Morgan Lewis Jr.
It started as a simple fund-raiser -- a bake sale, but on a grand scale -- and a campaign to help raise awareness of breast cancer in the Akron area.
The first year, it raised a modest $5,000. Since then, the Muffins for Mammograms program has blossomed into a nationally award-winning program that has raised more than $120,000 for free mammograms and helped make Main Street Gourmet a household name in Northeast Ohio.
In partnership with the Akron General Health System's Women's Health and Cancer Center, every October, Main Street Gourmet's 100-plus employees, along with hospital workers, volunteer to bake muffins, brownies and cookies beginning as early as 4 a.m. to deliver to local businesses.
Each year, the program sells more baked goods than the year before. This year's effort helped raise nearly $20,000 for the cause, which is planned for October to coincide with National Breast Cancer Awareness month.
"Every year, more people take advantage of it, and it's just gotten bigger," says Main Street Gourmet co-founder Steven L. Marks. "It's going to sound cliché, but it's the right thing to do, first of all, and it has other benefits, as well. The employees feel good about the fact that we're responsive to this community; they know they work for a company that cares."
Since Main Street and Akron General started the fund-raiser in 1992, word has spread about Muffins for Mammograms. The program received a Bronze Award from the National Breast Cancer Board in 1994 and has been recognized by the Ohio Hospital Association. The company and Akron General are planning to launch the program with a Toledo hospital next year.
"It's actually saved lives," Marks says. "People who wouldn't otherwise be able to afford mammograms have been able to afford them and changed their lives by early detection."
"We also deliver information for the buyer, or the buyer's organization, about breast cancer with the products, so it's a good package of information," explains Mary Adams, vice president of communications for Akron General Health Systems, who helped found the program. "Women in the community are really starting to see this as a resource because we make these free mammograms available year-round."
Although it may be best known for the Muffins for Mammograms fund-raiser, Main Street Gourmet has its fingers in the dough of many other community organizations in the Akron-Canton area.
Since 1995, the company has supported the Weaver School Workshop program, which empowers its mentally challenged students by having them work at Main Street's corporate and production facilities. In 1996, the Board of Mental Retardation and Developmental Disabilities awarded Main Street for its partnership with the Weaver School.
Marks' business partner and co-founder, Harvey S. Nelson, has volunteered as chairman of the Akron-Canton Food Bank since 1997. Main Street annually supports the nonprofit organizations both with financial contributions and with donations of its frozen bakery products and custom formulations.
"A business deciding to take on an effort like this shouldn't feel reluctant, because it has other benefits," Marks says. "By doing that, your employees come closer, your employees feel good about the company they work for. They get a reward, too, by helping."
How to reach: Main Street Gourmet, (330) 929-0000
Morgan Lewis (email@example.com) is a reporter for SBN.
Developer John McGill had a piece of property in Macedonia, where he wanted to build a shopping center.
The only problem was the sprawling 18 acres of wetlands that needed to be filled or moved for the development to go through.
McGill shopped the wetlands project around and was hit with staggering estimates, from $1.2 million to $1.8 million. Reeling from sticker shock, he turned to Mentor-based HzW Environmental Consultants Inc., a company he had called on before for advice on environmental issues.
"They're really a necessity to have as part of the team," McGill says.
HzW helped cut the wetlands project cost down to $400,000, while not putting at risk the land and water or the surrounding community.
Too often, Matthew D. Knecht, President of HzW Environmental says, company owners wait until they are faced with a fine or court order from the EPA until they clean up, or they are unaware of a problem until they are cited.
"Once you're in the noose, we hope we can find you the most pragmatic, practical, legal, ethical, moral solution," Knecht says.
Taking steps to avoid environmental problems is usually less expensive than waiting until the government is breathing down your neck.
A quick phone call to ask simple questions of a environment consultant may be the best and fastest way to decided how to approach a problem.
Company owners may not even know they are having a negative impact on air, land or water, let alone be up-to-date on the most recent environmental regulations. And all companies, whether a clean industry or not, must grapple with environmental issues when building a new facility on undeveloped property.
"They can call us, and we may not necessarily get a job out of it," says Thomas G. Powell, HzW Environmental's business development director. "We may recommend they go somewhere else, talk to somebody else that's more of an expert."
