How Jim Budros’ skills in taking risks helped him develop a business built on confidence

Jim Budros, chairman of the board of Budros, Ruhlin & Roe Inc.

W hen Jim Budros speaks to young people about what it might be like going into business for themselves, he talks about the ability to take risks.

Budros, chairman of the board of Budros, Ruhlin & Roe Inc., founded the company in 1979. It is now the largest independent wealth management firm in Central Ohio.

After working in Boston, he came to Columbus, where there was an opportunity with The Huntington National Bank. Budros expected to stay in the city for about two years.

“It was not a prospect that I thought was going to be permanent,” he says. “But the most important part is what kept me here, and that was the opportunity to be in the trust business at the bank. That was the most important part of the formation of my interest in the work that we do today.”

Budros says determination and willingness to obtain different experiences are the keys to being a successful entrepreneur.

“I think, first, you need to have the idea that someday a business could be of your own making, and then secondly, I think when young people start in the business, they should start by developing a broad and diversified base of experience,” he says. “Your first job shouldn’t necessarily be what you believe is going to be your ultimate goal, but it should be part of developing a database of experience.”

But it takes a certain risk; you have to be willing to accept the results of failure.

“Most people don’t start out on a path with a 45-degree angle upward,” Budros says.
“They cycle up and down, they learn from their mistakes, and they press forward.”

So, for example, when a student graduates from college, he or she may find a resume doesn’t open many doors.

“If you graduate from a prestigious school, you probably have an opportunity to reach out right off the bat,” he says. “Some 95 percent of the people who graduate from college don’t graduate from a prestigious school with a job offer.”

It’s not time to stop job-hunting but rather to take a different approach.

“So you use what connections you have to get the first job,” he says. “Get on somebody’s payroll to begin to prove yourself to your employer and show that you are worthy of a weekly paycheck. Then develop the most important skills right off the bat of integrity, honesty and showing up on time and doing a full measure of your responsible job and maybe then some.”

You will gradually determine your tolerance for taking risks.

“Risk is an interesting concept,” Budros says. “Risk is the environment in which you are paid for taking a chance on something that is less certain than what is known. If you require certainty in your life, then you are probably not going to be a risk taker.

“If the most important thing in graduating from college is looking forward to getting a pension from the state of Ohio, you can probably deduce that you are not likely to be a risk taker in your life.

“I am not suggesting that risk takers are foolhardy. They have this notion in their mind that they can be paid handsomely for the willingness to be uncertain. It’s more of a psychological or behavioral concept than an analytical one.”

Budros says early in young people’s careers or even as they are growing up, they can be seen as ones who are willing to take risks or not.

“You might look at 10 first-graders who are longing to ride a bicycle, and you will see that three or four of them are willing to fall down. Five or six of them are not willing to fall down,” he says.

“I am not suggesting that risk-taking is necessarily good; it is often, however, an ingredient for being successful in business.”

But risk aside, one of the first challenges after starting a business might be communicating with prospective customers about what your new business does.

“When we first started this business, we were practically unable to describe what we did to the public, but we knew that we were totally competent,” Budros says. “We had absolute conviction in our competence that we were doing it the right way. So we were willing to take the risk in building the business on that basis.

“We provided really good financial planning and investment advice, and we had developed good name recognition with folks in Columbus. We had developed these relationships based on trustworthiness.”

The result?

“We became thought of and known by our clients as their trusted adviser,” he says. “It was that alone that catapulted us to the place we are today and that is to say a pretty good-sized firm in an industry with relatively small firms.” ★


How to reach: Budros, Ruhlin & Roe Inc., (614) 481-6900 or


The inner circle

Fred Koury, President and CEO, Smart Business Network Inc.

If you had the choice of growing at a 5.8 percent compound annual growth rate in a five-year period or declining 9.2 percent, which would you choose?

While the answer is obvious, the real question is, what does it take to end up on the positive side of the equation instead of the negative? Simple: some trusted friends.

The numbers above illustrate the difference in compound annual growth rates for members of Vistage, an organization for CEOs, and the average U.S. company. On average, just by belonging to Vistage, you are going to see much better growth. Why? Because you get insights about your business from CEOs who aren’t lost in the day-to-day issues.

