social media.

The cost of this illegal invasion is huge and well-documented.

You are right that we need comprehensive reform. And you are right on some of the specifics needed to achieve it. And that Congress needs to explore some fresh territory and start doing its job.

But you are dead wrong when talking about why it’s necessary or the root causes. Your take does your readers and this country a grave disservice.

— Alan W. Sponseller, Broadview Heights

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20151012-NEWS--12-NAT-CCI-CL_--

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z OCTOBER 12 -18, 2015 z CRAIN’S CLEVELAND BUSINESS

BOARD PAY CONTINUED FROM PAGE 1

RICHARD BORGE

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Yes, according to a few board members and compensation experts who spoke with Crain’s.

Among them is Simon Peck, an associate professor at Case Western Reserve University who studies corporate management issues.

In his view, the “jury is out” on whether CEOs of large public companies are paid too much — many of them make thousands of dollars per hour. But he thinks board members are a steal.

“Yeah, I think it’s probably the biggest bargain in this country since the Louisiana Purchase,” he said, laughing. “… What a good board can do to the fortunes of a company — not only are they worth every dime, they should probably be paid more.”

Of course, some boards pay more than others.

By a long shot, the top-paying board in Northeast Ohio was aircraft components maker TransDigm Group Inc. of Cleveland. This year it paid more than $800,000 to former CEO Douglas Peacock, who continues to serve on the board’s audit and executive committees. A few other board members made similar amounts.

It helps that TransDigm has been a profit-generating machine lately: The company paid out $1.4 billion in dividends during the fiscal year that ended on Sept.

30, 2014. And at Trans-

Digm — which declined to provide comments for this story — board members who hold stock options still get dividend payments.

Coming in a distant second was Eaton Corp plc, Northeast Ohio’s largest public company, judging by its value on the stock market. Most non-employee directors at the power management company made more than $300,000 in cash and restricted share units, which convert into either stock or cash when they leave the board.

Don’t bank on it On the other end is OurPet’s Co., which in terms of stock value is the smallest local public company that regularly files documents with the U.S. Securities and Exchange Commission. None of the directors at the Fairport Harbor-based pet products maker received any cash last year.

Instead, the company gave out stock options, which at the time were valued at less than $4,000 per director.

OK, maybe it’s obvious that small companies would pay less. Perhaps this is more surprising: Directors at banks — the people who control the money industry — are usually paid much less than other companies that are about the same size.

Even though KeyCorp is the region’s sixth-largest public company by market value, it ranks 27th in average director compensation. Third Federal Savings and Loan, the 15thlargest public company, was 40th in

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CRAIN’S CLEVELAND BUSINESS z OCTOBER 12 -18, 2015 z PAGE 13

director compensation. FirstMerit, the 19th-largest company, was 25th.

That trend is national. Banks rank dead last in director compensation out of 24 industries, according to a survey by the National Association of Corporate Directors. Why? Midsize and small banks tend to be more traditional, regional businesses, said association president Peter Gleason.

For instance, it might be complex to run a global company in the pharmaceutical industry — which falls in the highest-paying category.

The ‘decimal’ system But even those banks still pay the average director more than $100,000 in cash and stock. And directors of smaller companies still receive tens of thousands of dollars.

Yes, for a part-time job, being a board member pays well. But that’s the way it should be, according to Gleason.

Board members have usually served as high-level executives at other large organizations. Many are current or former CEOs who are accustomed to making much more than $670 per hour.

When you compare what they’re paid to the experience and skill they bring to the board, there’s no contest, in Gleason’s view. “It’s decimal dust when it really comes down to it,� he said.

And though some board members are retired, many are still extremely busy people. Yet, they have to make

See the illustration over there?

Notice how the old guy is on the tallest stack of cash? There’s a reason for that.

Only four local companies can say that a female is their highest-paid director, judging by data we collected on 56 companies that regularly file documents with federal regulators. That’s just 7%. And even though the average board member in Northeast Ohio is 61, the highest-paid members skew older.

It may not be sexism or ageism, since board pay is often highly structured. Directors often get more money for leading committees or serving as chair of the board. Women and younger members usually are newer and less likely to hold leadership roles. It also doesn’t help that 14 of the 56 companies have no female members, and 22 have only one member. — Chuck Soder

time to attend meetings and take phone calls at night and on weekends, and many have to travel long distances.

Bill Summers — a board member for both RPM International in Medina and Greatbatch of Frisco, Texas — has been there. A few weeks ago, the former chairman and CEO of McDonald Investments hopped on a 7 a.m. flight to Minneapolis to interview two people for a high-level human resources position at one of the two public companies he serves. He wouldn’t say which one.

He got home at 9 p.m.

Granted, sometimes he might go two or three weeks without any calls

or meetings. But the calls often are scheduled at odd hours, and the meetings can last all day. For instance, on the afternoon of Wednesday, Oct. 7, Summers was planning to attend a board meeting for RPM that was scheduled to run into the evening and restart again the next day. And the company’s annual shareholders meeting was slated to take place afterward.

Taking stock He and others noted that board members work more today than they used to because of increased regulations. They said laws like Sarbanes Oxley and Dodd Frank have made the job more complex. Some of them also said that those regulations have helped drive up director compensation. Pay has risen by 4% to 7% annually since 2009 — a year when most board members took pay cuts, according to the National Association of Corporate Directors.

A few people also noted that most board members get about half their pay in stock — stock that they often can’t sell for several years. That helps them keep the long-term interests of shareholders in mind. And “if the company isn’t doing well, the directors don’t do well,� Summers said.

The vast majority of boards have a regimented process for setting their compensation levels. It often involves hiring an outside consultant to evaluate how much similar companies

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pay their directors — a consultant like Donald Kokoskie, a Clevelandbased partner at Pay Governance.

After looking at some of the data Crain’s collected on director compensation, Kokoskie said most of the local companies seem “in the ballpark” for businesses their size.

Kokoskie said they have to pay reasonably well to find “top-quality directors who can commit the time.”

Of course, directors do control their own pay. Might they be inclined to overpay themselves?

He doesn’t think so. Most directors “are very cognizant” about how it might be perceived if they pay themselves too much, especially if a company isn’t doing well and its employees aren’t also getting raises.

Ironically, when a company isn’t doing well is often when board members are required to work the hardest.

Ralph Della Ratta said he definitely had to do some “extra duty” when lighting products maker TCP International was hit with a lawsuit that accused CEO Ellis Yan of misconduct.

Yan resigned this past summer.

A board member’s workload also increases when they sign up to lead committees — or the entire board.