Whether you think you have a problem or not, it's better to be safe than sorry. Some companies ask HzW to audit their facilities and look for potential environmental compliance issues. Knecht says his inspectors will make recommendations, but it is up to company owners to take preventive steps.
"We pretend we're little EPA inspectors," Knecht says. "We have probably 13 industries that we're on contract with that don't have problems today, but they ask us to come in and continually monitor their air emissions to make sure they're not violating air permits."
What do you need?
Because issues change so rapidly, it's rare for a smaller company to have a full-time environmental officer. Those duties are usually combined with those of another employee, leaving environmental issues to fall by the wayside.
"Rather than pay someone $60,000 a year, it makes a lot more sense for them to pay us $1,000 a month to have us, so if the EPA shows up, we can come down and walk through with the EPA," Knecht says. How to reach: HzW Environmental Inc., (440) 357-1260
Morgan Lewis Jr. (firstname.lastname@example.org) is a reporter at SBN Magazine.
Easter 1995: Michael Zaite's phone rings at 7 p.m. On the other end is the soundman at Wilbert's in the Flats, a bar (now closed) that featured live music.
"Hey, Mike, you have to get down here," the soundman says.
"What's going on?" says Zaite, concerned by the urgency in the man's voice.
"The guitarist for John Mayall is really digging your amp; he's been playing it all day!"
Zaite is better known as "Dr. Z" by guitarists all over the world who marvel at his line of handmade amplifiers. Musicians including the Eagles' guitarist Joe Walsh, the Black Crowes, Steve Earle, Boz Scaggs, John Mayall & The Bluesbreakers and country artists Lucinda Williams and Brad Paisley all plug into Dr. Z's amps.
The amp in question that night had been left at the bar by Zaite as a demonstration model for the musicians who performed there. Luckily, Buddy Whittington from The Bluesbreakers decided to plug in to it and loved what he heard. Zaite says that is by no means an everyday occurrence.
"It's hard to go after the big players," admits the 49-year-old Zaite, who is sitting in the office of his Maple Heights manufacturing facility surrounded by photos of some of his famous customers. "Basically, they have to talk to you first. I've been lucky and made a lot of friends, so it's been easier to make those connections."
Dr. Z, who pulls his moniker from his first and middle initials, M.D., landed his stable of big name accounts through a network of friends and colleagues in the industry, good press, positive word-of-mouth and, of course, quality products. Zaite invests little in advertising and accepts only as many orders as he can handle.
During his growth, he has twice moved into larger manufacturing facilities and added two employees.
Zaite's father was a television and radio repairman. As a boy, he watched his father repair electronic equipment and recalls with mock pride how he helped repair a Dynakit stereo system at age 13.
"I think he let me solder a few wires together," Zaite says with a laugh. "Ever since then, I've been fascinated with electronics."
Zaite earned a degree in electrical engineering from Cleveland State University before taking a job with a company that manufactured CAT scanners, MRIs and other medical imaging equipment. When the company was bought out by General Electric medical systems in the late 1980s, Zaite was ready for a change.
Combining the two loves of his life -- electronics and music -- seemed like the perfect solution. So with a $3,500 investment in test equipment and materials, he started his amplifier manufacturing and repair business in his Garfield Heights basement in 1988.
The big break
Business was slow but steady for the first couple years while Zaite experimented with the right sound for his amplifiers. In 1991, he called an old Cleveland friend, David Sparrow, who was the manager for Joe Walsh, the Eagles guitarist, popular solo artist and Cleveland native. Zaite asked Sparrow if Walsh would like to try out one of his amplifiers.
That night, Zaite met Walsh. The guitarist took an amp back to his hotel room and literally took it apart -- he was an electronics major at Kent State University. He liked what he saw and heard, and Zaite landed his first major artist.
Two years later, Walsh ordered another amplifier to use on the highly publicized Eagles reunion tour.
"That's kind of when the ball started to get rolling for me," Zaite says. "I got national attention. People wanted to know, 'What's that amp Joe Walsh is using?"
During the tour, Zaite received photos of Walsh next to his amplifiers to use in advertising with the guitarist's full endorsement. He was thrilled and promptly called up Guitar Player Magazine to order a full-page ad with Walsh's pictures.
