Transcript
Michael Palumbos (00:03.064)
Welcome everybody to the Family Biz Show. I'm your host, Michael Palumbos with Family Wealth and Legacy in Rochester, New York. Today we've got Dominic Cortese from Cortese Construction Services joining us. Welcome Dominic.
Domenic Cortese (00:17.314)
Welcome, Mike. I'm glad to be here.
Michael Palumbos (00:19.658)
We're excited to have you here because you're second generation in the business. Your children are third generation in the business right now. Love to hear your story a bit, how you got involved with your father and uncle and the history of the business. Let's do it in that order. You talk about how you joined the business. We'll circle back and talk about the history.
Domenic Cortese (00:28.258)
That's right.
Domenic Cortese (00:48.782)
So the business was started by my father and my uncle when they came from Italy in the early 50s. And they did it as a part-time gig. They were working full-time in factories. Mind you, they came over with nothing, not even any ability to speak the language. They learned everything the hard way. so they did factory jobs. My father worked at Niagara Machine and Tool as a crane operator, and my uncle Nick worked at Bethlehem Steel.
Domenic Cortese (01:18.766)
They were very enterprising and very eager to make a mark for themselves in the United States. So they started the part-time gig of doing concrete. They did that part-time till the later 50s, 57, where they incorporated the company and left their factory jobs and started working doing concrete installation for home builders in our region.
Domenic Cortese (01:46.082)
And so we did all the driveways, garage floors, basement floors, which got them started. then branched into residential construction. then in 1970, the summer of, I was 14 and worked my first summer on the concrete crew. Came home that first day saying, you do this every day, which is come home tired, angry and filthy. But my father's philosophy was you didn't work that day.
Domenic Cortese (02:16.17)
if you didn't do those three things, come home tired, angry and dirty. And so that was how I grew up in the business. frankly, Mike, I hated every minute of it because it was all back and not brain. So in the later seventies, I went to college, 74 to 78, graduated from Kinesis with a BA and my aspiration was to become an attorney. In fact,
Domenic Cortese (02:46.166)
I spent a semester in Washington at American University in the category of foreign policy and I had developed a passion for international law. And that was what I was going to do, is become an international lawyer. The problem of course is I took the law school admissions test and fell flat on my face. So I didn't have a plan B.
Domenic Cortese (03:12.942)
And then the company became the plan B. And you know what? Here it is some 50 plus years later and I can say everything happens for a reason. I made the business into something that it wasn't then. And you know, with the blessing of my wife and my children to have been able to have that, be able to say that. So in the late 70s, we branched out into remodeling and kind of took the helm of that and
Domenic Cortese (03:42.444)
began the process of developing the remodeling division. then over the years grew that and actually, believe it or not, left concrete. We no longer do concrete. And it was my father who encouraged me to drop concrete after we were having a problem finding someone to take over the concrete division. advance the clock.
Michael Palumbos (04:09.422)
I'm
Michael Palumbos (04:10.082)
gonna pause you for just a second. I wanna go back and like, so there's tidbits in everybody's story. But I think the reason why this show exists is so that people can listen to it and just listen to the breadcrumb, follow the breadcrumbs and watch it for their story. So your father and your uncle, they get into business because they come over from Italy, they trust each other implicitly.
Domenic Cortese (04:27.256)
I get it.
Domenic Cortese (04:38.466)
Right.
Michael Palumbos (04:39.246)
And,
Michael Palumbos (04:40.006)
you know, so like, you know, they're doing this side gig and, know, they're doing side hustles before side hustles were side hustles. Um, and they flip that into full time work. Good for them. That's awesome. Through the years, you're 14 when you start to see them, you know, working together, how, give me timeline wise, how many years are they in business together?
Domenic Cortese (04:47.703)
Yeah.
Domenic Cortese (05:06.382)
So they were in business together since 1951 until they both retired. My father retired at 65 and so did my uncle. And the reason that they retired is because back then we had a defined benefit plan that required exit at 65. So they got their lump sum settlement at 65. So let's see.
Domenic Cortese (05:35.95)
I'm going to have to do the math here. I think it would have been somewhere in early 90s that that all came together.
Michael Palumbos (05:45.134)
And so your first time working for them though, how long have they been in business when you're 14? What's that put them time?
Domenic Cortese (05:53.038)
20 years from 1951 to 1970, 19 years. They had been working together.
Michael Palumbos (05:59.63)
Yeah. So sitting at the family dinner table, listening to your dad talk about working with his brother, what does that feel like for you growing up? What are you hearing?
Domenic Cortese (06:11.768)
You're nuts to try to get into that business because all they did was argue about everything. It's funny, they had the most classic love-hate relationship. To each other's face, they were nothing but rude to each other, but they never did anything apart from each other. And I swear to God, including twin everything, twin cards.
Domenic Cortese (06:41.176)
twin condos in Florida. They would go away together. They were completely inseparable. They died within weeks of each other. Wow. Yeah. So it was funny to watch because you'd never think they would have that strong of a bond because to each other's face, they came across as absolutely hating each other.
Michael Palumbos (07:05.326)
What did you take away from that? How did that affect your management style of the things that you were doing?
