Morgan Lewis Jr.

Friday, 30 May 2003 05:46

Balancing act

When the economy is strong, people want to invest in new buildings. When the economy is in a slump, as it was in 2002, they are more likely to repair or improve what they have.

Luckily for Tom Nesbitt, president of United Glass & Panel Systems, his company is prepared to serve both markets.

United Glass designs, engineers, manufacturers and installs glass and panel systems for new construction, and in the past has followed up with service and maintenance on its work. Thanks to that demand, last year Nesbitt launched the service arm of his business as a separate division.

"Besides creating a more complete offering for our customers, this also makes great business sense for our company by providing a balanced income stream," Nesbitt says.

The service work, in addition to the new construction projects United landed last year -- including Malone College's science building, Mount Union Library and the Millennium Building -- helped the company boost sales by 30 percent over the previous year.

This enormous growth required the company to expand from its 8,000-square-foot facility to a 25,000-square-foot headquarters in North Canton.

"We have been very fortunate that the greatest adversity we faced was keeping up with our own growth," Nesbitt says. How to reach: United Glass & Panel Systems, (330) 433-9220

Thursday, 24 April 2003 20:00

Brand leader

On the wall of Richard Posey's office is a wooden plaque framing a hand drawing of four famous animated insects.

In the 1980s and early 1990s, we watched on television as these hairy green and yellow cockroach-looking bugs schemed to infest a home, then recoiled in terror when Raid insecticide appeared. The pests destroyed, the product's slogan would appear: "Raid: Kills Bugs Dead."

A redundant phrase, yes, but that was the intention, because it stuck. It stuck to the point where you couldn't mention Raid without thinking of that phrase. Those four simple words, written by beat poet Lew Welsh during a stint as an ad copywriter, conveyed not only what the product did, but helped create what every retail company aspires to own: a strong brand.

"It's an insecticide, so it kills things, but the way it's positioned in the marketplace, it's got an engaging, humorous personality, but with deadly efficacy," says Posey. "That's what the Raid brand is all about."

The Raid brand, which belongs to Racine, Wis.-based S.C. Johnson Co., is by all accounts the strongest in its industry. The executive responsible for that brand's success during its heyday, not to mention other ubiquitous brands like Windex, Pledge, Saran, Drano and Edge, was Richard "Dick" Posey, when he was director of North American businesses for S.C. Johnson.

"My background is in brands, that's really how I grew up," says Posey, now CEO and president of North Olmsted-based Moen Inc., the No. 1 faucet brand in North America. "The product is the tangible piece -- the finish, the way it looks, the way it performs, but the brand encompasses all the intangibles. Put the two together, and the brand is sum of all that."

Posey was named CEO of Moen in January 2002, which was a curious time for the company. Often new leaders arrive to save a struggling business, but not so with Moen. The faucet-maker, which also produces shower heads, composite sinks and other plumbing products, is the top performer for its parent company, Fortune Brands, in its Home & Hardware division.

Last year, Moen's sales were $800 million, up 7 percent from the previous year, according to Fortune Brands and analysts' estimates.

"They have a very strong focus on market brands, investing a lot of money in their brands, re-investing in their brand marketing and leveraging their No. 1 brands like Moen" says Alex Paris Sr., an analyst with Barrington Asset Management in Chicago, which follows Fortune Brands. "That's the whole operating philosophy in the company that keeps them going."

Posey, a proven brand-builder with global experience for S.C. Johnson and as CEO of small appliance manufacturer Hamilton Beach/Proctor Silex Inc., was tapped to grow Moen, not save it. In some ways, it's a more daunting challenge.

"When I arrived here, this company was not broken," Posey says, leaning forward slightly in his chair. "This company has had a lot of successes. What do you do then? What I'm trying to do is take the company to the next level and build on those past successes, rather than change everything around."

The next level for Posey is double-digit growth for Moen, which is no small challenge considering the average growth in the $8.4 billion residential and commercial plumbing products industry is a scant 3 percent a year, according to research firm Freedonia Group Inc.