Vistage, and other organizations like it (Young Presidents’ Organization, Entrpreneurs’ Organization — there are others as well) help you run your business better by putting you in contact with other CEOs.

Let’s face it; being in charge can be a lonely experience. At the end of the day, a lot of responsibility falls onto your lap, and if you fail, a lot of lives are affected. Some of us are blessed to have an inner circle of people we trust to bounce ideas off of and know that if an idea is bad, someone will speak up. But there are others out there that for whatever reason don’t have that trusted inner circle.

To be successful, you need to be willing to open up about problems before it’s too late to do anything about it. Telling someone you need help isn’t a sign of weakness. In fact, it’s the opposite. The increased success rates of companies that participate in peer groups bear that out.

You don’t have to have a giant network of other CEOs to be successful. Having two people that you trust and value their opinions is probably all you need. Two trusted friends can help you navigate through tough decisions and act as a sounding board for your ideas.

Working with your peers to review your ideas and goals is a great way to eliminate stress. They can provide the confirmation and validation you are looking for as you move your organization forward and can point out potential pitfalls you may have overlooked.

Sometimes, just having someone else say, “Yes, I think that will work,” can go a long way toward putting you at ease.

So what do you do if you don’t have a couple of people whom you trust? That’s where the professional organizations like Vistage come in. They can provide the same sort of feedback in a group setting and also offer a great way to network with other CEOs. As you build your network, you will most likely find a few people you are comfortable with and can build a closer relationship with them.

The most important aspect is to not try to go it alone. Whether you have a trusted inner circle of a few people or prefer a larger group setting, it’s important to have some sort of sounding board for your ideas. It’s also important to have people who understand what you are going through. Other CEOs can relate to the challenges of leadership and talk about what keeps them up at night. What you’re likely to find is that many of the same issues that bother you are also bothering others. Work together to find solutions or at least talk it through. You might discover a new approach to an old problem.

After all, two heads are better than one.

Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or [email protected]

How low interest rates plus low valuations create extraordinary planning opportunities

Brian J. Jereb, Member, McDonald Hopkins LLC

Interest rates are at historic lows. Market values of many assets are lower than they were a few years ago. This juxtaposition creates potentially significant wealth transfer opportunities.

“The interest rates for loans to family members and related party transactions are lower than they have been in several decades,” says Brian J. Jereb, a member with McDonald Hopkins LLC. “These rates set the valuation rate used to determine the value of property transferred in certain types of gift strategies.”

In the valuation process, this is the assumed rate for valuing the taxable gift component. This rate is often referred to as the “hurdle-rate” in terms of the rate of return required for the strategy to perform as well as the valuation projection for tax purposes.

“While relative investment rates of return are low, the assumed rate is fixed at the time of the transfer, so when rates of return increase to more normal levels and market values increase as a result, the chance for success of these strategies should be greater than under normal circumstances,” Jereb says.

This juxtaposition also occurs at a time when the lifetime gift tax exemption is at an all time high of $5 million, which allows for larger taxable gifts while still having enough left to cover estate taxes or gift tax.

There are recent rumors that the so-called “Super Committee” could include in its plan a decrease in the gift tax exemption from $5 million to $1 million. “These rumors appear to be based on sheer speculation by various commentators about what the Super Committee may include in its plan if its members are ever able to reach an agreement,” Jereb adds. “By the time this article is published, we may have some indication concerning the possible future of the gift exemption should the committee agree to a plan.”

Smart Business asked Jereb how business professionals can take advantage of these opportunities now, as pending tax reform discussions loom on the horizon.

What is the simplest approach to capture this ‘double-barreled’ opportunity?

The simplest approach is a low interest loan to a family member. The borrower is not burdened by high interest charges and could use the loaned money for his or her desired purposes. If the lender dies, the loan is an asset, but will not disappear. If the borrower is a beneficiary of the lender’s estate plan, the loan balance can be distributed to the borrower or be offset against the inheritance.

What about trusts?