Domenic Cortese (07:13.752)
Again, my approach was there's no way I want to be in the mix of this. And you know what? I reference those times all the time now because believe it or not, Mike, I use it as what not to do sometimes, more than what to do, you know? And we run the company in a different way than I think I would have had I not had that experience.
Michael Palumbos (07:36.936)
awesome. Talk about, you know, you're in the business at 14. Did your uncle have kids?
Domenic Cortese (07:45.326)
So I had a cousin, a different path from my cousin. He was, you know, by legacy, you know, supposed to follow exactly as I was doing. Again, everything had to be the same. So my cousin, unfortunately, did not aspire to work physically, nor did he have any interest in the family business. That continued until our adulthood, when I finally,
Domenic Cortese (08:14.168)
found a way for him to get out. took a class at UB, in fact, all my children followed me in this class, UB School of Management, called Center for Entrepreneurial Leadership, if you haven't heard of it. It's invaluable program. And in my session in that program, I put it on as my objective is to help in the succession planning of our business, and frankly, to give my cousin a way out. And there was a gentleman,
Domenic Cortese (08:43.542)
who I was assigned to, who was going to be involved in my presentation. And he sat my cousin down. His business was family business succession and he was an expert in that he came from a family business as well. Anyway, he sat my cousin down and said, is this where you want to be? And my cousin was honest with him and he said, no, I'm here because my father mandates it. Now mind you, at this point in time, he was in his
Domenic Cortese (09:12.974)
mid to late thirties, already had a family and children and frankly wasn't providing based on the income as we were paying ourselves straight commission. But through the intercession of this gentleman, he said to my cousin, know, do you want out? And my cousin said yes. And he immediately resigned after that and went on to his own passions, which was great. Of course, my uncle was not happy.
Domenic Cortese (09:43.31)
you know it was a turning point in the business but my uncle came to realize you you always can't mandate everything you know some things have to happen on their own and this is a good example of that and you know what might to our to this day my cousin and i my relationship was saved and as and as actually improved and grown since we were kids because you know i gave him that away to get out
Michael Palumbos (10:10.604)
Yeah, we talk about that in terms of the vision of the individual versus the vision of the founder and the vision of the family. And they're different. And unless we're talking about them, every father and mother, what they want for their kid is, you they always say, I want you to be happy. I want you to flourish. I want you to have a wonderful life that you're proud of.
Domenic Cortese (10:23.136)
Amen. Well said.
Michael Palumbos (10:40.224)
And yet we, you sometimes we hold those strings and say, well, why don't you follow in my footsteps? And we don't even realize that it's happening.
Domenic Cortese (10:49.122)
Great,
Domenic Cortese (10:50.109)
well said.
Michael Palumbos (10:52.706)
So without going into like numbers or details, can you talk about how that transition worked for your father and your uncle and your cousin? How did you make that happen as an example so that anybody else in the situation might say, there's my way out?
Domenic Cortese (11:00.824)
Yeah.
Domenic Cortese (11:13.934)
So we had the company evaluated and basically gave him, based on an evaluation, 50%. We came up with terms, which we did over five years and I paid for it out of cash flow.
Michael Palumbos (11:31.202)
And then, so then your cousin is bought out, which leads the path for your father and uncle to be bought out at a later date, or were they already bought out the business?
Domenic Cortese (11:43.726)
We did not do buyouts in the family. We did just gifting. my cousin's shares went back into the treasury. My father's shares were gifted to me. And then my uncle's shares went back in the treasury too. So I ended up at the end of the day when my cousin leaving, my father retiring, my uncle retiring, I ended up with 45%, the rest being in the treasury.
Domenic Cortese (12:12.942)
and no other family member in the mix at that point.
Michael Palumbos (12:17.582)
That makes sense. that's really good for people to hear for a couple of reasons. What's going through my head is there was a mix of gifting. There was the mix of the buyout of your cousin. you can do what's right for the family. what we know is that in order for your uncle to retire his shares,
Michael Palumbos (12:44.204)
He had already been financially, he had a financial plan. He was financially okay without having to rely upon the business to support his lifestyle afterwards.
Domenic Cortese (12:56.974)
That's correct. And that's why they were happy to gift the business. They had other things, investments in real estate. So they were both well positioned. And of course, the defined benefit plan, which was very expensive to orchestrate, we got them in the position where at 65, they were well positioned.
Michael Palumbos (13:23.022)
Was there any conversations, do you remember, as you were going through this stuff, to say, Dad, are you going to be OK financially? Remind me your uncle's name. Sorry. What were those conversations? How did you have those conversations so that everybody knew everybody's going to be fine as we're doing this?
Domenic Cortese (13:33.282)
Yeah.
Domenic Cortese (13:43.256)
Well, big part of the puzzle here, Mike, was that we had a pretty substantial real estate portfolio that they developed, again, out of their blood, sweat, and tears over all the years. They were able to amass a good portfolio of rental properties, which I'm sure you've heard countless times from other immigrant families that that was something that they felt they had to get into was real estate.
Domenic Cortese (14:12.52)
And really, think that was a big piece to their having adequate money to live on was the income that came until they both passed from the real estate holdings.