Della Ratta — who by day serves as

HIGHEST-PAID DIRECTORS IN NORTHEAST OHIO 1. DOUGLAS W. PEACOCK, 76, TransDigm Group Inc. — $800,294 Retired chairman, CEO, TransDigm 2. GEORGE SMART, 69, FirstEnergy Corp. — $389,412 Retired president of Sonoco-Phoenix 3. GREGORY R. PAGE, 63, Eaton Corp. plc — $337,932 Executive chairman, Cargill 4. HENRY D.G. WALLACE, 69, Diebold Inc. — $328,407 Former CFO, Ford; former CEO, Mazda 5. CHRISTOPHER L. MAPES, 53, The Timken Co. — $326,013 Chairman, CEO, Lincoln Electric 6. W. ALAN MCCOLLOUGH, 65, Goodyear Tire & Rubber Co. — $310,728 Retired chairman, CEO, Circuit City Stores 7. TERRANCE R. AHEM, 59, DDR Corp. — $306,584 Cofounder, CEO, The Townsend Group

CEO of Western Reserve Partners, an investment banking firm in Cleveland — serves as lead director at both TCP in Aurora and Olympic Steel in Bedford Heights.

Taking on that title was “definitely a noticeable transition,” he said with a laugh, noting that he tries to check in with the management teams of the companies once or twice a week.

Della Ratta has served on the boards of several public and private companies over the years.

He believes that some board members are underpaid and others

— the ones who don’t pull their weight — are overpaid. Boards need to get rid of directors who don’t do their jobs, he said, arguing that they don’t do it frequently enough.

Though board compensation can be an emotional topic, he’s OK with it. Shareholders should know what a company’s board members are paid.

Last year, he made $127,485 from Olympic Steel. Exact figures weren’t available for TCP, but the company gives all directors at least $110,000 in cash and stock.

“All the scrutiny on compensation is a healthy thing,” he said.

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CONTRIBUTED PHOTO

MIDDLE MARKET

Recovering from growing pains Cleveland HeartLab’s expansion slowed after initial surge, but the company is aiming to kickstart sales

BY CHUCK SODER csoder@crain.com @ChuckSoder

Once you’ve picked the low hanging fruit off a tree, what do you do?

You either find new trees, or you start climbing.

Cleveland HeartLab is doing both.

During its first four years in business, the Cleveland Clinic spinout had little trouble convincing doctors to send blood and urine samples to the company’s Carnegie Avenue headquarters, which doubles as a testing laboratory. Then, two years ago,

the company hit what CEO Jake Orville described as “the plateau.”

It’s not that Cleveland HeartLab stopped growing, but it no longer had the momentum that pushed the company to hire 120 people and hit $27 million in annual revenue by the end of its fourth year in business. Today, the company has more than 130 employees, Orville said. He declined to give a current revenue figure.

So what happened? Many of the doctors the company won over in its first few years were early adopters who jump at the chance to use promising new technologies. In some cases, they already unSee HEARTLAB, page 26

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MIDDLE MARKET ADVISER: Stacy Feiner

TAX TIPS: Carl G r

Middle market is the official employer of choice Treasury c o The large corporate companies we had always known to be great have fallen from grace. The financial institutions that served as bedrocks of our communities have disappointed us. Many Americans have lost faith and have been challenged to find heroes in these sectors.

In the meantime, quietly persevering outside the public eye, the United States middle market has been duking it out and winning.

Heroically, the middle market is responsible for employing 70% of the country’s population. Despite enormous regulatory pressure and economic uncertainty, this fact alone makes the middle market the economic wealth engine of our nation.

And while the middle market is not a new class of companies, this group of companies is propping us up and propelling us into a better place. Hungry media outlets and clamoring investors are taking notice of the value they bring. While this visibility is a valuable marketing opportunity, it can also lead to exploitation. That’s why middle market and small business owners must strategize so they can leverage visibility and avoid exploitation.

There are three steps to accomplish this. First, as a middle market business owner, you should understand what makes you an economic powerhouse — what gives you the edge in today’s market and how to leverage that position. Second, as a business owner you must realize that being in the limelight makes this a critical time to establish a board of

advisers. Finally, business owners must recognize that they create the work environments of more than half the population, and as such, fostering employee engagement and building bench strength will ensure a competitive advantage.

So, why are middle market companies economic powerhouses? Just consider these statistics: About half of the 197,000 middle market companies — defined as those generating revenue between $10 million and $1 billion — are headquartered in the interior states. There is intrinsic value in this 50/50 ratio. In contrast, the majority of public companies in the country and the majority of early stage companies reside on the coasts.

z

z Middle market companies are aligned to stakeholder value with an average 37-year outlook allowing communities, strategic partners and other beneficiaries to prosper long term alongside. In contrast, the focus on shareholder value forces public companies and private equity firms alike to operate with a short-term outlook, which can quickly disrupt business continuity and destabilize communities. z Most middle market companies are headquartered in the same state as the majority of the company’s production,

personally connecting the company’s executive leadership with the communities in which they live. An example of the wise proverb, “Don’t piss where you eat.”

All this to say, middle market companies stabilize our communities and create new opportunities for commerce by contributing to the local tax base, offering stable employment, creating mutually beneficial strategic relationships, and relying on local resources.

So, how does a middle market company leverage its opportunities?

The best leaders have a coach whispering in their ear — and by extension, a board of advisers. A thoughtfully selected board is the most important defense against exploitation and a valuable source for vetting options and infusing new thinking.

Experience shows that no single leader can know everything. A wellstructured board is also a cost-effective way to gain expertise and skills in areas outside your company’s core competencies. They meet regularly, learn the ins-and-outs of the business and gain a deep understanding of the goals of the company and the aspirations of the owner.

The breadth of experience and broad management expertise keeps your business on the right course, contributes to innovation, helps take advantage of new opportunities and guards against exploitation.

Finally, with more than half of the population employed by the middle

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Stacy Feiner is an executive coach for the middle market at BDO USA. market, it is incumbent on business owners to establish a talent management system that engages employees, rewards productivity and innovation, and unifies the company’s culture. The life cycle of your people follows the life cycle of your business.

Since numbers are a lagging indicator, turn your attention to the people. People drive the numbers.

If you’re looking for a business hero and need inspiration, you’ll find it in your own backyard. The middle market is a powerful collective of businesses that is keeping our country strong. These businesses come in many shapes and sizes — and they are the real American heroes. They fuel our quality of life the way our military protects our quality of life. That is why the middle market is the official employer of choice

Estate planning attorneys have been using discounting techniques as an important part of wealth transfer planning for many years.