The Installment Sale to a Grantor Trust, sometimes referred to as an ‘Intentionally Defective Grantor Trust,’ or ‘IDGT,’ allows a senior generation member to sell an asset to a trust for the benefit of family members. An IDGT is designed so that the assets therein are treated as being owned by the trust’s creator for income tax purposes under the applicable federal income tax laws. While the assets are treated as owned by the trust’s creator for federal income tax purposes, they are owned by the IDGT and not the creator for federal estate tax purposes. The creator can sell assets to the IDGT without generating income tax; assets sold to the IDGT and appreciation are excluded from the creator’s taxable estate for estate tax purposes.

The IDGT generally benefits the creator’s family members. When the creator sells assets to the IDGT, the trust pays most of the purchase price with a promissory note at the current low interest rates. Because the creator and the IDGT are treated as the same taxpayer for federal income tax purposes, the interest paid on the note is not taxable to the trust’s creator. However, because the creator is deemed to own the assets in the IDGT for income tax purposes, he or she continues to be taxed on the ordinary income and capital gains realized by the IDGT’s assets. The payment of the income tax allows the assets in the IDGT to appreciate without reduction for income tax, and the payment of income tax is not a gift to the beneficiaries because the trust’s creator is merely paying his or her legal income tax liability.

With the low current market valuations, it is more likely than normal that the assets sold to the IDGT will increase in value from their depressed current values, and the current low interest rates make such a sale an efficient planning technique.

Another strategy is the Grantor Retained Annuity Trust (GRAT). Here, the senior generation contributes property to a trust in return for an annuity payment during the term of the trust. The term and the annuity rate determine the amount of the gift to the trust’s remainder beneficiaries. There are two limitations: (1) if the creator of the trust dies during the term, some or all of the trust assets will be part of the creator’s taxable estate and (2) the property transferred could be used up by the annuity payments, leaving no value for the remainder beneficiaries.

How can family-owned businesses benefit?

In the family business context, the low market valuations and the large gift tax exemption make it a good time to recapitalize C corporations with preferred and common shares and in the process make significant gifts to family members. Both C corporations and S corporations can be recapitalized into voting and non-voting shares. The non-voting shares can then be sold to family members or to an IDGT via a low interest rate note back to the senior generation. The current low tax and interest rates also currently provide an ideal opportunity for the business to borrow money to either pay a dividend or redeem shares owned by the senior generation.

How can charitable giving best be structured?

A related strategy with a charitable advantage is a Charitable Lead Annuity Trust (CLAT). In this strategy, the trust pays an annuity to selected charities over a term of years. At the end of the term, if the investment rate of return exceeds the valuation rate, the remainder that is available to the family beneficiaries will be greater than the amount projected using the IRS valuation rate. A CLAT is often used as a vehicle to fund ongoing annual gifts or to establish and fund an endowment gift through the annuity payments.

BRIAN J. JEREB is a member with McDonald Hopkins LLC. Reach him at (216) 348-5810 or [email protected]

André Thornton leads ASW Global through tough times

André Thornton, president and CEO, ASW Global LLC

André Thornton doesn’t make excuses. He didn’t do it as a baseball player with the Cleveland Indians and he doesn’t do it as president and CEO at ASW Global LLC.

In both cases, he faced sizable challenges.

In the late 1970s and early 1980s, the man once known as “Thunder” hit a lot of home runs, but played in front sparse crowds at cavernous old Cleveland Municipal Stadium with a team that had almost no hope of ever winning a title.

Today, Thornton leads the 170-employee supply-chain solutions company in the midst of an Ohio economy that is still recovering from the 2008 recession. But just as he did in his playing days, Thornton stays laser focused on the job at hand.

“You can’t sit back and say, ‘Well, I’m in here in Northeast Ohio, so therefore, I’m crying about business going out all over the world,’” Thornton says. “Well, that’s not going to change. You have to figure out a way to be competitive and to survive in an ever-changing global marketplace. That’s what a leader and his leadership team is always thinking about.”

When Thornton bought ASW in 2007, he saw employees that had quite a bit of fear about what the future might hold.

“People’s anxiety levels were up,” Thornton says. “Frustration was up with things going on around them. To go through those ups and downs, you really have to trust the people you are following.”

So it was up to Thornton to be open with his people and give them a reason to trust him.