Michael Palumbos (14:24.302)
Thank you for sharing that. really, I mean, it helps to paint that picture that we don't always get. How did you get there? Where was, you how did you dot the I's and cross the T's, so to speak. So then we fast forward and you mentioned that you pivoted. We're not doing concrete any longer. We're starting to go down a different road. Where did that, where did that come from? And I also want to recognize
Michael Palumbos (14:49.964)
that you know, UB's cell program, it is fantastic. Susan, I forget. Yeah, Susan Stefan runs that program, does a great job. Any chance the person that was helping you was his name, Bob?
Domenic Cortese (14:57.39)
Susan Steffen.
Domenic Cortese (15:06.823)
It was Joe Basil Jr.
Michael Palumbos (15:09.506)
Don't worry, that was before my time. But they have just some great professionals over there. I've had several people on the show that have gone through that program. One of them, one of the best lines I heard when he was talking about when he went through the program, something that happened for him was that they're like, when's the last time you checked to see if your CPA, your attorney, and your wealth advisor were keeping up?
Domenic Cortese (15:11.768)
Yeah.
Michael Palumbos (15:37.804)
with all the things and the complexity of your growth. And he went out and shopped those people and started to realize, my gosh, I'm hurting myself. I'm hurting myself.
Domenic Cortese (15:48.994)
Good point, very good point.
Michael Palumbos (15:50.99)
Very cool stuff. So let's talk about the pivot. What drove that? How did you come to decide where you were going to go? And what were you feeling at the time as you're pivoting through this stuff?
Domenic Cortese (16:05.582)
So now we're in the early 80s, married in 1980. Phil, our oldest, came in late 81. And you need to have a way to obviously take care of your family. And year-round employment is kind of key element to that. The concrete business was seasonal. So the winter months were lean.
Domenic Cortese (16:33.25)
You know, the problem was how do you grow a family, you know, especially if we go into a second generation. And maybe at that point, my cousin's still being part of the mix. So diversification became obvious that, we needed to consider some level of diversification. And so we hired carpenters and we began very slowly with building auxiliary structures like garages. And that evolved over a few short years to attached garages.
Domenic Cortese (17:02.606)
and then evolved into additions and then general wholesale residential remodeling. So that at the very beginning of time for this new era in the company, it was simple additions, simple garages, simple structures that we would implement not only the concrete components, but also the structure as well.
Michael Palumbos (17:29.646)
That makes an awful lot of sense.
Michael Palumbos (17:35.736)
talk about what you just said there was really interesting. I want to make sure people, I almost went past it. You're doing this pivot, it wasn't a ginormous pivot. It was simple things that you knew that you could be successful at, and they were still utilizing your core competencies right from the get-go.
Domenic Cortese (17:50.702)
Correct.
Domenic Cortese (18:02.478)
Exactly.
Michael Palumbos (18:04.534)
And that I think that becomes some of the mistake that I see out there as families have, we have to be transitioning, we have to pivot when the times change. But you know, if you go too far away from what your core competencies are, it's a huge risk.
Domenic Cortese (18:22.338)
Well said. In fact, we use that model of the initial diversification away from concrete or adding onto concrete. We've used that model subsequently, which we can talk about later in other diversifications and other expansions that we've managed over the years.
Michael Palumbos (18:42.668)
Awesome. so let's dive into some of those things. You're there growing a family. You're making these pivots and building out the business. How did you build your first leadership team? So this is pre-kids, you're stepping those things out. How did you start to do that work?
Domenic Cortese (19:07.566)
Domenic Cortese (19:08.287)
Boy, that's a good story. You know, in the early years, I was a one man show and it was very, very taxing. In fact, frankly, you know, I missed my children's growing up and all the key things that you have as benchmarks because of how arduous my work schedule was, because I was
Domenic Cortese (19:36.354)
doing everything alone and my father was there to say, you want something done right, you have to do it yourself. And, you know, it didn't take me long to realize, now mind you, my father was not, was an intelligent person, not schooled, but street smart, you know, and industry smart. But he had a fear of trusting others. And so, you know, we were always lean staffed and
Domenic Cortese (20:05.528)
You know, so here I was throughout the 80s and into the 90s doing all the sales, doing all the logistics, doing all of the material management, doing all of the estimating. You know, I was it. And so I had a young lady who started with me in the early 80s. We opened an office. We moved the business out of the house finally. Because up until I graduated from college,
Domenic Cortese (20:33.666)
the business was still in the house. So we moved the business out of the house. We opened an office. You know, we started to take down the, go down the path of a legitimate operation that was, you know, I had a retail storefront. So at that point I realized there's no way I could continue with doing all of this myself. You know, so we started to add field staff and then we started to bring in a sales staff.
Michael Palumbos (20:35.864)
Okay.
Domenic Cortese (21:03.791)
And then over the years, it seems to have been a little bit here and a little bit there contributing to where the holes were within the company.
Michael Palumbos (21:14.56)
It's interesting the way that you're talking about this. It's almost even though you're second generation, you acted as like a founder as well. That pivot and growing the business differently puts you back in the same seat as the founders kind of role where it's like, I am the bottleneck to all of this stuff because I've got to learn to do this.
Domenic Cortese (21:37.634)
Right. That's right.
Michael Palumbos (21:39.448)
What do you think besides, besides, you know, necessity, you know, being the mother of invention, besides that necessity, how did you, you know, learn to let go of what dad was saying and start to build that team out yourself?