The only problem was, the ad cost $10,000. Zaite changed his mind.
"I said, 'Wow, there's not enough profit in these to be able to afford that.'"
Instead, Zaite sent one of his amps to the magazine for a critical review, which only cost him the price of the amp. It received glowing praise from the magazine's editors and Zaite's phone started ringing.
"People were interested," he says. "I ran into a little bit of resistance because guitar players are funny people. They want to play it, they want to hear it, they want to feel it. It's kind of a personal thing with them. But then the stores started to order little by little.
"Though that didn't reach everybody nationally, it did keep the ball rolling."
Today, Zaite's amplifiers are in 25 stores across the country, with two large distributors in Europe and the Pacific Rim. Each month, Zaite produces about 50 amplifiers. That translates into annual revenue of $500,000, which Zaite says continues to grow every year.
The first press review earned Zaite attention in more trade magazines, which spread the word about Dr. Z amps to more nationally known artists. While he's proud of the famous guitarists who use his products, Zaite never lets the prestige go to his head.
Where he really makes his sales are to the players who never sign a record contract or perform in front of screaming crowds.
"I think my amps are probably on stage and played more than most boutique amps," Zaite says. "But the large percentage of my business is made up of young professionals. Guys in their 30s and 40s, who always wanted to play guitar or played it when they were high school and stopped when they entered college or a career.
"Now, they can afford the $3,000 guitar and the $2,000 amp and whatever they want, and play for their own enjoyment."
As an indication of his company's success, Dr. Z and 22 other boutique amplifier manufacturers were featured in Guitar Player Magazine in 1997. Today, only seven of those companies besides Dr. Z are still in business.
What little money he spends on print advertising, Zaite makes up for on his Internet site. Although you can't buy directly from the site, customers can listen to sound samples and music samples from Dr. Z's line of eight amplifiers.
Customers are then directed to stores that sell Dr. Z amps. Not only is it inexpensive worldwide advertising, the Web site also serves as a catalog, which saves thousands of dollars on printing.
"I can invest my money in this because I think this is what's happening," Zaite says. "This is where the future is."
Although happy with the steady growth, Zaite envisions moving to a larger facility and adding more employees in the coming years. But, he's wary of expanding too quickly.
With 19 years experience in the manufacturing business before going out on his own, he's seen the pitfalls of rapid expansion without preparation.
"Sometimes success is more difficult to deal with than failure," he says. "Your overhead goes up, you hire more people, you're going through parts at a faster clip and your suppliers start sending you junk. Once you start accepting substandard quality from your suppliers, it trickles down to the quality of your product.
"I can't do that. My name is on the amp forever." How to reach: Dr. Z Amplification, (216) 475-1444 or www.drzamps.com
Morgan Lewis Jr. (email@example.com) is a reporter at SBN Magazine.
The company founded by Case Western Reserve University and Harvard grad Manual Glynias and Nobel laureate Dr. Walter Gilbert has successfully pioneered technology that accelerates the drug discovery process by integrating diverse amounts of genomic data and chemical structure information.
However, even with innovative technology and strong management, NetGenics struggled in the beginning to find investors.
One of the perceived drawbacks was its downtown Cleveland headquarters.
"What we've found is there are, in fact, a lot of good technology people here in Cleveland," Glynias says. "We have Case Western, we have Cleveland Clinic, we have a number of Fortune 500 companies that are pumping out and creating good technology and good technology people. But what seems to be missing is the connection to business.
"For whatever reason, it seems to be difficult for the technology person who's got an idea to find some businesspeople who know how to help him turn his idea into a business."
Speaking at the Cleveland Engineering Society's Leadership breakfast series, Glynias discussed how he found investors and overcame the obstacles to grow NetGenics to where it is today -- on the verge of going public.
While no one likes to fail, Glynias says that risk shouldn't hold you back.
"It's hard to walk away from your nice, safe Fortune 500 job and take a risk to start your own company even if the reward could be so great," Glynias says. "Most of us don't have the personal experience of how great the rewards could be."
A good entrepreneur in the tech field simply chalks up a failing company as a learning experience for the next endeavor.