Recently, there have been indications that regulations will be issued soon by the Treasury Department that will significantly curtail this practice.

While the higher federal estate tax exemptions put in place several years ago have lessened the need for discounting for most people, those with taxable estates over the exemption amounts should consider whether action needs to be taken soon to take advantage of the current law.

Generally speaking, discounting involves the use of planning techniques that facilitate an estate and/or wealth transfer plan that makes assets less valuable for gift and estate tax purposes.

Discounting in its simplest form is often times achieved by transferring the assets to an entity (such as a limited partnership) that imposes restrictions on the ability of the owners to convert the assets into cash. Gifts of an interest in the limited partnership would be valued at less than the underlying assets in the partnership because there would be significant restrictions.

For example, typically, there is no way to convert the partnership interest to cash and no way to control the investment decisions or the decision to sell the assets.

The actual value of the gift would

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Voice of Reason

FIG. 6-C

G rassi

Hero

c ould curtail discounting practices be determined by an appraiser, but even a modest discount from the fair market value of the underlying assets could save a considerable amount of gift and/or estate taxes.

The IRS has, over the years, fought this type of planning, especially where the assets consisted of marketable securities.

There have been many cases in tax court where the IRS has challenged this type of discounting strategy, and it has had some success.

Most of the taxpayer losses have been in situations where the partnership or LLC was not set up properly or the gifting was not executed properly.

There has been a fair amount of press this summer on the IRS plan to curtail this planning technique in a more formal and permanent way.

Treasury already has been given broad authority to issue regulations limiting situations where discounts can be taken. Existing regulations provide that an “applicable restriction” is ignored when determining the value of an asset. An “applicable restriction” is one that limits the ability of a corporation or partnership to liquidate, if the restriction lapses or could be changed in the future by family members.

A limit provided under state or federal law is not considered an applicable restriction, so these types of restrictions are permitted and can provide the basis for a discount on the value of an interest.

For example, under Delaware law,

the general partners and two-thirds of the limited partners of a partnership have to agree to dissolve the partnership.

While a valuation expert could take this restriction into account when valuing an interest in the partnership, he could not take into account a provision in the partnership agreement that required unanimous consent to liquidate, because this is more restrictive that what is provided by Delaware law.

The new regulations could provide additional “applicable restrictions” that would be ignored for purposes of valuing an interest, reducing or eliminating the benefit of discounting.

All indications are that these regulations may be released soon.

While most practitioners feel that an outright prohibition on marketability discounts would be beyond the power of the Treasury, there may be some room for Treasury to scale back the use of this technique.

The scope of the changes is unclear.

Some practitioners feel, for instance, that the regulations may be focused on situations such as the one described above, where marketable securities are put into an LLC or partnership, if the primary purpose of the transfer is to generate a discount. Operating businesses might be left out of the new rules.

The timing of the effective date of the regulations is also a question.

Although these regulations would

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Carl Grassi is president of McDonald Hopkins LLC. likely be issued as proposed regulations, these types of regulations are oftentimes made effective as of the date of initial publication, meaning there would be little or no advance notice that the changes were coming.

Regardless of whether regulations are imminent, it is perhaps time to review your estate plan and determine whether discounting could be a part of your overall wealth transfer plan.

If so, the plan should probably be put in place as soon as possible because this wealth transfer planning technique that may not be available much longer.

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MIDDLE MARKET

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A lot of hourly workers are about to get raises — millions of them, in fact. And Ohio’s employers might be affected more than most.

That’s because, beginning sometime in 2016, employers in Northeast Ohio and across the country will be operating under new rules with regards to who is and who is not entitled to overtime pay.

The bottom line: more will be — a lot more.

“Something like this is going to be such a sweeping change to the way employers do business — you pretty much have to stay on top of it,” said Ludgy LaRochelle, a labor lawyer with the Cleveland firm Weston Hurd.

The changes are coming via the U.S. Department of Labor, which announced proposed new overtime rules this summer and just finished taking thousands of comments from the public. Final rules will be unveiled next year, but observers say employers should be prepared for what’s been proposed to soon become the rule.

The changes will severely limit which workers employers can classify as exempt from overtime regulations, which generally require that hourly workers be paid time-and-ahalf work beyond a 40-hour weekly threshold. The Department of Labor is proposing that the minimum salary of exempt workers be increased, from a current threshold of $455 per week or $23,660 a year, to $970 per week or $50,440 per year.

That’s a huge change, in part be-

cause the department has not revised the threshold since 2004. But it’s got a lot of businesses up in arms.

For instance, the last time the feds unveiled a new threshold was in 2004. Then, it received just fewer than 76,000 comments in the 90-day comment period, according to Nicole Gray, a partner and labor lawyer at McDonald Hopkins in Cleveland. This time, however, it received more than 200,000 comments.

What it means for businesses is that no employee earning a salary of less than $50,440 a year can be considered exempt. So if they work more than 40 yours a week, their employer must pay them time-and-a-half for the extra hours.

That employee would still have to meet the other “duty” requirements as well.

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hange “If I have the title of manager, but I really just stock the shelves, that’s not going to make me exempt,” Gray said.

But no employees making less than the new threshold amount could be considered exempt, whether they are doing management duties or not, she said.

Gray, LaRochelle and some other business advocates don’t necessarily take issue with whether there should be a threshold salary level for exempt employees. But they do take issue with how the changes are made and the degree to which the labor department is now seeking to adjust them all at once.

For one thing, they said, there is no provision for either geography or industry.

That means that a worker at McDonalds would have to make $50,000 a year to be considered an exempt manager, and a worker at a large corporation would be subject to that same threshold amount.

And because service industries have the most crossover between employees and managers — not to mention employees that tend to work long hours — that sector will likely be affected more than most.

Hotels, restaurants, bars and other service businesses are likely to have to revamp how they use their employees. Nation’s Restaurant News recently estimated that “tens of thousands” of restaurant workers would be affected, with chain restaurants affected more than most others.

But where the problem might really come in is in terms of geography.

Salaries in places like Cleveland (or Toledo, Youngstown or many other Ohio cities) are much lower than they are in places like New York, Boston or San Francisco.

Setting the same minimum salary level for managers in all places equally does not make sense to many.

“What’s a ‘minimum’ in New York is not the minimum in Toledo — it’s not going to work,” LaRochelle said.

“I agree that (the salary threshold) needed to be adjusted, but I think it should be done more at a regional level.”