Domenic Cortese (21:54.606)
It became obvious really where I could see my health was being affected. I was actually thinking that maybe I should walk away from this. In fact, I fell into what I call probably the biggest mistake of my life in this time period where I was so frustrated with how stressful life was that I thought, well, maybe there might be an easier path. And I made the mistake
Domenic Cortese (22:24.79)
you know, mistakes are tuition. So I never really think a mistake when you're on this side of it, looking back was a total, a total, mistake in that you learn from it. Hopefully you learn from mistakes. I invested into, a franchise and, it was a dealership, not really a franchise and it was through Sears and we were going to be the kitchen and bath contractor for Erie, Buffalo and.
Domenic Cortese (22:54.466)
here in Pennsylvania, Buffalo, New York and Rochester. Well, those three cities were working well together. Sears came to us and said, we want you to expand into other territories, which meant, you know, having to have a regional office somewhere. And, you know, again, this was completely out of my box and nothing I really was adept at or really should have agreed to. Well, that fell flat on its face, as you might expect, that you can't manage what you can't see.
Domenic Cortese (23:24.302)
We have the saying here that we live by, don't expect what you don't inspect. And of course, that was obvious, you know, couldn't. Okay, so there you go. So yeah, so anyway, that was my awakening that I got to make this work kind of on a regroup and make this work in the right way. You know, so the argument was that this just can't continue nor could it grow.
Michael Palumbos (23:32.77)
My father says the same thing.
Domenic Cortese (23:54.424)
by keeping such a narrow funnel.
Michael Palumbos (23:57.986)
I'd like to tweak what you said a little bit for our listeners just a bit, because you're not wrong. And at the same time, there is a way that you can inspect things, even if you're at a distance. Many, many people figure it out. We teach our clients to use software, and there's KPIs, and there's things that are in there. So you can look and see what's going on in your business every single day.
Michael Palumbos (24:25.166)
I have a team today, so if I told you in 2018 that my business could operate remotely, I would have laughed hysterically like many of us. And today, of COVID, COVID was not the first punch. I a valued team member that fit my company values.
Michael Palumbos (24:51.18)
that really was a hard worker and I knew she was gonna be a great employee. Her husband got a job in Colorado and she said, I think I can do this job fully remote. And that was in, she left in January of 2020. isn't the joke on us when, you know, a couple months later, the whole team is remote and we didn't skip a beat. And so today,
Michael Palumbos (25:20.14)
We have an office, but it's in a nice office park, but I just use the shared space and I use the conference room and I've reduced that cost of having to have a physical footprint by an immense amount of money. And I have team members that fit the culture that are in Georgia, that are in Florida, that are here in Rochester. And that to me has opened up the doors as we're growing to say,
Michael Palumbos (25:48.726)
we can be a national company, not just this regional company based on knowing what we can provide. and that goes back to, you've got to have the culture fit. You've got to have those people, you know, you do still have to have that trust and you still have to, well, you know, trust but verify as Reagan said, right? We got to have a way to look at those numbers.
Domenic Cortese (26:13.068)
But from where I sit now, I use that saying to reinforce what I expect from my field staff. You know, now it's a totally different picture. I'm rarely on any job anymore. So, you know, I have to rely on the people that are doing that inspection and making, as you say, you know, and for us, it's a very, you know, so manual process to affect effectively with effect quality in someone's home.
Domenic Cortese (26:43.31)
with a manpower, you know, it's still very much old school and how all that comes together.
Michael Palumbos (26:49.312)
Agreed. So you've made the pivot. You're growing your team out. You've got some mistakes. What are what were some of the other learning experiences for you along the way, Dominic?
Domenic Cortese (27:03.83)
my gosh, you know, the time we have, we have fluff together wouldn't even justify the list. There is so many things that, you know, I have to say, and this is unfortunate and fortunate, learning by trial and error, you know, and that's a great blessing now that I can pass down to Phil, Nick and Michelle as they take it into the third, is that I'm here as a reference point, always.
Domenic Cortese (27:32.994)
you know, to be able to tell them, at least give them the barometer of, you know, not falling into a bad habit or a bad mistake. And that's really an unfortunate thing. And again, I reference back to CEL, probably one of the biggest things I got out of CEL is finding that there are people that have the same issues, number one. And number two, there's people that can help you. And
Domenic Cortese (28:00.738)
You know, my father always had the philosophy that you had to figure things out on. It didn't, you didn't go on the street to talk about a concern or an issue. You figured it out on your own. And you know, you know how that is basically, you're looking in the mirror, trying to, and praying for a solution or an answer. You know, you have to have the resource. And that was one of the biggest things I learned from CEO.
Michael Palumbos (28:04.226)
wrong. Right.
Michael Palumbos (28:24.3)
you became coachable through that process and open to other ideas. That's a, that is a huge blessing for all of us. We are, we are a country of immigrants and as immigrants, we stick to it. We stick to our own knitting. We stay together and you know, we figure it out on our own because we did these, we did the impossible already and we haven't lost that rugged individualism.
Domenic Cortese (28:33.154)
Amen.
Michael Palumbos (28:53.038)
So to be coachable and to say, know, hey, help me out with this, kudos to you, hats off.
Domenic Cortese (29:00.738)
Yeah, thank you. Yeah. So yeah, that was probably the biggest learning curve was just realizing that you need help.