Look around for funding
The money is out there; you just need to get on a plane to find it, says Glynias. He admits he was turned down by several investors in Cleveland before finding funding in New York City.
"We asked for $1 million; he (the investor) said that's not enough and gave us $1.5 million," he says. "Finding money is possible, you just have to go out there and work at it."
West Coast investors, he says, are less likely than East Coast investors to invest in a Cleveland company. Glynias recalls one Menlo Park, Calif., venture capital firm telling him, "We like to drive to be able to see our investments," after recommending that NetGenics move to Silicon Valley.
Get good advice
Everybody knows you need to have a solid business plan to solicit funding, but it's not always easy when your background is not in business. Get help, Glynias says -- there's plenty of help out there.
"The amount of money to go out and use a real law firm instead of your brother-in-law or your cousin who knows how to do corporation papers; it's worth every penny to do that the right way," he says.
Plan the exit
Make sure your investors know when they will be able to cash out. Although most venture capital firms want to get liquid quickly, some will stay on as long as you have a plan.
Glynias explains, "Whether they're investing in the early stages or the late stages (the lack of a solid exit plan) can cause a little acrimony between you and the investor." How to reach: NetGenics, (216) 861-4007
Morgan Lewis Jr. (firstname.lastname@example.org) is a reporter at SBN Magazine.
He went by the nickname "Mucko." And last year, the day after Christmas, he roamed the offices of the Boston Internet strategy consulting firm where he worked, armed with a semiautomatic rifle, a shotgun and a semiautomatic handgun.
Allegedly, he hunted down and shot to death seven of his co-workers, four women and three men. Employed by the firm at the time of the shootings, Mucko, whose real name is Michael McDermott, reportedly had a conflict with the firm's accounting department over garnished wages.
Then, in January, just outside of Chicago, in Melrose Park, Ill., William D. Baker, a 66-year-old former employee of the Navistar International Corp. diesel engine plant, strode into the factory hiding a bevy of firearms in a golf bag. Baker, who was to serve a five-month prison term for stealing from his former employer, reportedly shot and killed four employees and wounded four others before taking his own life.
Incidents like these underline the need for business owners to consider better security measures and to re-evaluate the procedures they use to hire, review and terminate employees. According to William A. Penrod, Cleveland director of the business security firm of KlinkFarley Inc., many business leaders don't have a solid security plan in place. That could be setting them up for trouble.
"We tell our clients, 'Your employees are probably the most valuable part of your business and also the part that can cause you the most problems,'" says Penrod, a former trial attorney who has successfully argued a case before the U.S. Supreme Court. "The old adage about an ounce of a prevention is worth a pound of cure, that really rings true."
Develop extensive programs
Penrod says it's imperative to design an education program and a prevention program which work hand-in-hand. In his education programs, he helps employers train employees about risks in their jobs, ways to protect themselves and how to respond to a violent incident.
"You need to put in place steps to ensure the safety of the workers," Penrod says. "And then, after something happens, you need to have post-incident responses. For victims and witnesses, is counseling available? Do they talk to the police?"
In his prevention program, Penrod reviews where the potential problems are in his client's facilities and procedures. It could be as simple as a physical location. Are there dark areas of the plant where employees need to go at night? Are they located in a bad neighborhood?
One way to stave off problems is to allocate extra dollars and time to the hiring process.
"All the attacks don't occur from the outside," Penrod says. "You have to screen better and scrutinize the resume. You can't believe how many people have on their resume that they did XY&Z when they really may have done a little bit of X, a little bit of Y, but they didn't do all of XY&Z. That's a pretty good indicator.
"You might have a problem employee on your hands if he or she is a big liar."
You don't need to turn your office into a glorified prison, but security officers, armed or unarmed might be a good idea if they aren't already in place. Having a few extra guards on hand for a potentially hostile employee termination is also a good practice.
Penrod used extra security recently with a client who had been receiving subtly threatening e-mails from an employee.
"Were they overt? No," he says. "But they were subtle hints that something might happen and a red flag goes up. That, coupled with a layoff, could send somebody off the edge."