"That means we have to take market share from our competitors in order to do that," Posey says. "We're going to grow through innovation. That's the main thing we're trying to achieve. We can innovate with our products and services. We can innovate in the way we run our business. And we can innovate the way we lead our people. All those pieces taken together will lead to the kind of growth figures we're looking for."

Moen's innovation is driven by investments in exhaustive consumer research and development, and 24/7 laboratory analysis of its products.

Moen studies every aspect of how consumers use its products, how they misuse the products -- and perhaps most important -- how they would like to use products. Because if a company is not in touch with what the consumer wants and needs, then the brand, and the company, will suffer.

"What we don't want to do is just come out with a faucet that's like anybody else," Posey says. "We call those 'me too' products. If you're just like anybody else, then you're not bringing anything different to the consumer, and ultimately that ends up in a price war. If my product is the same as your product, then the only difference is price.

"We want to make our products better and different so they demand respect in the marketplace."

Creating different and better products requires Moen to study consumers, whether it's in its kitchen laboratory in the basement of its headquarters or in their own homes. Moen used both formats for the creation of its Revolution shower head, but its observational in-home study is what really attracted industry attention.

Jack Suvak, Moen's director of marketing research, didn't know exactly what kind of shower head he wanted to help create in 1996 when he launched the study that led to the Revolution product.

"We were looking at understanding consumer usage of the shower," says Suvak. "We tried to understand how people were using their shower area and how they were interacting with water in the shower. We thought that would give us a basic grounding in understanding usage and how to develop better products to meet consumers' needs."

Suvak started with retail aisle research, interviewing consumers shopping for shower heads. And not just Moen shower heads, but all brands. Shoppers were interviewed when they were done shopping, and then called back four weeks later to see if the product met their expectations.

"This whole project was about what were the trade-offs people are making in aisle when it comes to the type of shower head they want," Suvak says. "What did they bring with them in their minds to the aisle, what type of trade-offs did they make in the aisle and ultimately, what was important to them in their decision-making, and how satisfied were they when they once they had it and were using it."

Suvak then formed the "Shower Head Panel," as he calls it, made up of about 40 people who tried a number of shower heads over time and told Suvak's team what they liked and didn't like about them.

This was pretty standard market research. But you can't really tell how people use the shower and "interact" with their home shower unless you, well, watch them take a shower in their home.

"If I asked several people how they shower, I can get about 30 percent of what they do," Suvak says. "If I took them to a facility and I had them shower in a facility, I might get 40 percent of what they do -- it's not their shower. If I can observe them in their home, I can get 80 percent of what they do. The incremental increase is significant by doing that type of research."

Using an outside market research firm to recruit test subjects, Suvak and his crew twice descended on 35 homes in diverse areas like suburban New York, San Francisco and Orlando to interview and video people while they showered.

"We installed cameras in their home, but we were not in their homes for weeks," Suvak says. "We would interview them while video equipment is being set up. We would show up in the morning, or show up in the evening, depending on when they typically shower. We would debrief with them, have another in depth interview for maybe 45 minutes to an hour again afterwards. Then we pack up and leave."

The research led to several new design features on the Revolution shower head. One of the most unique was what Moen calls the "Freedom Dial," which changes the type of spray dispersed from the shower head using a large toggle switch placed below the shower head instead of on it or around it.

"When you're in the shower and you're washing your hair or whatever and the water is coming into your face, you're kind of blind, and you want to be able make that adjustment easily, which is why this dial is on the bottom, so you can just reach up and grab it and turn it," says Posey. "Observational research was very helpful in developing this product."

In the main lobby of the Moen headquarters is the product show room.

Here, all the Moen faucets and fixtures are arranged in a grid on a series of six-foot-high charcoal-colored panels on each side of the room. Track lighting is positioned to make the chrome, brass, and copper finishes gleam.

Panels filled with bubbling water backlit neon purple are placed next to the faucets. Soft music lilts from the room's sound system.