There’s still a chance that the final rule, which is expected to come out early next year, could be changed — but Gray, LaRochelle and most other observers think it will either stand as-is, or be changed only a little.

“I think the change in the minimum threshold is here to stay,” LaRochelle said.

He and other attorneys say that big businesses are very aware of the changes that are coming. But they worry that smaller companies won’t stay on top of the issue and could get blindsided.

“If I was the employer, I would start worrying about it now,” Gray said.

“It’s a good time to take a look and see who are the affected employees … and it might be a good time to ask, ‘should I increase this person’s salary? Does that make sense now?’”

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MIDDLE MARKET

Check out these digs A well-designed office space can be an attractive tool for recruiting and retaining talent

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Office space design is about much more than simply creating efficient space for employees to work in. It’s about expressing the culture of an organization, conveying to employees that they are valued, and giving workers opportunities to develop and grow.

For middle market companies, well-designed office space can be a crucial tool for attracting and keeping top talent. Earlier this year, the National Center for the Middle Market and the Novo Group released a study “showing that middle market firms with the most well-developed and compelling employee value propositions (EVPs) offer attractive options across the board,” according to the website. Seventy nine percent of executives said the quality of facilities and working environment was an attractive component of a compelling value proposition for employees.

Scott Ashley, senior workplace strategist for Vocon, an architecture and interior design firm with offices in Cleveland and New York City, said that workplace design can play a sizeable role in job satisfaction and motivation. Ashley heads Vocon’s five-person workplace strategy team. His group researches organizational culture, works with top executives to identify business strategy and values, and helps companies to align their office space design with their overall vision and mission.

“When we can understand how a culture operates within an organization, then we can design spaces that can support those types of activities for employees,” he said.

Selling top brass on the big picture isn’t always easy, though. Companies tend to look for new space for two reasons — either they’ve outgrown their current space or their lease has run out. Vocon helps firms to take a step back and develop space that will help them grow.

Ashley said office space design can be crucial for growing middle market companies.

“It’s like buying your first suit when you’re a junior or senior in high school, and then you put it on and say, ‘Oh, I look good,’” he said. “A lot of organizations have grown to that point where they say, ‘It’s time to move into our big boy office.’”

Northeast Ohio has no shortage of intriguing work spaces, but here are a few companies dabbling in the middle market who have made their creative office spaces a central part of their value proposition to employees.

— Lee Chilcote

Cleveland software company LeanDog coaches companies on getting rid of their cubicles and creating open, transparent environments. LeanDog doesn’t even call them cubicles, according to founder and CEO Jon Stahl. It prefers the term “sensory deprivation chambers.”

So one would only expect that LeanDog’s offices would be radically open and entirely devoid of walls.

Yet the company’s floating offices in downtown Cleveland — housed in a century-old barge that the company shares with advertising firm Arras Keathley — are something else entirely. Employees are encouraged to not only soak in the views of Lake Erie, but also get out and enjoy it. The office has a fleet of powerboats, paddle boards, kayaks and jet skis.

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“Creative people really have to have creative environments,” Stahl said.

“Most people want to be part of a high-performance team with a high-performance culture. We all contribute, we’re all accountable. It looks like fun, but we work hard, and there’s complete transparency.”

On the boat itself, perks include access to high-tech 3D printers and a rooftop deck with a full bar and concert stage. The creative office environment is crucial to attracting and developing employees, Stahl said.

The company’s retention rate is very high.

“What we do here at LeanDog and on the boat is kind of like adult kindergarten,” he said. “Everyone is valued, we’re not in silos. We try to work a hard 40, but we’re allowed to have recess. But it’s more of an adult recess. We’re allowed to take mental breaks and have fun.”

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TWIST CREATIVE

FIT TECHNOLOGIES

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Imagine going to work each day in a historic creamery with painted concrete floors, high ceilings, and cement columns that still bear the wood grain of the forms used to make them a century ago.

That’s just another day at the office for Connie Ozan, co-founder and chief design officer of Twist Creative, a 15-person brand strategy and design firm in Tremont. Twist is on the first floor of the recently renovated Fairmont Creamery building on West 17th Street.

“We loved the character of the old building blended with the amenities of new construction,” Ozan said. “This way we can stay focused on what we love to do, and our productivity and creativity goes up.”

Twist’s new offices include a lobby inside the old truck bay, a creative lounge with sleek midcentury furniture, and whiteboard walls that can be used for internal brainstorming sessions.

There also are pinup boards throughout the space where employees can display their work.

“Everyone is aware of what’s happening and we can see each other,” Ozan said of the partially open design. “It creates an inclusive environment where everyone’s ideas matter.”

Twist moved from a four-floor office in Ohio City where teams were located on different floors, making collaboration difficult and inefficient.

“They see it as an investment not only in the company, but also in them,” said Ozan of the employee response to the new space. “It says to them that we’re growing.”

Ten years ago, the managed IT services firm Fit Technologies was operating out of a basement office in Elyria. It had 65 employees packed into 3,500 square feet and were actively seeking a new location.

“There was a lot of energy, but if you wanted to write, forget it,” said Michelle Tomallo, president and cofounder of Fit Technologies. “We couldn’t talk to clients, we couldn’t have sensitive discussions.”

In 2006, Fit Technologies moved to the Idea Center at Playhouse Square, where they were able to custom design their space. In 2013, it relocated again from the fifth floor to the third floor. The open office layout includes seated height dividers, a comfortable kitchen and a lounge area with a large flat screen TV. The space also has large windows and colorful walls with whiteboard paint where employees can brainstorm and jot down ideas.“The biggest thing is that because we work together as a team to service clients, the space imitates the work we’re doing,” Tomallo said. “We’re really a flat organization. We think it’s important that people feel like they know what’s happening and feel connected to each other.”

Visitors or prospective hires are impressed when they walk into the building.

“They say, ‘Wow,’” she said. “It’s like a surprise. There’s so much energy here, from all the color and light.”