Penrod often recommends to clients that they consider installing alarms systems, panic buttons and cash handling controls, have a law enforcement liaison in the local police department and install video surveillance equipment. The bottom line is, the safer your workplace, the safer your business.
How to reach: KlinkFarley Inc., (216) 589-9750
Morgan Lewis Jr. (email@example.com) is a reporter at SBN Magazine.
When Greg Fife was an account representative for Ameritech, the company sent him and his fellow sales reps to Chicago or Detroit on week-long training seminars.
The seminars were helpful, but they stole time Fife needed to be on the street making his sales quota and earning commissions.
"Believe me, they didn't adjust our quotas for the month because we were only there three out of four weeks," Fife says.
Two years later, he was a regional sales manager for a Canadian same-day freight company, which was not nearly the size of Ameritech and couldn't afford the $15,000 sales seminars. That prompted Fife to look around, but he found no quality training programs for smaller companies. So, he started one.
Westlake-based Executive Dynamics offers six sales training seminars a year, with each session taught by internationally-known speakers like Hal Becker, Jim Jacobus and Dr. Dale Henry. Although the names are big in the industry, Fife tries to keep his customer fees low at $59 per person or $299 for the year.
"We've been able to get the targets that we wanted, and people are telling us, 'Wow, I didn't know that something like this even existed,'" Fife says. "So, I think we're filling a void."
Although designed for the small- to mid-sized company, Fife's clients are businesses of all sizes, including Aetna U.S. Healthcare, Qwest Communications, Fifth Third Bank, Morgan Stanley Dean Witter, Progressive Insurance and even his former employer, Ameritech.
Pete Deverall, vice president of sales and marketing for Sun Newspapers in Cleveland, says his sales force does a lot of internal and external training and has reaped benefits from Fife's seminars.
"It's the old cliché, but if you learn one thing you can use and it helps you become a better sales professional, then you've gained an awful lot," Deverall says.
Using his own experience as an account executive, Fife has learned a thing or two about training and used those skills to design his program. He says any sales training must include the following traits to be effective.
Flexibility and consistency
If the members of your sales force are stuck at a seminar in Chicago for a week and their sales territory is in Cleveland, they aren't going to close many sales from a hotel room or cell phone.
Although regular training is a must, it shouldn't interfere too much with the job at hand.
"The reason we keep it every other month, if you've ever been to training once a year you get really motivated, but then two months later, you forget about it and drop back into the old habits," Fife says. "Our seminars are every other month. It's a way to build better behavior through repetition."
Don't waste your sales reps' time with training by speakers who might be knowledgeable about what it takes to be a closer but have never done it themselves, Fife says.
Be sure that any training your employees attend offers real-world lessons, not just theoretical concepts.
Training is not just about learning the best selling practices. It also serves to motivate employees who have heard "no" on sales calls many more times than they've heard "yes."
Even sales veterans, who could probably teach a seminar or two themselves, need training so they stay hungry in the field, Fife says.
"It's like going to church," Fife says. "It forces you to focus and bring it all back in and think about your career." How to reach: Executive Dynamics, (216) 899-2423
Morgan Lewis Jr. (firstname.lastname@example.org) is a reporter at SBN Magazine.
After business owners called family and friends on Sept. 11, they called Peter Miragliotta to see what, if anything, he could do to make their buildings and their employees safe from terrorism.
But the phones at Tenable Protective Services quieted just as quickly as they had started ringing. Victim benefit concerts, the overthrow of the Taliban, Enron and Chandra Levy distracted those who months ago frantically called Miragliotta for help.
"The effects of 9-11 made us rethink for our clients all kinds of security situations," says CEO Miragliotta. "But Americans, as you know from elections, have very short memories. We're traditionally only as good as the evening news."
Despite the recession that followed the terrorist attacks, companies couldn't cut security as they planned their 2002 budgets. Miragliotta, who weathered recessions in the 1980s and '90s, says there's usually a 10 percent to 20 percent drop in sales during an economic downturn. That was not the case this year.
"Security is like a doughnut hole. You know it exists but you don't see it," he says. "But this year we held our own. Our first quarter we were actually a couple points ahead of last year."
By the end of 2001, Miragliotta had opened an office in St. Petersburg, Fla., added 300 employees and increased sales by more than 10 percent from the previous year. Founded in 1994, Tenable's sales have grown by 178 percent in the last five years and has added offices Toledo and Detroit.