What you don't see in this cozy space is what goes on in the basement. Just one floor below, the faucets are put through what could be called a faucet torture chamber. The faucets and fixtures are smashed with weights, pulled apart, dissected, cooked in 300-degree ovens, frozen to 100-degrees below zero, sprayed with salt and acid, and put through every extreme condition the 30 engineers and technicians in Moen's Design Reliability labs can imagine.

With a devilish chuckle, Moen mechanical lab manager Mark Meldrum enters the Life Cycle lab in Moen's basement. This is where most of the damage happens.

Meldrum and his crew subject new and old Moen products to thousands of test cycles, hoping to make the faucet fail so they can improve it. They want to see where the weaknesses are and make the product stronger.

"Better that they fail here than in somebody's home," Meldrum says.

"When I started here eight years ago, the test lab only used about 50 percent of the area. Now we use 100 percent of the basement. We've gone through quite a bit of growth over the last eight years. I started out in a group that was only six people total, now I manage a group of 14 people."

Dozens of test stations, which look like phone booths without glass, are arranged next to each other in the middle of the lab and against the walls. Young men in khakis, casual shirts and safety goggles tend to the testing equipment, turning dials, scribbling on clipboards and connecting water hoses to the poor, unsuspecting faucets.

These men used 29 million gallons of water last year testing Moen faucets. Some years they use as much as 39 million gallons.

At one station, a pair of white robotic fingers twists a two-handle faucet on and off and won't stop until it reaches 185,000 turns. At another station, Moen's new pullout model faucet jolts on and off while 125 pounds of pressure per square inch shoots through the fixture, more than twice the water pressure of an average home.

"When we were first testing this, we had water all over the place," Meldrum says. "No one had ever done testing like this before. Through constant development of this product, it will go 250,000 cycles without a problem."

Innovation occurs in these labs, too, small improvements which the consumer may never notice but which maintain the Moen quality, and more important, maintain the integrity of the Moen brand.

"Innovation is not just about major breakthroughs, not just about putting the proverbial man on the moon," Posey says. "It's all areas of the company, all levels of the company, and not just huge ideas. Innovation is all about improving everything we do on a regular basis."

Big box retailers like Home Depot and Lowe's make up a third of Moen's business, and with 203 Home Depot stores opening last year, that trend shows no sign of waning. These retailers, eager to keep costs low and product turnaround high, have thousands of suppliers and are always eager to reduce that number.

"Large retailers want to deal with fewer and fewer people," says analyst Alex Paris Sr. "Home Depot may like the product of one company, but they can't afford to deal with 1,000 little different suppliers."

Luckily for Moen, Fortune Brands' $2.5 billion Home & Hardware division includes Master Lock, Waterloo tool storage, and cabinetmaker Omega Group. This year, the cabinet manufacturer announced it will be the sole provider of Home Depot's line of Thomasville brand cabinets.

"There's a great deal of interaction between all of the brands," Paris says. "Enhancing one brand helps them to enhance the other brand, and introduces Moen to more and more distribution channels."

Likewise, Posey, a 25-year veteran of retail and consumer products, understands the importance of working with his big box customers.

"If we can make our customers' business grow faster, then we will benefit from that because we have a strong market position with that customer," he says. "The attitude isn't, 'I want to make Moen's business at Lowe's or Home Depot or a wholesaler better,' the attitude is, 'I want to make Lowe's business better, or Home Depot's business better,' and we will benefit from that growth they achieve."

Appealing to retailers' desire for exclusive products, Moen has a private line of faucets in Home Depot's 1,600 stores, as well as exclusive arrangements with Lowe's and growing Midwest retailer Menards. For Posey, it's a matter of growing with your customers or getting left behind.

"The wholesalers are consolidating, so we have a fewer number of larger customers," he says. "The big production builders are buying up local and regional builders because they want to achieve greater economies of scale. The result is the customers get ever larger; they have a lot more clout and a lot more influence in the marketplace.

"So it's important that Moen stay competitive, and to stay competitive, that we become global and that we get larger."