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12. Tax Status: (For completion by nonprofit organizations authorized to mail at nonprofit rates.) The purpose, function, and nonprofit status of this organization and the exempt status for federal income tax purposes: (Check One) ❑ Has Not Changed During Preceding 12 Months ❑ Has changed During Preceding 12 Months (Publisher must submit explanation of change with this statement) 13. Publication Title: Crain’s Cleveland Business 14. Issue Date for Circulation Data Below: September 28, 2015 15. Extent and Nature of Circulation No. Copies Average no. of copies of single issue each issue during published nearest preceding 12 months to filing date A. Total No. Copies (Net Press Run) 23,066 28,969 B. Paid Circulation (by mail and outside the mail) (1) Mailed Outside-County Mail Subscriptions Stated on PS Form 3541 (Include paid distribution above nominal rate, advertiser’s proof copies and exchange copies) 8,128 7,937 (2) Mailed In-County Paid Subscriptions stated on PS Form 3541 (Include paid distribution above nominal rate, advertiser’s proof copies and exchange copies) 13,500 13,176 (3) Paid distribution Outside the Mails including Sales through dealers and carriers, street vendors, counter sales, and other paid distribution outside USPS 1 1 (4) Paid distribution by other classes of mail through the USPS 0 0 C. Total Paid and/or Requested Circulation [Sum of 15B(1), (2), (3) and (4)] 21,629 21,114 D. Free or Nominal Rate Distribution (by mail and outside the mail) (1) Free or Nominal Rate Outside-County Copies included on PS form 3541 285 3,755 (2) Free or Nominal Rate In-County Copies included on PS form 3541 160 271 (3) Free or Nominal Rate Copies mailed at other classes through the USPS 0 0 (4) Free or Nominal Rate Distribution outside the mail (Carriers or other means) 421 3,200 E. Total Free or Nominal Rate Distribution (Sun of 15D (1), (2), (3) and (4)) 866 7,226 F. Total Distribution (Sum of 15C and 15E) 22,495 28,340 G. Copies not distributed 571 629 H. Total (Sum of 15F and G) 23,066 28,969 I.Percent Paid and/or Requested Circulation (15C/15F x 100) 96.15% 74.50% 16. Total circulation includes electronic copies. Report circulation on PS Form 3526-X worksheet 17. Publication of Statement of Ownership printed in the 10/12/15 issue of this publication.

18. I certify that all information furnished on this form is true and complete. I understand that anyone who furnishes false or misleading information on this form or who omits material or information requested on the form may be subject to criminal sanctions (including fines and imprisonment) and/or civil sanctions (including civil penalties).

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z OCTOBER 12 -18, 2015 z CRAIN’S CLEVELAND BUSINESS

Business of Life AROUND TOWN: SoLo (South of Lorain) Crain’s occasional look at places to see and things to do. Send ideas of places you love to: clevedit@crain.com

Welcome to the neighborhood ...w

By Rachel Abbey McCafferty Ohio City’s South of Lorain district — or as what some refer to as SoLo — is trying to be more than just a temporary spot on the city’s trendy circuit.

While the stretch of long-standing buildings along Lorain Avenue near Fulton Road still sports some empty storefronts, businesses like modern breakfast spot Jack Flaps and brewery and incubator Platform Beer Co. have been making the area home in recent years.

The Ohio City district is close to other vibrant neighborhoods like Tremont and Detroit Shoreway, but no one had been looking in the area for a long time, said Justin Carson, president of Platform Beer and JC BeerTech LTD. There was a big opportunity for people to lease or buy a building for less, like he did in 2013. He opened Platform Beer in summer 2014.

Ward 3 councilman Joe Cimperman said Ohio City has always been a “dynamic” neighborhood, but there’s been a lag in development in South of Lorain. That has changed in recent years, as the city changed the zoning to crack down on illegal car lots on Detroit and Lorain avenues, and investments from businesses like Platform started rolling in. The councilman, who loosely defines the boundaries of the district as West 25th Street to West 52nd, said the area will be one to watch in the next few years.

Carson, who defines the district more tightly than Cimperman, said it’s important to have boundaries for redevelopment and investment purposes.

Randy Carter, chef and owner at Jack Flaps, said he thinks the growth helps build up the neighborhood as a whole, noting that West 25th has evolved a bit in recent

years to more of a late-night and dinner spot.

Ohio City overall has seen a great deal of revitalization in recent years, said Tom McNair, executive director of community development corporation Ohio City Inc. Since 2010, more than 90 businesses have opened in the neighborhood. Ohio City Inc. is focusing on the area’s corridors, adding bike lanes to Detroit and working to slow traffic on Lorain Avenue.

McNair said the plan is to connect the neighborhood’s interior parts with those main corridors.

Jane Alley, general manager of Fridrich Bicycle Inc., said the growth of the area has introduced new people to the bike store and repair shop, which has been a staple on Lorain Avenue for more than 100 years.

It also tends to bring people out in groups, which she said is both safer and helps to make the area an up-and-coming one. But it’s not all about building up the area for tourism.

Rachel Kingsbury, owner of The Grocery, said she didn’t see amenities for residents in the neighborhoods connecting the entertainment districts like in other cities. She opened the small market, which offers locally grown produce and grocery staples, about 10 months ago.

Kingsbury said she thought it was “time to start filling in the storefronts with the things the people in the neighborhood need.”

Addresses: Fridrich Bicycle Inc.: 3800 Lorain Ave; The Grocery: 3815 Lorain Ave.; Jack Flaps: 3900 Lorain Ave.; Platform Beer Co.: 4125 Lorain Ave.; Canopy Collective LLC, 3910 Lorain Ave.

FROM LEFT: The SoLo district features such spots as The Grocery (shown is owner Rachel Kingsbury), Jack Flaps, Canopy Collective and Platform Beer (shown is president Justin Carson). (McKinley Wiley photos)

We don’t just see people for who they are; we see

20151012-NEWS--23-NAT-CCI-CL_--

10/9/2015

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CRAIN’S CLEVELAND BUSINESS z OCTOBER 12 -18, 2015 z PAGE 23

w ithin Ohio City In the past year,

84% of people engaged in United Way-funded workforce development programs have obtained employment.

them for who they can become.

20151012-NEWS--24-NAT-CCI-CL_--

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z OCTOBER 12 -18, 2015 z CRAIN’S CLEVELAND BUSINESS

BUSINESS OF LIFE

Source Lunch Mike Mulhall has been boosting Northeast Ohio in one form or another for more than 20 years.

Since 2012, he’s been vice president of partnerships for the city’s convention and tourism bureau, Destination Cleveland, where he manages more than 700 relationships with area businesses, organizations and attractions. He’s also a supporting staff member for the Cleveland 2016 Host Committee, which is responsible for preparing Cleveland for next year’s Republican National Convention. Mulhall works closely with David Gilbert, who is president of both Destination Cleveland and the Host Committee.

These days, like most people involved in tourism, Mulhall is deeply involved in helping to prepare for the 2016 Republican National Convention. He’s a great person to talk to about all it means to Northeast Ohio and its tourism industry.