But Miragliotta remains focused on the future of the company, which he says is faced with a funding challenge.
"Tenable has always been undercapitalized, and because we've had such rapid growth, it's finally caught up with us," he says. "We've found a bank that will give us a little bit of breathing room with credit lines and some of our debt."
Miragliotta says he's in negotiations with several venture capital firms to help fund Tenable's expansion.
"We're looking at an acquisition and we're putting together a business plan," he says. "And because of 9-11, the consulting has gone up, so we're going to continue to keep pushing that. That division is still in its infancy, and I haven't found the right mix of personnel and marketing to get that off the ground." How to reach: Tenable Protective Services, (216) 361-0002
No one is happier about this than Bruce Hanusosky, president and CEO of High Tech Performance Trailers.
Hanusosky's company designs and builds the semi tractor trailers that carry race cars from track to track. High Tech's competition, Featherlite Inc., a publicly traded corporation, controls 65 percent of the market, but posted an $8.8 million loss last year. High Tech claims 20 percent of the market and its sales climbed 17 percent last year.
"Our competitors are going away and we're taking the front seat now," says Hanusosky. "Our business will grow substantially in the next couple of years."
Hanusosky has spent his life around cars and motor sports. He opened his first custom car painting shop out of his garage when he was 16, later expanding into engine repair and auto restoration. He was in the pit crew for the BFGoodrich off-road racing program, where he discovered a market for a more upscale vehicle trailer.
He launched High Tech Performance Trailers in Painesville with two employees in 1982, when auto racing was still a fringe sport in Northeast Ohio.
"The banks, they didn't want to deal with us," Hanusosky says. "They thought it was too specialized. Money was a tough thing in the beginning."
Luckily, Hanusosky had built a relationship with a bank through his years in the auto repair business. The bank's funding allowed him to land his first client, BFGoodrich, which is still with him today.
"We were just very sensible with money in the early years," Hanusosky says. "We were credible enough to get good financing to do what we wanted and keep building the business."
Once Hanusosky proved himself with BFGoodrich, landing clients like Michelin, Bridgestone, Yokohama, and racing teams like Penske, Rahal was easier.
"People found out about us by me being out on the road," Hanusosky says. "I spent the majority of my time visiting racing venues all over the country. I started the whole sales program."
High Tech has more than 50 employees and designs and builds 30 trailers a year, with an average cost of $275,000.
"People trust us," Hanusosky says. "People trust that the equipment we sell them is good. We have never gotten off that track. And that has really made this company what it is today." How to reach: High Tech Performance Trailers, (440) 357-8964
To refresh your memory: Wild interest rate fluctuations in the 1970s panicked the savings and loans. Hit hard by a lack of deposits, the thrifts sought new revenue-generating methods to stay solvent. In the early '80s, Congress approved massive deregulation. Lending rules were loosened. Interest rate ceilings were eliminated. Sound familiar?
But the measures didn't work. The savings and loans continued to lose money. Many made bad loans on overvalued property. In March 1985, Ohio's deposit insurance fund neared depletion. Ohio Gov. Richard Celeste declared a bank holiday and shut down the thrifts. He allowed those that could be federally insured to reopen.
Regulators swept into Ohio to suture the wounds. Panic ensued.
Regulators shut down Northeast Ohio thrifts like Broadview Savings, Transohio Federal Savings and Cardinal Federal Savings. Others were purchased by larger commercial banks. Park View Federal Savings Bank remained open.
Park View President Keith Swaney euphemistically refers to those days as the "tough times." Swaney has seen many tough times. He joined the thrift 40 years ago balancing account statements and worked his way up to teller, then to the data processing department.
Today, the tall, strapping Swaney is wiser and grayer than the young man who joined Park View out of high school. A lot of those gray hairs appeared during the fallout from the S&L crisis.
To be fair, his thrift was more a victim of the times than of greed and mismanagement. Because of its tighter control, Park View emerged from those tough times stronger than before.
"The regulators had bigger problems than Park View," Swaney says. "We were lucky we had the time to work our way out of the problems."