In his career, Posey has been somewhat of a globetrotter. He estimates he has worked in every region except the Middle East, Africa and the countries that make up the former Soviet Union. For S.C. Johnson, he twice lived abroad, outside Milan, Italy, and outside London.

"In five to 10 years, I would expect the company not only to be larger in North America, but have a larger presence on the world stage than we have today," Posey says. "So it's a good thing I like the international side of the business."

Like most U.S. manufacturers, an increased global presence inevitably includes sourcing more of its products from China. Last year, China exported $325.6 billion in goods, primarily to the United States. That's up 22 percent from the previous year, according to the World Trade Organization.

"Last year, we were able to increase our production volumes in our North Carolina plants at the same time we increased our sourcing from China," Posey says. "We are sourcing in increasing amounts from China, as is practically every company in the world. We're not immune to those pressures."

Those pressures have Posey planning to aggressively target untapped regions of the world for Moen, like the Pacific Rim, Latin America and Europe.

"We don't have anything in Europe right now," Posey says. "Europe is a very concentrated market, and it would be difficult just to enter the Moen brand into the market."

Therefore, to crack the European market successfully will most likely require an acquisition.

"Acquisitions are important ways to grow your business," Posey says. "But it's very important when you make an acquisition that the company that you're acquiring has a compatible culture and can be integrated effectively in your organization, because if you have divergent cultures, then it's very difficult to make the acquisition work well."

But with 7 percent overall growth last year and strong corporate backing, there won't be any rush to acquire a European business, Paris predicts.

"It's a longer term thing," Paris says. "But again, they do business with the big home builders here; there are probably big home builders in Europe they can deal with. It's the big box retailers they don't have there.

When Posey was recruited by Moen in late 2001, it was an unusually mild winter. He remembers there was no trace of snow on the ground, and people walked outside in light jackets or shirt sleeves.

"I was optimistic that it would maintain that, but this winter has been pretty dreadful," laughs Posey, safely inside his office on frigid early March morning. "Weather is what it is. S.C. Johnson was in Racine, Wis., and that's also Great Lakes weather. So, I'm used to it."

Talk of Cleveland prompts Posey to stand and open the vertical blinds covering the wall-to-wall bay windows of his second-story office. He points outside, across the roads that lead to Al Moen Drive, named after Moen's founder, who passed away in 2001. Posey motions across the road to a long grassy strip of vacant land with a line of trees separating the area from a condo development.

"We own about half of that empty land you see across the street," Posey says. "We have a lot of room. To that group of trees there to about the other end, we own. So we've go plenty of room for expansion for future growth, or should we make an acquisition or whatever. ... This is our home." How to reach: Moen Inc., (440) 962-2000 or

Friday, 25 April 2003 10:48

Surging ahead

When installing a building's fire or security alarm system, Abbott Electric Inc. used to leave the job incomplete. That is, the electrical contracting firm used to install the wiring, then hire another company to put in the security devices and perform the monitoring.

Last year, Abbott Electric CEO Jim Abbott decided to finish the job himself.

"We had an opportunity to bring somebody on with experience in fire and security low-voltage type applications last year," says Abbott Electric Treasurer Brent Fatzinger. "It allowed us to expand further into the low-voltage area and establish this new company to do installation and monitoring, along the lines of ADT or Brinks."

Expanding its product line has been a successful pattern for the company in recent years. In addition to fire and security systems, Abbott added last year Tele-Data technicians to install computer cabling, phone wiring and phone systems.

"Our mindset is, the more markets we get ourselves into, the more things we can do within the electrical contracting, engineering, and low-voltage market, the better foundation we have," Fatzinger says. "If things slow down in one area, we can offset that slowdown with increased market in another."

Since Abbott started the company alone in 1978, it has grown to more than 100 employees.

"The more diversity we have, the better chance we have of not just surviving, but growing," Fatzinger says. How to reach: Abbott Electric Inc., (330) 452-6601

Monday, 31 March 2003 09:05

Sound advice

Phones, copiers, fax machines, not to mention the loudmouth next to you yapping about his weekend, creates a cacophony that can distract employees or interrupt a meeting.