Michael Palumbos (29:10.094)
Great. So fast forward a little bit further. When did you start bringing kids into the business? When did they start showing an interest in the business? How did you integrate those things and make that an opportunity? And how did you balance the opportunity, because you had gone through this thing with your cousin, the opportunity versus you must do this versus it's available to you?
Domenic Cortese (29:40.302)
First of all, their mother and I, Diane and I raised them with the idea that nothing would ever be handed to them. And that's basically how I was raised. You earned everything that you had. My father was very frugal with us. so with that in mind, the idea is that, why don't you think about coming into the company? But we started in the same way I did. They worked summers.
Domenic Cortese (30:06.014)
At that point now we had the fledgling remodeling division and it was you know into more sophisticated projects and we had skilled carpenters working for us and so both the boys, Phil and Nick, over all the years they worked as summers, so high school college, they both became master carpenters in that time frame and they absolutely fell in love with the craft. Now mind you,
Domenic Cortese (30:35.502)
They also went to college, as I mentioned, were a Canisius family. They have business management degrees from Canisius. And I always said they majored in business management and they minored in carpentry because as they were going through school, they ended up working in the field every summer or every time we had a break from school. And they absolutely fell in love with it. So after college, I said to both of them, I think,
Domenic Cortese (31:04.578)
The mistake I made is I never worked anywhere else. I would suggest that both of you think about, was staggered ahead of Nick. I would suggest that you work somewhere else for a while. They both said to me, why? We love it. So I said, OK, but I don't want to say I told you so that when you have regrets. Because that was the biggest thing I wanted to avoid from them.
Domenic Cortese (31:33.702)
that I didn't want them to any regrets, for, for the mistake that I made, which was always doubting the decision I made. Right. So, yeah. So. So they graduate from college. They start working in the field. Michelle's story is coming a little bit later because here's a little bit different than the boys. and I left them in the field for a couple of years.
Domenic Cortese (32:02.67)
Domenic Cortese (32:03.25)
until the point where I started to realize that I was wasting their skill in terms of their schooling. And we started to need more management staff in the office. So one by one, Phil first, then Nick, they came in inside to help run the company. the youngest of the three, also went to Kinesis, also has a business degree.
Domenic Cortese (32:33.086)
Of course, obviously being female, where was she going to fit in the field side of the equation, right? Now mind you, I would have gladly given her a chance, although she didn't have any interest in that. So she went right out of college to work for a company where she learned office management. In fact, she became the office manager of that company. When that company closed, moved out of Buffalo, she was without a job. And I said, well, perfect timing because
Domenic Cortese (33:03.01)
guess what, you're going to be the new office manager for us if you want to do that. Of course, that was seamless for her to walk in. She since went on after that, after that beginning, to get her certification in interior design. So now she fits that category for our customers where she takes them through the selection process and helps them make all their choices for interior finishes. So.
Domenic Cortese (33:31.722)
It was amazing, Mike. I didn't orchestrate any of this. I didn't mandate any of it. It was, I think, God's interference that made it all come together as neatly and as cleanly and as succinctly as it did, having the third generation entrenched the way they are.
Michael Palumbos (33:53.55)
Again, want to point something out. They are technically third generation. They act as if second generation. And here's where that difference comes from for me. And it's funny, this is just over this weekend. I've had this conversation in my head. I have to get this data out there so people can see it. But the three of them all coming from the same household.
Michael Palumbos (34:22.306)
And so they have the same values. And that usually is where the second generation is coming from. And just because somebody's third generation, they still could have the benefits of still being second generation. And they don't have the level, they won't have the same level of complexity as that cousin generation or the cousin consortium where you're growing up in different households. You and your cousin could have been there as you know what I mean? Cause it was automatically the way that the founders were brothers.
Michael Palumbos (34:52.363)
So that was almost like second generation starting it. It's a really interesting story when you start to look and pull this stuff apart from family, you know, dynamic side and family governance side. What are you doing as mom and dad to help make sure that your three beautiful children can make decisions together? How is that working through and how are you planting those seeds?
Domenic Cortese (35:22.318)
So now, yeah, now you've got a triumvirate ready to take over as leadership. I'm 68. I'm always going to be around, but I'm letting them kind of ply their trade on being involved with some of the big decisions. And I sit back and I watch how they interact with each other, which is largely very healthy. The problem we have had and continue to have is that they're siblings.
Domenic Cortese (35:52.782)
And having siblings be co-owners, by the way, bringing you right up to date with the ownership side, I've gifted now over the years, all three of them are equal. We're 25 % owners now each. So they're equal to me in terms of ownership now. Again, we gifted that. so now they're all equally involved as far as ownership goes.
Domenic Cortese (36:22.478)
Okay. We also did the same thing with our building. We built a new building four years ago and I have them each sign personally for their 25 % liability for the mortgage. So yes, the tribulations and the challenges now is having them realize and I talk about this with them all the time that when they're in this building, their first connection with their brother and sister is business partner.
Domenic Cortese (36:53.174)
not sibling, because they confuse the two. And they talk to each other like siblings and not business partners. So it leads to, frankly, it leads to arguments sometimes, it leads to personal issues over stupid things that are really not even business related sometimes. And it just speaks of how they have to control their inner dynamics of making sure that when they're in the business that they're speaking
Domenic Cortese (37:23.027)
like a business owner and not a brother and sister.