Like any business rapidly losing money, Park View had to lay off workers, trim its branch offices (from 16 to seven) and scale back business divisions. But Northeast Ohio as a region continued to expand. New homes and businesses sprouted up in the outer suburbs.
Park View was there to loan money for those projects and regional growth helped nurse the thrift back to health.
"It was a lot of hard work, cutting expenses and taking advantage of the real estate market when we could," Swaney recalls. "We eventually started growing again."
Thanks to its success in honing its niche of local home and business construction lending, Park View continues to grow in another tough time for smaller banks. The burgeoning thrift has $736 million in assets and 15 branch offices. It is too large to ignore, but still too small, Swaney says, for large commercial banks to come snooping around.
"You really have to have about $1 billion to draw any interest," he says. "But we're not looking to be bought. We have a young management team that has been with us for 10 to 20 years. We all enjoy what we do, and our company continues to perform."
A breed apart
Former Park View President Jim Male decided in 1992 to take the company public on the NASDAQ stock exchange. The move gave Park View the necessary cash infusion of $8.5 million to leave the mess of the '80s behind.
In 1994, the thrift reorganized under a parent company called PVF Capital Corp.
"We really had no choice," Swaney says. "We literally had zero capital. You either had to raise capital or get taken over by the (Resolution Trust Corp.). If you didn't come up with the capital, the RTC was either going to liquidate you or sell you off to somebody else."
Like most thrifts, Park View's stock doesn't excite investors.
It broke into the NASDAQ at $10 a share. Since then, it has dipped as low as $8 and climbed as high as $14 to $15. While not exciting, that doesn't mean investors aren't interested in the stability thrifts like Park View offer.
Diamond Hill Capital Management Inc., an investment firm based in Columbus, offers a mutual fund made up of financial services stocks that include both large commercial banks and small-cap thrifts.
"The thrifts have performed very well relative to many other parts of the market in the last year," says Christopher Bingaman, an investment analyst at Diamond Hill. "It's generally a lower growth, lower return business than commercial banking, but it's also lower risk. When the economy gets difficult, thrifts tend to perform better because of that lower risk, and they're usually more (interest) rate sensitive than banks are."
Commercial banks are more reliant on fees from the myriad other business offerings like cash management services, credit card processing and investment management, Bingaman says. Those fees often drop in a slower economy, and the bank's stock price plummets.
"I would always prefer to own a well-run thrift vs. a poorly-run bank," Bingaman says. "I wouldn't say there's anything too unique about (Park View), but there have been above average returns in growth over the last couple years. That's probably just indicative of a well-run company."
Stick to your guns
Swaney says Park View will remain a Greater Cleveland thrift and will not follow the lead of others in the area, like Charter One Bank, which dropped its thrift charter in January for a national bank charter. During the S&L crisis, some thrifts got into trouble by approving out-of-state loans.
But there's a fine line between conservative and stubborn, and Swaney says Park View's breadth of services will respond to the market.
"I'm not going to sit here and say we're not going to offer all the new things that everybody else is offering," Swaney says. "To some extent, we will. It will be a matter of what our customer base is, but we will continue as a real estate lender."
Those looking for evidence can consider Park View's new 55,000-square-foot corporate headquarters in Solon. The building has two entrances due to its unique customer traffic -- the large glass-enclosed main entrance is for employees and visitors and the other, smaller, entrance around the corner is for building contractors only.
"With our accelerated growth over the past two years, we needed to take more control over the internal operations and put them all in one place," Swaney says of the new headquarters. "It's enhanced our efficiency as a company."
Recent buyouts have worked in Park View's favor, too. Security Federal Savings & Loan was acquired by FirstMerit Bank. Strongsville Savings Bank was acquired by Fifth Third Bank.
Since 1999, Park View has grown more than 60 percent and increased its employee base by 15 percent.
"(FirstMerit and Fifth Third) can't cost justify a deal that's $4 million and under," Swaney says. "That's where we do a big business. That's our niche and we plan to continue to grow in that arena."
How to reach: Park View Federal Savings Bank/PVF Capital Corp., (440) 248-7171
Some courts haven't fully addressed when LLC owners would be liable. Other courts may apply the same rules that exist for corporations. However, the LLC is an entirely different animal -- not quite a partnership, not quite a corporation. Applying corporate principles to limited liability companies is like trying to fit a square peg into a round hole.