— Dan Shingler

Your main responsibility is managing Destination Cleveland’s partnerships, but are you currently spending a lot of time working with them with regard to how to they can work with the RNC? Yes. They understand how connected we are, so I think they’re really looking to us to help lead them through it. So we spend a lot of time on that. Part of the Host Committee’s job is to make sure that Northeast Ohio benefits from hosting this convention. So we’re trying to make sure that people here know how to connect with the people who will be coming here and spending money. We’re just trying to make that as easy as possible.

A lot of your partners are already involved in tourism, and this is a big-deal event for your universe. What’s being done to help everyone take part?

We’re working regionally with a lot of the other convention bureaus — in Lake County, along the Lake Erie shore and islands. As you know, the convention is taking place seven weeks earlier than it typically is. So it’s now falling in the middle of vacation season. We’re saying, “Hey, let’s encourage people to come early and stay late and build a vacation around it.” That’s where you can really bring in the whole region.

What do you like most about the preparatory work you’re doing for the RNC? I love that the organization is being looked to the way we are in terms of leading the effort. I think it helps the credibility of the organization, and I think things are in the right hands under David’s leadership. It’s a great way to get to know our partners better.That’s the best part of my job — growing all of those relationships. We’re all really, really passionate about Cleveland; you have to be to work at our organization. This is a once-in-a-lifetime opportunity, so we want to get people excited about it. Those are daily conversations I’m having with people — why this is so good for Cleveland.

How big is this for Cleveland, really?

It’s one of the second-biggest media events in the world. The only thing bigger is the Summer Olympics. So you’ve got all this media coming here — and what better time to tell our story? The biggest Super Bowl ever credentialed 6,000 (media members).

This will be more than twice that.

Do you travel a lot because of the Republican Convention?

Not really. I’m on the road a lot, but talking to (regional) partners.

I tell all my people, “I love you, but I don’t want to see you. If you’re talking to me, you’re not out in front of customers.”

Mike Mulhall

When you’re done with the RNC, what will you and Destination Cleveland be doing?

Hopefully, we’ll be busier than ever. We’ve really seen a huge uptick in our convention leads since the RNC was announced.

We attribute that to a lot of meeting planners. We just weren’t on their radar before. …

The convention center and some of the attention we’ve gotten has really helped to grow our hotel industry, which helps us get more business. … Close to 1,000 more hotel rooms will become available in the next year.

Is your job, promoting tourism, easier or more difficult than it was 10 years ago?

I don’t know if it’s easier or harder. The environment is certainly a much more exciting one — and expectations are higher. But I’d certainly rather be doing what I’m doing now than then.

What’s something I should check out that I might not have seen in Cleveland yet?

Have you seen The 9 yet? It’s cool. You should check it out and at least wander through it. …

They’ve got public restaurants and — you should do this soon — they have a really cool rooftop where you can go and have lunch, called Azure.

TOURISM

FIVE THINGS WHEN YOU WERE 10, WHAT JOB DID YOU THINK YOU’D GROW UP TO HAVE?

Playing for the Indians — and I believed it!

WHAT ARE YOUR HOBBIES?

Kayaking, fishing, cheering for kids at soccer games and cross-country meets.

YOU MIGHT KNOW THE LOCAL RESTAURANT SCENE AS WELL AS ANYONE. WHAT ARE SOME OF YOUR PERSONAL FAVORITES?

Pura Vida, Grumpy’s, Pier W, Merwin’s Wharf, Sokolowski’s University Inn

LUNCH SPOT Grumpy’s Café 2621 W. 14th St., Cleveland, OH 44113 (216) 241-5025 www.grumpys-cafe.com

The meal Turkey reuben and black bean burger. They both rocked, but consider something with Grumpy’s awesome bacon on it.

FAVORITE ALBUM?

The vibe

Pearl Jam, Ten

You can wear jeans and not feel out of place next to a politician or business person. And don’t be surprised if the owner, Kathy Owad, comes to take your order.

THINGS NOT TO MISS IN NORTHEAST OHIO IN THE FALL?

Metroparks, Browns games and high school football

The bill $23.76 + tip

20151012-NEWS--25-NAT-CCI-CL_--

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CRAIN’S CLEVELAND BUSINESS z OCTOBER 12 -18, 2015 z PAGE 25

EXPO continued from page 3

to stop in for an hour here and an hour there, as their schedule permits.

The museum closes at 5:30 p.m. daily, Detling said, and he’s already fielded about 20 requests from convention groups that want to rent the iconic building out for evening events. He said the museum has decided not to let one group use the building for every night of the convention but will instead rent it out on nightly basis.

“Evening events are going to be buyouts” of the entire building for a single event, he said. “We’re going to do individual parties, but we haven’t decided what the pricing is going to be.”

While the Rock Hall’s glitz and downtown location make it desirable, venues farther out see an opportunity to get in on the action, since conventiongoers likely will be in hotel rooms as far from downtown Cleveland as Akron, Lorain and Mentor.

Andy Malitz, general manager and executive director of the NEOMED Education and Wellness Center on the Northeast Ohio Medical University Campus in Rootstown, said he’s already getting some inquiries for convention week. He has booked a convention training event for several days leading up to the main event.

Contact: Phone: Fax: E-mail:

COMEBACK

“Everybody in the industry

continued from page 4

Slovenian National Home on East 80th Street, which he’s rebranding as “The Nash” and starting to promote bowling events.

He’s even got a catchphrase for his ventures — “The New Wave of the Old World.”

Trzaska’s focus is on Fleet, but the retail study, and Slavic Village Development, see redevelopment possibilities at East 55th Street and Broadway as well, Alvarado said.

At the moment, the most visible retailer at the 55th and Broadway crossroads is Hubcab Heaven, on the first floor of the 116-year-old Broadway Savings and Loan Building at East 55th Street and Broadway.

Most of the other storefronts, if they’re not empty, are occupied by insurance agents, daycare centers and tax services.

Alvarado would like to develop a retail incubator there or on Fleet that would help home-based artisan businesses that now sell at places like the Cleveland Flea, and food businesses that sell at farmers’

is bulking up audio-video staff” — Matt Radicelli, founder, Rock the House The expo wasn’t just for venues, of course. Once an event is booked, the venue operator or the host group may need to line up catering, tables and chairs, valet parking and other goods and services.

Rock the House’s Radicelli said he expects everyone in his business to be adding staff and figuring out how to meet the demand for the hardware and equipment they’ll need for the convention surge of business. He’s buying new equipment not just for events his firm might be handling, but to rent out to others caught short.