Michael Palumbos (37:27.63)
So now I'm gonna dive a little technical. Is there a buy-sell agreement between family members? And has it been tested and tested and retested to go as deep as it possibly can? Here's the question I ask people. Are you positive that the document you all signed is the best document for you 10, 15 years from now? If you ever needed it.
Domenic Cortese (37:36.781)
Yes.
Domenic Cortese (37:53.88)
Right
Domenic Cortese (37:54.05)
now I can only say yes. mean, I haven't, it hasn't been tested, you know, beyond, you know, beyond the initial intent, which is to protect each other. And we did make a pact that, that spouses partners would not be allowed to enter the business, which I think is a healthy, a healthy move. We have, however, come up with a plan for grandchildren.
Domenic Cortese (38:23.862)
And again, the model is going to be the same. They're going to work their way through and start at the bottom. And literally the most menial task. My oldest grandson's 14. So same age as when I started. And he was in here cleaning toilets the other day. So that's the approach we're taking with the grandchildren.
Michael Palumbos (38:47.95)
Good for you. it's, look, it doesn't matter what the answer is. The good news is you're talking about it. You're putting those pieces out there. And it's funny, I'm gonna recommend a book to you. I don't know if you've ever heard Every Family's Business. It's a little book by a guy named Tom Deans. And he has the 100%, 180 degree flip from you.
Michael Palumbos (39:15.916)
what his belief, and it's just a belief, is that every generation, you should sell the business. And that protects the family's wealth, and that if the next generation wants to buy it, that's they put their skin in the game and move forward, but there's no gifting, so that we're always protecting the asset. And I think from my perspective, because you've got the other side of things and how you've been doing things for generations,
Michael Palumbos (39:44.278)
I think you'd find it an interesting read. But there's questions that he says the family needs to be discussing at least once a year, if not twice a year. I think that regardless of how you pass the business, those questions I think would be really helpful. It's a little simple book. It's a parable. you're reading a story of two families doing it differently, meet on an airplane kind of a thing. And it's like,
Michael Palumbos (40:14.528)
Again, I want to say hats off to your family for communicating and talking about this stuff. And then, you know, coming up with rules with how things are going to be for the future. My gut says that if, you know, you're totally out of the picture, kids are doing their own things and something changes where, you know, we need to change for spouses to be in because, you know, I have a granddaughter who's not interested.
Michael Palumbos (40:43.992)
but her son comes from a construction business background and wants to come into the business, how do we make this all work? But you do that through conversation.
Domenic Cortese (40:53.71)
All right. All right. Well said. Well said.
Michael Palumbos (40:57.706)
What keeps you up at night today?
Domenic Cortese (41:02.21)
Believe it or not, not much. You know, we've got, you know, our work ethic here in our culture here, I think are so well, well refined and well organized that I feel as though, you know, I always felt like the plate juggler as it going back to when I ran the whole place by myself, you know, there was always a plate ready to wobble and ready to fall.
Domenic Cortese (41:32.134)
And I think about that analogy all the time, are all of our plates spinning? And right now, I feel confident about saying that all our plates are spinning. And it's because I got far away from my father's mentality. And we have very niche specialists within our company that are administrating to its vitality.
Domenic Cortese (41:58.636)
and preserving our legacy and preserving our good name and making sure our quality standards are high. So those are the things you worry about, right? And those are things I don't have to worry about because we have the right people in place.
Michael Palumbos (42:11.042)
Good for you.
Michael Palumbos (42:16.738)
three years from now.
Michael Palumbos (42:20.182)
What are you hoping for? You're 72 years old, 71 years old. Sorry, I didn't want to pre-age you. It's three years from now. What is the plan looking like over the next three years? And how do know if you look back that it went?
Domenic Cortese (42:36.27)
So believe it or not, the plan for three years from now is basically the plan I've been functioning with over the last several years. Actually COVID got in the way. Their mother and I are just booking as many trips as we can. And right now we're three deep on the trip planning. And that's going to be my retirement is just travel.
Domenic Cortese (43:05.432)
be away from the day to day, which obviously then immerses them in the minutia of everything that I've done for all the years, which is great, because that's the only way you can really learn it.
Michael Palumbos (43:16.844)
Love it. Your planning. Talk about, you know, the succession plan, the transition plan, you utilize gifting there, but you're in the same position as both your father and your uncle. What was that mindset as you were growing your business? How did you, you know, was it their example or was something else that made you say, gotta make, the business is there for me to get money out of.
Michael Palumbos (43:42.582)
and build my personal stuff. So many times I see people just constantly reinvesting in the business, but for generations now, you're using the business as an engine to fund your personal wealth.
Domenic Cortese (43:55.552)
Exactly, exactly. So we did a life estate for the house and and then all of our assets are are in that. So there's a a document that's been created by our attorney. So, you know, really, their mother and I are just, you know, going to be operating on the premise that we have Social Security income. We have the company's income and we did sell all the properties that we I mentioned. So we have.
Domenic Cortese (44:24.148)
we have that as a nest egg as well. And frankly, know what, Mike, how much do you really need? You know, I mean, you basically can, you know, do whatever you want and buy whatever you want. And what else do you need other than to keep the whole legacy alive as healthy as it can be.