You don't have to seal yourself in a bank vault to get some peace and quiet, says Cullen Roth, president of Working Walls Inc., an acoustical and tackable wall panel manufacturer in Brooklyn Heights.

"Sound is like water," he says. "It will keep going until it hits something. It will go around corners, over cubicles, through things. If your door is open, your office is not acoustically sound."

Apart from outfitting your office with acoustical wall panels, Roth offers the following tips to make your office sound better.

* Although hardwood floors and exposed ceilings are visually-pleasing, they turn an office into an echo chamber. Carpeting and a drop ceiling are the most basic, and most effective, sound blockers.

* Move the copiers, fax machines and other noisy machines to a special room to isolate the sound nuisance.

* Think about office layout in terms of sound. For example, don't put the office conference room next to the wall that adjoins the restroom or cafeteria. The noise will bleed through the walls.

* Glass, metal and other hard surfaces don't absorb sound well. Use curtains, blinds or wall hangings for better room acoustics.

* Workstation walls of higher than five feet offer ideal sound protection.

* Some people just have louder voices than others. Those with more powerful vocal chords should position themselves away from doorways or other openings where they might disturb others.

* If two or more employees share an office, face them away from each other.

How to reach: Working Walls, (216) 749-7850 or

Monday, 31 March 2003 08:53


After the Sept. 11 disasters and the rapid economic slide that followed, everyone was talking about when, and if, things would turn around.

Publications from the United Kingdom to Southern California turned to Kenneth T. Mayland, president of ClearView Economics in Pepper Pike for answers.

The short answer is yes, Maynard would tell them. But, he added, the disastrous events in September have slowed the recovery. What has helped was the early response by business owners, the Federal Reserve and even the Government before the attacks, which prevented an even deeper recession.

"In my 28 years of doing this, the actions taken have been the most potent list being brought to bear on the economy," Mayland told nearly 200 real estate and construction professionals at Grubb & Ellis Co.'s 2002 Cleveland Commercial Real Estate Forecast. "Over the next year, those steps will gain some traction."

In the meantime, Mayland said to ignore these commonly held myths about economic recovery.

• Myth: Consumer incomes must recover before consumer spending will recover. "That is wrong," Mayland says. "It's wrong historically, and it's wrong statistically. The spending recovers before incomes do."

• Myth: After 11 Fed interest rate cuts, there is little to show. Monetary policy is not longer effective. Wrong, says Mayland. "The lag time is one year. We're just starting to feel the impacts from the first cuts in January 2001, and there are a lot more rate cuts in the pipeline.

• Myth: A rise in interest rates will snuff out a smoldering recovery. "When the economy's prospects improve, that means the returns on investments will improve," Mayland says. "A rise in interest rates is a good sign that the economy is starting to cook."

• Myth: Company performance must improve before stock prices can rise. "That's not true," Mayland says. "Stock prices bottom out and rise before profits do."

How to reach: ClearView Economics LLC, (216) 595-9931.

Monday, 31 March 2003 08:42

Rent check

The commercial real estate market is still showing lingering effects of a recession despite several economic indicators of a turnaround during the first quarter of the 2002. Commercial real estate broker Colliers International released a nationwide survey last month showing the top ten issues facing the market, most of which suggest it will not begin to recover at least until the end of the year.

So, as a tenant, now might be the time to upgrade your office or renegotiate your lease.

"Landlords are very aggressive, as they do not want to lose tenants, and rents continue to trend lower," says Ross Moore, vice president and director of research for Colliers International. "Sublease space continues to be tough to move, and deals are taking a long time to close as tenants evaluate the numerous options available to them in this market."

According to Colliers, here are the top 10 factors affecting the weak commercial real estate market:

1. Occupancy levels continue to drift lower across most markets. This trend of rising vacancy is expected to continue for another two quarters.