You need your employees to be an active and committed part of your team so they can do their best to help you compete. You can start by clearly explaining to them what you’re looking to do.

“It’s making sure that the plan you have in place, people can understand it, they can believe in it, they can trust it and they can see the practicality of it,” Thornton says. “They can see the progression even though they may not see all of the plan rolled out at once. They can see a progression of where you are trying to go.”

Thornton draws a parallel to the very nature of his business, which is to provide solutions for clients with warehousing and distribution needs. You need to do the same with your employees.

“This is where we’re going and this is why we’re going there and this is what we want to accomplish along the way and this is the benefit to all of us,” Thornton says. “Those are things that a leader has to establish.”

But it’s not just your ability to explain a balance sheet or lay out a strategy that is going to make the difference for your business. You need other people who can play leadership roles too and help you move things along.

“I need to have the right people in place to help promote, direct, guide and advocate the vision throughout our organization,” Thornton says. “That’s through leaders both formal and informal in your organization. They have to buy into it and continue to advocate. They have to be people that have the respect of the organization. What I mean by that is they are not only saying something, they are doing it. Their lifestyle and management style is one of respect and one of integrity.”

And while respect doesn’t have a slot on your balance sheet, it’s probably as important as anything in determining whether your business succeeds.

“It’s the way you carry yourself,” Thornton says. “It’s what you do and how you do it. It’s how you treat people. It’s how you listen. All those things are vitally important because for you to follow me, there’s a respect level that needs to take place.”

Evaluate yourself

André Thornton is a respected man in Northeast Ohio and that’s something that matters a great deal to him. It should also matter to you as the leader of your business.

“We see leaders struggling today,” says Thornton, president and CEO at ASW Global LLC. “It is often around a lack of management around their personal life. Look at the breakdowns that we see taking place in the business community and the political arena. “You are constantly being bombarded with all sorts of information, challenges, requests and opportunities. If you don’t have a way to manage that in your own life, it could throw you off kilter. Whether it’s success or lack of success, people respond to those things in ways that are not healthy.”

So take a moment once in a while to look in the mirror and assess what you see.

“Be honest in assessing your own personal management,” says the leader of the 170-employee supply-chain solutions company. “That it is not a hindrance or deterrent to the success of your organization. Secondly, make sure that what you’re doing organizationally is not a deterrent to the success of your organization.”

How to reach: ASW Global LLC, (888) 363-8492 or

United Auto Workers trust not planning quick Chrysler exit, two sources claim

DETROIT/NEW YORK ― A United Auto Workers trust fund will retain its shares of Chrysler Group LLC in a bid to maximize returns for retiree healthcare costs rather than follow the Obama administration in a quick exit of its investment, two people familiar with the fund’s strategy said.

The union’s healthcare fund, known as the UAW’s VEBA trust, is considering a range of options to cash in on its 45.7 percent stake in Chrysler, at a time when the value of that investment is rising, these people said.

The options could include selling shares to an outside investor, including Chrysler’s majority owner Fiat SpA, or selling in an initial public offering if the stock is eventually listed. Fiat owns 52 percent of Chrysler.

The UAW’s VEBA trust has delegated the decision on how and when to exit its Chrysler investment to its fiduciary adviser, a subsidiary of Brock Capital Group, one of the people said.

Last year, the trust hired Brock Fiduciary Services to manage its stake in Chrysler. Brock also represented VEBA during Chrysler’s talks to refinance $7.6 billion in government debt, and is currently calculating Chrysler’s market value for the union fund, people familiar with the matter said.

Under the 2009 agreement with the U.S. Treasury, VEBA’s proceeds from a sale of its Chrysler stake are capped at a “threshold amount.” This amount was set at $4.25 billion in 2009 and was set to grow at a 9 percent compound annual interest rate, according to the agreement.

When factoring in this interest rate, that cap on the union’s payout has risen to nearly $5 billion currently, one of the sources said.

In the event that proceeds from the sale exceed this amount, the excess cash goes to a third party or a holder. Fiat is the holder under its agreement with Treasury on Thursday, which has given the Italian automaker the option to take over all of the No. 3 U.S. automaker.