Michael Palumbos (44:43.662)
Thank you. That's awesome. Again, hats off because so many times I see where they have to have, the owner has to have money out of the business to get themselves out of it because they have not been funding the 401k or their personal wealth or the real estate side of things and they're just looking at it and saying, okay, how am going to do this?
Michael Palumbos (45:09.486)
So you kept your fingers on the pulse of what your needs and your wife's needs were. So at the end of the day, that's the foundation is are you okay? Because if you're not okay, it would be really hard to do any transition.
Domenic Cortese (45:21.632)
Exactly. That's very well said.
Michael Palumbos (45:24.686)
Michael Palumbos (45:25.586)
Michael Palumbos (45:28.14)
talk about, is there any non-family leaders that when you're making leadership decisions, are there any non-family people that are involved in big decisions within the business today?
Domenic Cortese (45:41.642)
Not not not family in terms of business decisions, but we are reliant on non family for key key positions within the company. And you know that gets into the whole issue of hiring right and making sure you've got somebody that's buying into the value structure and the whole idea of you know what we're trying to do long term.
Domenic Cortese (46:10.904)
And we just went through replacing our controller, which was arduous. So that's the kind of thing I'm talking about. Our key other people would be our chief project manager, very vital position. Our lead estimator, very vital position. Those are all non-family people. Yeah.
Michael Palumbos (46:32.91)
You did mention this before and I heard you talking about the next generation. How many grandkids do you have already? Hey, oh, so you've got a full slate coming to board. This is, go back to what we talked about with the communication. Do each of your kids have children?
Domenic Cortese (46:39.309)
Eight.
Domenic Cortese (46:53.464)
Right, so Phil has three, two girls and a boy. Nick has two boys and Michelle has two girls and a boy. So there's four and four.
Michael Palumbos (47:03.852)
Yeah. So if we look at, as we started the show, we talked about how your father and your uncle trusted each other, came from the same cloth. Then because your cousin, you know, was bought out and stepped out of the business, it was just you. So you were like the founder again. Your kids coming in, our, even though they're third generation, it's going to feel like in all the textbooks, second generation.
Michael Palumbos (47:32.66)
And this transition coming up, this is where grandpa could really, grandma and grandpa could do some really big, meaningful things to help prepare. This is one, I'm gonna, this is mini self-promotion. Go out to our website and I'll send you, I'm gonna send you a link later, but for those listening, find the Grandparent Grandchild Philanthropy Project, an interview that I did with one of our clients where
Michael Palumbos (48:01.528)
Grandma at starting at age it's grandma and grandpa starting at age six and nine Started taking four grandchildren through Dealing with philanthropy not at a big look not big dollar amounts This is just teaching them how to give teaching them how to be great. You're gracious teaching them how to do public speaking Teaching them how did all the little traits that it becomes to be a leader? something that grandma and grandpa
Michael Palumbos (48:30.23)
I love this project. She's the only one that's really done it to this level. I have other clients that do it differently. But you and your wife would get a big kick out of understanding what that looks like, and I'll send that stuff over to you. But I believe, and it's becoming more and more, I'm starting to hear people understand that philanthropy is a sandbox for entrepreneurship. Done at the right age is because they don't realize that, you know,
Michael Palumbos (48:58.744)
they're making a group decision and they're learning how to communicate together. this is, know, the grandparents and grandchildren are on the same side of the fence. The kids don't want to listen to mom and dad. Grandma and grandpa want more time with the grandkids anyways. So if you can put those pieces together and under the radar, start to teach these children what to do. you know, I have lots of ideas around this stuff. I think it is
Michael Palumbos (49:26.764)
the most healthy project that any family business can start and you're just uniquely, you know.
Domenic Cortese (49:34.85)
Yeah, I am hearing you. Yeah. I really buy into what you're saying there. That makes a lot of sense.
Michael Palumbos (49:40.898)
And because they're coming from different households and their spouses that were not part of the Cortese family in that house where your three kids were, there's different values that each of those households are gonna have. And so the philanthropy project helps to get them in tuned at a young age. How old's the youngest? it's perfect. Even at three, they could still be part of the conversations and whatnot.
Domenic Cortese (50:02.254)
Great.
Michael Palumbos (50:09.324)
I'll send this stuff over to you whether you do anything with it as.
Domenic Cortese (50:12.009)
I appreciate that. I really do.
Michael Palumbos (50:14.466)
Okay. I'm assuming that you've been on panels for Cell since you've been there a few years.
Domenic Cortese (50:23.406)
I've mentored ever since I went through the program. By the way, three of Phil, Nick and Michelle went through CEO as well. So we're one of the only families where everybody in the ownership has gone through the program, which I think is invaluable. We all had different clinic objectives and now kind of like a mix of all four of our objectives are what help run this place now.
Domenic Cortese (50:52.278)
Yeah, so yes, I've been involved with CEL pretty much nonstop since I went through the program. And I find it probably one of the most valuable things I ever did is in being a business owner.
Michael Palumbos (51:05.794)
What is some of the advice today that when you're talking to family businesses, are some of the key foundational pieces of advice that you're sharing?