Under what circumstances the LLC, as a business entity, protects its owners from losing personal assets in a legal battle is not clear. Such uncertainty should cause some concern among LLC owners. However, LLC owners who conduct business appropriately need not be in fear.
Clearly, in spite of this legal uncertainty, entrepreneurs in Pennsylvania have recognized the value of the LLC and are taking advantage of it. In fact, in 1998, slightly more than 3,600 Pennsylvania LLCs were formed. By 2000, the number of LLCs formed in one year increased to more than 7,300.
LLC owners should take proactive steps to reinforce the "limited liability" of their companies. Structuring your LLC and its business activities properly may help to take some of the uncertainty away. Consider the following:
Corporations - shareholder liability
An individual could be held liable for corporate acts in more than one way. One way is for their actual participation in wrongful activities of the corporation. Another way to hold liable those people owning or running the corporation is to "pierce the corporate veil." That legal jargon is used to describe the situation in which a shareholder is held liable for corporate acts.
This "veil piercing" almost always has to do with either a small or closely held corporation that has failed to properly conduct its business in some way or that has, perhaps inadvertently, become a façade for the activities of one or more shareholders.
Pennsylvania law has created several factors that guide courts in determining whether disregarding the corporate entity is appropriate:
* whether the corporation has failed to comply with required formalities, i.e., meetings, books and records, etc.;
* whether the corporation is undercapitalized;
* whether the affairs of the corporation have been mixed up with the personal affairs of the principals;
* whether the corporation has been used to further personal interests,
* and whether the corporate form has been used to perpetrate a fraud.
Why the corporate rules matter
Why does all this corporate stuff matter if you have an LLC? In spite of its impropriety, courts likely will rely on corporate law when determining whether the owners of an LLC should be held liable. The law as it concerns corporations is well established, and using it prevents judges from having to venture into totally new territory. That's why LLC owners need to know the corporate issues they may have to face.
In general, though, the characteristics of an LLC place it on a continuum somewhere between a corporation and a partnership. LLCs often are taxed and managed like a partnership, but its members are protected from liability like shareholders of a corporation.
Compared to a corporation, the LLC may be structured rather informally and is subject to few of the rigors of procedure that plague corporate existence. On the other hand, the LLC may sell "member interests" almost like shares of stock, and the LLC may operate through managers but be owned by separate members.
LLCs by their very nature are permitted, if not designed, to be formed and operated with relatively little pomp and circumstance. Without being required to set up annual meetings, keep meeting minutes or issue annual reports, LLCs can enjoy relative freedom in operations and management. Corporations, on the other hand, are subject to a number of burdensome formalities. In fact, failure to abide by these formalities is often an important factor causing shareholder liability.
Still, you don't want to take unnecessary chances, given the lack of clarity in the courts about owner liability within LLCs versus corporate law. Therefore, here is a list of some steps you may want to follow to strengthen your LLC's veil:
1. Put your operating agreement in writing (this is a must!)
2. Organize a management team and provide real positions, titles and written business plans.
3. Keep your tax filings current.
4. Set up a bank account (or accounts) for your LLC and avoid (at all costs) using the account for any other person or entity.
5. If you currently have a one-member LLC, add another member.
6. Schedule meetings for the management and the members and take minutes of such meetings.
7. Keep records and generate reports of capitalization, meetings, minutes, ownership interests, dividends, loans to or from the company, business plans, etc.
8. Follow the few required formalities, which will vary slightly from state to state but often include filing a certificate of formation with the secretary of state and paying taxes.
9. Keep your personal activities or the business activities of other companies separate from the LLC. When two or more companies are using overlapping personnel, office space or assets, continue to treat the companies as separate and distinct.
Keep in mind that these points, while helping to prevent personal liability in the event of a lawsuit, will not protect you from being sued. Unfortunately, there are relatively few legal safeguards to prevent a plaintiff from suing both a company and its owners. What matters is how far the lawsuit progresses.
Jeff Aronsohn Jr., is an attorney with Pittsburgh law firm Thorp, Reed & Armstrong, LLP.