“Everybody in the industry is bulking up audiovideo staff,” he said. “Five executives from our company are going to China in the first quarter of next year to source equipment. We are doing two years of capital spending ahead of the RNC.”

REAL ESTATE

Denise Donaldson (216) 522-1383 (216) 694-4264 DDonaldson@crain.com

markets, take first-floor spaces that combine a workshop or small processing shop with a storefront retail operation.

The first example of that will be Saucisson, a butcher shop that will open in the next few months in a building Trzaska owns on Fleet. The move will come after the reconstruction of Fleet is complete.

Melissa Khoury and Penny Barend have been butchering pigs and making sausage for two years, working out of a catering operation and selling at farmers’ markets on the East and West sides. But they wanted their own space for both butchering and retail sale in a location accessible by existing customers on both sides of the Cuyahoga River. Now they’ve found it.

“We wanted to put ourselves in a middle ground,” said Khoury, noting their space used to occupied by Jaworski’s Meats, which moved to Middleburg Heights several years ago. “And we wanted to be part of something and Slavic Village has so much history.”

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20151012-NEWS--26-NAT-CCI-CL_--

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10/9/2015

2:11 PM

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z OCTOBER 12 -18, 2015 z CRAIN’S CLEVELAND BUSINESS

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HEARTLAB CONTINUED FROM PAGE 15

derstood the science behind Cleveland HeartLab’s flagship test. It’s designed to predict whether patients are at risk of a heart attack by testing their blood for an enzyme called myeloperoxidase (MPO).

But there’s one problem with early adopters: There aren’t enough of them. Orville said that the company has had a harder time signing up more mainstream doctors. Plus, new competitors have cropped up in recent years, which had made that task more difficult.

But heart disease is a huge problem. The low-hanging fruit may be gone, but there is plenty of fruit on higher branches and on other trees.

Now the company is getting ready to go after it.

“All of it is still out in front of us,” Orville said.

The company’s strategy consists of four main elements: z Develop new products.

Multiple new tests are in the pipeline. For instance, in November the company plans to launch a new test designed to tell how much TMAO — trimethylamine-N-oxide — is circulating in a patient’s bloodstream. Studies suggest that people with higher TMAO levels are at greater risk of heart disease and stroke. The more red meat you consume, the higher your TMAO level probably is.

Orville doesn’t expect there to be a huge demand for the test right away, given that there are no products on the market to treat TMAO — yet.

However, the Cleveland Clinic is working with Procter & Gamble to develop an overthe-counter product designed to help patients lower their TMAO levels. If they create something that proves to be effective, demand for the test should rise.

However, it’s unclear when that product might reach the market: Procter & Gamble is still at the beginning on the innovation process and “can’t speculate on timing,” according to Michelle Vaeth, associate director of communications for P&G Health Care.

“The work is just starting,” she said.

In general, if Cleveland HeartLab can offer more tests, it should be able to win over more doctors, who pre-

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z Educate doctors.

Cleveland HeartLab scored a big win on that front in April, when The Journal of Medical Economics published a study suggesting that Cleveland HeartLab’s inflammation-related tests could reduce the number of heart attacks and strokes by 10%.

The tests could save a health plan with a million members $187 million over five years, the study said. Three of the eight researchers who conducted the study worked for Cleveland HeartLab when the study was conducted. z Cut costs.

Cleveland HeartLab spent much of the past two years focusing on becoming more efficient, according to Orville.

He would not go into detail about how the company cut costs, but the business does have more employees than it had before it hit the aforementioned plateau.

“Our revenue per test is up.

Our cost per good is down.

Our gross margins are improving,” he said. z Increase foreign sales.

There are still plenty of early adopters in other countries, and Cleveland HeartLab wants to go after them. In July, the company received a CE Mark, which gives it the right to market its services in most European Union countries. It also received ISO Certification for Europe and Canada, Orville said, noting that the company is only “putting our toe into the European market.”

One more factor should give the company a boost. Its largest competitor, Health Diagnostic Laboratory Inc., filed for Chapter 11 bankruptcy this summer, after a federal investigation caused its sales to fall dramatically. The Virginia-based company exited bankruptcy last month, after it was acquired for $37 million.

So when is Cleveland HeartLab going to ramp up its growth? Next year, Orville said.

“2016 is the time for us to expand our sales and marketing footprint,” he said.

TECH ELEVATOR CONTINUED FROM PAGE 5

Tri-C® offers workforce training for both individuals and companies, including custom training tailored to fit your needs.

fer to send all of their tests to the same lab, Orville said.

“They want to pack one box a day, and they want to send it to one lab a day,” he said.

Cleveland’s economic development director, Tracey Nichols. She told him that she liked what the Software Guild was doing in Akron and wanted to see him do something similar in Cleveland.

“I said, ‘Oh, I’d love to talk to you about that,’ ” Hughes recalled.

Tech Elevator is talking to her department about the possibility of receiving financial incentives from the city.

No decisions have been made, but Nichols said in a Tech Elevator news release that she recognizes “that the future of Cleveland is heavily reliant on a skilled IT workforce.”

Local companies constantly complain about not being able to find software developers, a problem that Wintrich said he saw first hand at the Federal Reserve.

So maybe people like Seth Pinckney can help the situation. Like many bootcamp students, he had experimented with coding. Pinckney, who previously worked in the digital marketing world, so he picked up some front-end web development skills over the years.

But he’s still lost when he talks to real developers. The bootcamp should help fix that.

“It’s a good opportunity to expand my hard skills,” he said.

20151012-NEWS--27-NAT-CCI-CL_--

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CRAIN’S CLEVELAND BUSINESS z OCTOBER 12 -18, 2015 z PAGE 27

The List

LARGEST COLLEGES AND UNIVERSITIES Ranked by Fall 2015 full-time equivalent enrollment FULL-TIME EQUIVALENT ENROLLMENT

NAME OF COLLEGE OR UNIVERSITY THIS ADDRESS YEAR PHONE/WEBSITE

FALL 2015

FALL 2014

STUDENT TO FACULTY % CHANGE RATIO

ANNUAL TUITION ROOM & BOARD

% OF ENROLLMENT TYPE OF UNDERGRADUATE INSTITUTION AFFILIATION GRADUATE

OPERATING BUDGET (MILLIONS) ENDOWMENT YEAR FOUNDED ($ MILLIONS) PRESIDENT

1

Kent State University P.O. Box 5190, Kent 44242 (330) 672-3000/www.kent.edu

31,724

30,744

3.2%

21:1

$10,012.0 $10,334.0

84.0% 16.0%

4 year public

$666.3 1910

118.0

Beverly Warren

2

University of Akron 302 Buchtel Common, Akron 44325 (330) 972-7111/www.uakron.edu