2. Office rents maintain downward trend. Similarly, suburban rents also dropped during the quarter falling by 3.4 percent to average $25.50 per square foot.

3. Sublease space continues to pile up in many markets. This trend is also expected to extend into the 2nd and 3rd quarters.

4. Job losses remain a dominant theme in the economy.

5. No tenants for new buildings. Select markets are now experiencing "see through" buildings with new developments 100 percent vacant. Most can be found in previously highflying tech markets.

6. Pendulum has swung in tenants favor. Current leasing activity is dominated by lease terminations and not growth.

7. Landlords still struggle to maintain occupancy.

8. Flight to value. As part of their cost cutting efforts, tenants are focused on the value of the office premises and are not swayed by the prestige of upscale office space at a reduced rate.

9. Leasing market activity by small tenants. Markets, both big and small, reported an absence of large lease transactions. More prevalent, however, were smaller transactions in the 4,000 to 8,000 square foot range.

10. Owners/investors remain confident of office real estate. Many owners/investors report that the weak market is caused by high vacancy rates, and not because of overbuilding in their areas.

How to reach: Colliers International, (216) 861-7200,

Friday, 28 March 2003 08:31

Wild blue yonder

Carl Gedeon, president of Mayfield Heights-based Med-Space Inc., often needs to visit the factories where his modular MRI offices are built, places like Elkhart, Ind.; Farmville, Va., and Morristown, N.J. Not exactly major airport hubs.

"Farmville is between nowhere and nowhere," Gedeon says. "To get there, you have to fly into a major airport and drive another three to four hours. Or, I could fly there in two-and-a-half hours, accomplish what I need to do and fly back. That's less than half a day."

Which is why a year ago, Gedeon signed up to earn his pilot's license through the Be A Pilot program, offered by Cleveland-based AirSports Aviation. Now he can fly directly to secondary airports closer to his manufacturing facilities.

"You'll be surprised when you get up there how many contiguous airports there are," Gedeon says. "You can program the GPS (Global Positioning System) to just give you the nearest airport to where you want to go."

Gedeon flies at least a couple times a week, even if he doesn't have anywhere to go for business. In December 2001, he bought a Cessna Skyhawk single-propeller airplane, which he parks at Burke Lakefront Airport.

"Weather permitting, I like to get up there to keep current and stay sharp," he says. "I usually go to Pennsylvania and come back. It only takes a couple hours."

Gedeon has a basic pilot's license, called a private pilot certificate, which allows him to carry passengers. Although he's not allowed to fly for hire, he can share expenses with passengers, typically cutting the cost of flying to one-half or one-quarter the cost of aircraft rental.

"My first lesson was uneventful, actually," Gedeon says. "I just got familiar with the instrumentation. It's amazing when you start flying how natural some of the things are."

Earning a private pilot certificate typically costs $3,000 to $7,000, depending on local cost-of-living and pilot aptitude, according to Be A Pilot. Most pilots rent aircraft, which ranges from $60 to $70 an hour, or $90 to $100 an hour for the newest models.

Gedeon says for his business, it's well worth the cost.

"It's less expensive than when I had a boat, and it's probably less than when I belonged to a country club," he says. "At the end of it, you accomplish something, if nothing else."

AirSports Aviation has offices at Burke Lakefront, Akron-Canton Regional, and Cuyahoga County airports. How to reach: AirSports Aviation, (216) 241-2127 or (330) 244-2250

Learning to fly

My instructor, Charlie Wentz, an extremely affable pilot with red hair and a booming voice, greets me at the door of Cleveland Air Sports with a question no one had ever asked me.

"You ready a fly a plane?"

I wasn't.

But if I was going to write an article about how easy it was to learn to fly a plane, it was my journalistic duty to find out.

After Wentz's safety check, we belt into the blue-and-red-stripped white 2001 Cessna 174 SP and taxi the runway at the Burke Lakefront Airport.

The plane is about the size of a small Italian sports car on the inside. I am shoulder to shoulder with Wentz. About two dozen dials, gauges, digital readouts and LCD display screens pulse before us. I begin to have second thoughts.

Due to its size, the plane doesn't need much speed before we are 2,000 feet in the air, looking down at downtown Cleveland.

Wentz lets me take the control stick, called a yoke, to perform some turns, an ascent and a descent. On the turns, I feel like I'm going to tumble out of the side window.

On the descent, I am too forceful on the yoke and we lurch toward the snow-covered earth.

"I've got the controls," Wentz assures me.

With my sunglasses fogged up and sweat seeping through my shirt, I'm more than happy to let him fly.

The truth is, it was remarkably easy -- and thrilling -- to fly a plane. And I imagine after 40 hours, which is the requirement for a basic license, I would be at ease behind the yoke -- once I got over the fear of crashing, that is.

Pilot facts

Want to become a pilot? Here's what it takes, according to the Be A Pilot program, which was founded by a coalition of aircraft and equipment manufacturers, pilot organizations, and aviation trade associations.

* A student pilot certificate is limited to flights with an instructor or supervised practice flying. Student pilots may fly alone, but may not carry passengers and are limited from certain air traffic areas without additional training and instructor endorsement.

* A private pilot certificate allows you to carry passengers and offers standard pilot privileges. Training and requirements: Minimum 40 hours of flight instruction and supervised practice flying, a 50-question knowledge test and a flight test.

* Earning a private pilot license typically costs $3,000 to $7,000 depending on local cost-of-living and pilot's aptitude.

* A private pilot certificate is good for life, as long as the pilot can pass the doctor's office exam for an FAA Third Class medical certificate every two years.

* Pilots take a review with a flight instructor once every two years to assure skill level and knowledge of current regulations and recent changes.

* Most pilots rent aircraft by the hour, at rates ranging $60 to $70 an hour, or $90 to $100 an hour for the newest models. Source: Be A Pilot, (202) 637-1383 or

Thursday, 27 February 2003 08:11

Put it on paper

If you're interested in entering the 2003 Greater Cleveland Growth Association's COSE Business Plan Challenge, it's not too late to get started.

Entries aren't due until September, but don't put it off. Writing a successful business plan takes months of research, writing and revising, say last year's Business Plan Challenge winners from Home Team Marketing.

"Without exaggeration, our plan went through at least 100 revisions," says the plan's main author and Home Team co-founder Peter Fitzpatrick. "You have to make the plan understandable in layman's terms, to make it understandable to any type of person."

Fitzpatrick's vigilance paid off. Home Team was the Best Of Show winner in last year's competition, taking home the $50,000 grand prize and free consulting help from business experts. The five-person firm moved from the co-founders' parents' attic to the ShoreBank Enterprise Building in Cleveland, just outside of Bratenahl.

Home Team's concept is remarkably simple, but as remarkable is the fact that no one thought of it before. Fitzpatrick, who founded the company in April 2001 with his brothers, Regan and Jake, and family friend, Patrick Spear, sells sports sponsorships for high schools. Through its network of 213 Ohio high schools, Home Team sells stadium and scoreboard signage and space in programs to large companies, generating revenue for the schools.

"The easiest part of the plan to write was explaining our concept," says Regan Fitzpatrick. "It was a completely different idea, but easy to understand."

The most difficult part was the financials, Peter Fitzpatrick says.

"There were a lot of things that I didn't understand in terms of appreciation, taxes, but you have to understand in order to write the plan," he says.

"There was also no market for what we were doing to compare it against," Regan Fitzpatrick adds.

Home Team didn't seek professional help to write the plan, but rather called on a network of family and friends who had legal and financial expertise.

In the year since it won the grand prize, Home Team has added another account representative and more than 60 high schools to its sponsorship network.