20,724

21,186

-2.2%

19:1

$11,215.0 $11,567.0

84.0% 16.0%

4 year public

$366.5 1870

216.0

Scott L. Scarborough

3

Cleveland State University 2121 Euclid Ave., Cleveland 44115 (216) 687-2000/www.csuohio.edu

17,260

17,355

-0.5%

17:1

$9,636.0 $12,500.0

80.9% 19.1%

4 year public

$243.8 1964

74.9

Ronald M. Berkman

4

Cuyahoga Community College 700 Carnegie Ave., Cleveland 44115 (216) 987-4000/www.tri-c.edu

14,256

15,780

-9.7%

17:1

$3,136.0 NA

100.0% 0.0%

2 year public

$349.4 1963

50.3

Alex Johnson

5

Case Western Reserve University 10900 Euclid Ave., Cleveland 44106 (216) 368-2000/www.case.edu

10,587

10,130

4.5%

10:1

$44,156.0 $13,850.0

45.0% 55.0%

4 year private

$1,051.7 1826

1,776.0

Barbara R. Snyder

6

Youngstown State University One University Plaza, Youngstown 44555 (330) 941-3000/www.ysu.edu

10,034

10,149

-1.1%

16:1

$8,087.0 $8,990.0

89.6% 10.4%

4 year public

$176.9 1908

225.0

James Tressel

7

Stark State College 6200 Frank Ave. NW, Canton 44720 (330) 494-6170/www.starkstate.edu

6,714

7,845

-14.4%

21:1

$2,796.0 NA

100.0% 0.0%

2 year public

$60.0 1960

4.8

Para M. Jones

8

Lorain County Community College 1005 N. Abbe Road, Elyria 44035 (800) 995-5222/www.lorainccc.edu

6,470

6,685

-3.2%

20:1

$3,076.8 NA

100.0% 0.0%

2 year public

$6.4 1963

45.1

Roy A. Church

9

Lakeland Community College 7700 Clocktower Drive, Kirtland 44094 (440) 525-7000/www.lakelandcc.edu

4,674

4,946

-5.5%

20:1

$3,287.0 $0.0

100.0% 0.0%

2 year public

$58.3 1967

NA

Morris W. Beverage

Ashland University 401 College Ave., Ashland 44805 (419) 289-4142/www.ashland.edu

4,280

4,240

0.9%

10:1

$19,298.0 $9,602.0

66.4% 33.6%

4 year private

NA 1878

NA

Carlos Campo

10

SOUND SOLUTIONS FOR HIGHER EDUCATION Contact Chris Anderson + canderson@maloneynovotny.com + 216.363.0100

11

Baldwin Wallace University 275 Eastland Road, Berea 44017 (440) 826-2900/www.bw.edu

3,575

3,505

2.0%

13:1

$29,908.0 $8,370.0

84.0% 16.0%

4 year private

$122.8 1845

155.7

Robert C. Helmer

12

John Carroll University 1 John Carroll Boulevard, University Heights 44118 (216) 397-1886/www.jcu.edu

3,525

3,643

-3.2%

14:1

$35,930.0 $10,920.0

85.4% 14.6%

4 year private

$94.0 1886

205.2

Rev. Robert L. Niehoff, S.J.

13

Oberlin College 101 N. Professor St., Oberlin 44074 (440) 775-8400/www.oberlin.edu

2,919

2,944

-0.8%

9:1

$49,928.0 $13,630.0

99.0% 0.1%

4 year private

NA 1833

784.6

Marvin Krislov

14

University of Mount Union 1972 Clark Ave., Alliance 44601 (800) 992-6682/www.mountunion.edu

2,167

2,211

-2.0%

13:1

$28,550.0 $9,540.0

95.0% 5.0%

4 year private

$54.5 1846

142.4

Richard Merriman

15

The College of Wooster 1189 Beall Ave., Wooster 44691 (330) 263-2000/www.wooster.edu

2,036

2,034

0.1%

11.5:1

$44,520.0 $10,650.0

100.0% 0.0%

4 year private

NA 1866

NA

Grant H. Cornwell

16

Notre Dame College 4545 College Road, South Euclid 44121 (216) 381-1680/http://notredamecollege.edu

1,610

1,800

-10.6%

16:1

$27,520.0 $9,180.0

91.0% 9.0%

4 year private

$29.0 1922

8.0

Thomas G. Kruczek

17

Malone University 2600 Cleveland Ave. NW, Canton 44709-3897 (330) 471-8100/www.malone.edu

1,556

1,788

-13.0%

12:1

$27,104.0 $8,948.0

79.0% 21.0%

4 year private

$31.0 1892

18.4

David A. King

18

Ohio Technical College (1) 1324 E. 51st St., Cleveland 44103 (216) 881-1700/www.ohiotech.edu

1,355

1,307

3.7%

13:1

NA NA

100.0% 0.0%

2 year private

NA 1969

NA

Marc Brenner

19

Hiram College P.O. Box 67, Hiram 44234 (330) 569-3211/www.hiram.edu

991

1,134

-12.6%

10:1

$30,230.0 $10,190.0

98.0% 2.0%

4 year private

$29.6 1850

67.1

Lori E. Varlotta

20

Northeast Ohio Medical University 4209 state Route 44, Rootstown 44272 (330) 325-2511/www.neomed.edu

916

884

3.6%

NA

$34,670.0 NA

0.0% 100.0%

4 year public

$52.9 1973

15.4

Jay Alan Gershen

751

702

7.0%

16:1

$10,037.0 $11,670.0

100.0% 0.0%

2 year public

$8.0 1969

NA

James E. Kinder

21

The Ohio State University Agricultural Technical Institute 1328 Dover Road, Wooster 44691 (330) 287-1331/ati.osu.edu

22

Ursuline College 2550 Lander Road, Pepper Pike 44124 (440) 449-4200/www.ursuline.edu

736

848

-13.2%

7:1

$28,230.0 $9,490.0

56.0% 44.0%

4 year private

$30.2 1871

40.0

Christine De Vinne, O.S.U.

RESEARCHED BY DEBORAH W. HILLYER Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. (1) Tuition is $2,500-$31,000 for programs ranging from 12 weeks to 72 weeks.

20151012-NEWS--28-NAT-CCI-CL_--

10/9/2015

1:51 PM

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