"I love getting up every day and coming in," Peter Fitzpatrick says. "We are by no means four millionaires, by any stretch of the imagination, but we're doing well, we're growing, we're expanding our client base in all regards. We're only a year-and-a-half old, but we're all happy with where we're going." How to reach: Home Team Marketing, (216) 541-8326

Thursday, 27 February 2003 06:44

Word play

As the Internet has matured, Web sites have evolved to provide more information about the host company and its products, online storefronts for sales of products and services, online order fulfillment and interactive features.

As you add features and functions to your site, the legal implications of your online presence grow more important.

What purpose do legal notices serve?

Legal notices lay the ground rules for the relationship between you and the users of your site.

If your Web site does not specify the legal terms of use, any dispute between you and your users will be resolved under the general laws of sales and commerce. Although this will often be a satisfactory solution, the general laws may impose warranties, remedies and other commercial terms you did not expect to provide and which may not be appropriate to your business.

What should my notices say?

Legal notices should reflect the content and features of your site. If you sell goods and services over the Web, provide terms of sale.

Post terms of use for the images, text and other intellectual property. And if you permit users to interact with the site, specify rules for their conduct.

How should legal notices be presented?

The most powerful Web sites are fast and user-friendly, but unfortunately, the most powerful legal terms are neither of those.

Effective legal notices require a balancing act. Although more important sales may still justify a written contract, most transactions are satisfactorily protected by a click-through agreement in which before completing a purchase, the buyer is presented with terms of sale and must click on a button marked "I agree" to complete the sale.

General terms of use may also be presented on a separate page accessed by a link at the bottom of each page of the site. This method is the least intrusive, but is also less likely to be enforced.

What about privacy policies?

Users will be more comfortable providing personal information through registration, surveys and product orders if you have a privacy policy stating how the information will be used.

A privacy policy and careful data practices may be required in some circumstances, such as at sites dealing with health care and financial services, or if you use third-party certification services such as TRUSTe or BBBOnLine. If you adopt a privacy policy, make certain to follow your stated practices.

Also, federal law restricts the collection and use of personally identifiable information from children under 13.

Finally, there are some things that no legalese can fix. Copyright and trademark infringement, false advertising and other trade practices applicable to sales over the counter are equally applicable to sales in the online world. John J. Luecken Jr. is a partner with Brouse McDowell. He can be reached at (330) 535-5711.

Friday, 20 December 2002 09:34

401(k) fears?

Given the performance of the stock market over the last several years, many employers and employees are wondering whether a company sponsored 401(k) plan will provide income to retirees in the future.

Is this a viable way for employees to replace income? Should employers abandon helping employees achieve a level of financial security?

A report by Jack VanDerhei of Temple University Business School, published by the Employee Benefit Research Institute in November, offers hope. It indicates that the 401(k) plan accumulations of employees who contribute from their late 20s until retirement -- when combined with Social Security payments -- should provide sufficient income for the standard of living recommended by financial advisers.

The study considered whether 401(k)s would be an effective vehicle for retirement savings for employees retiring between 2035 and 2039. VanDerhei says projected retirement income from 401(k) distributions is likely to be significant despite brief periods of poor stock market performance.

VanDerhei took the worst three contiguous years and concluded that if you have been in a plan for your entire career, you would have a sizable replacement rate for the income you received while working. This holds true even if stocks perform poorly, as they did during the worst 50-year period in the history of the stock market, from 1929 to 1978.

The only projected situation that causes accumulations to drop significantly is failure to have continued access to a 401(k) plan. In other words, employers who wish to stay competitive should not abandon this tool to attract and retain employees.

The research was based on data covering 2.5 million plan participants. The model assumes participants will continue current contribution patterns, with the average 401(k) participant contributing 4 percent to 6 percent of income. Projections included participants' income, contributions, withdrawals, and loans and asset allocations from the end of 2000 until retirement.

VanDerhei says reports of heavy losses and widespread changes in participant behavior are not universally true. Heavy losses have typically been concentrated on those who only very recently got into the 401(k) system and suffered setbacks.

The moral of the story? Stay diversified and properly allocated, and continue your participation. How to reach: Ralph Antolino Jr. is president of Antolino & Associates, (614) 442-3355 or