Domenic Cortese (51:15.732)
One thing that we stress heavily with the grandchildren and of course with anybody that we hire and let work here, attitude is everything. And we wanna stay away from entitlement. We wanna make sure that the grandkids earn their place and that they want to be part of the continuation. Because you know how it is, like what I mentioned with my cousin, if it becomes
Domenic Cortese (51:45.3)
erode legacy, well you're going to breed contempt and you're going to breed an erosion.
Michael Palumbos (51:51.47)
Yeah, not everybody is born saying, I want to stick my fingers into the soil or the concrete or the business. thank goodness, because otherwise we'd have no art. We'd have no all of the other things. We'd have no doctors. And we need all of those things coming from all of our resources.
Domenic Cortese (52:11.136)
Exactly right.
Michael Palumbos (52:13.582)
The other piece of that is, know, as we call that the family balance sheet, right? You've got the financial balance sheet, but, you know, what about the intellectual capital of the family where it is nice when we have a doctor in the family and you can ask these questions. It's nice if you have an accountant in the family who just decided, I don't want to be in the business, but I'm going down a different road or, you know, or an artist for that matter.
Domenic Cortese (52:41.984)
Exactly. And you know, not to dwell on anything negative because largely I can sit here and tell you and your audience that it's been a very positive thing. But there's a downside to, you know, living and working virtually, you know, nonstop with your family. Again, I think sometimes it breeds too much familiarity and therefore you're looking for space away from that family, you know, which
Domenic Cortese (53:10.03)
you could think could be a little unhealthy, but yet on the same token, it might be healthy to be able to appreciate what you do have within the circle. You know what I'm saying? there's.
Michael Palumbos (53:21.432)
You might not always want to go on vacation together.
Domenic Cortese (53:24.44)
Well, and we actually do. And it's funny about that because we fund, grandma and I fund the family trip, which we just did in February. And it was amazing. It was amazing experience. Everybody had a great time. One other thing I got to mention in this regard, thank God for my wife and her dedication to the grandchildren because she's kept them, the eight of them together as a unit.
Domenic Cortese (53:52.766)
And they basically are growing up as if they're siblings, which I think is awesome because they're so well connected and well immersed with each other. They're very close and they do everything together as a unit, which I think is a very great testimony. And I might actually help them come together for the next generation too. Yeah.
Michael Palumbos (54:18.125)
percent.
Michael Palumbos (54:20.884)
If you, any part, anything that we haven't talked about that you think we should be talking about.
Domenic Cortese (54:27.468)
I think, well, just to reiterate, I think a family business demise is largely fed by entitlement. And I think that any family business that really wants to be able to preserve their legacy, it's hard sometimes to be able to say, no, you're going to start at the bottom and you're going to earn nothing in the beginning and you'll earn more as you develop more skill. I just think that that's essential.
Domenic Cortese (54:57.198)
for any business.
Michael Palumbos (55:00.174)
100%, not just family business, it's just that it's hard as a family because sometimes somebody doesn't have the same level of drive that their sibling does or really doesn't want to be there but doesn't want to disappoint mom and dad. And so that's where those things get really tricky. That's where I go back to that book and the six or 12 questions that are inside of there to make sure that you're all on the same page. I think it'd be interesting to run a SWOT analysis.
Michael Palumbos (55:29.09)
you know, from your perspective, and then looking at a swap perspective, you know, from each of your children to say, are they looking at and what are they thinking of as the strengths, weaknesses, opportunities and threats of the business? That's a unique exercise that I think is really healthy to do. And then it's, you know, the old question of, do you want to be here? And just recommitting annually to, are you okay?
Michael Palumbos (55:56.19)
Where is your health around the business? Where is your mental health around this business? And if you don't want to be here, what would you like to be doing and how can we support you? I just think that those are fair and healthy questions, not just to assume, you know.
Domenic Cortese (56:11.98)
Great.
Michael Palumbos (56:14.248)
Dominic, I need to tell you, thank you. You guys are doing a fabulous job in how you've done things. It's just a great story along the way. I love the level of communication that you have. I love that your wife is in there with the grandkids right now. When I send you these links later today, you're gonna be like, my gosh. mean, you'll watch it with your wife because you'll be like, my goodness, we're so doing this. And you can do, this is not about, you know,
Michael Palumbos (56:43.672)
Thousands of dollars think about it, you know at three four at five years old 50 bucks is like everything and You know, so maybe as they get older you could do a little bit more But it doesn't you know, even a 16 year old 14 year old giving away 500 bucks, know 250 bucks. It's plenty so it's not about the dollar amounts It's about the structure of all these other pieces and how do you how do you?
Domenic Cortese (57:09.262)
On that point Mike, have you ever heard of the butterfly effect?
Michael Palumbos (57:13.006)
I have not. I mean, I know what the butterfly effect is, but I don't know it is a foundation or a charity.
Domenic Cortese (57:18.402)
So basically, it's an idea more than anything where you give a student, a child, know, $50, let's say, and you put no real requirements on it other than go do something good. And, you know, you'll see kids that'll invest the $50, it'll turn into $250. You know, maybe you have something manufactured that they sell.
Domenic Cortese (57:45.742)
which could be endless in terms of its return on the investment. So it's idea of planting a seed and then having it grow and grow in possibly new directions that no one thought of.
Michael Palumbos (58:00.282)
And I think that's what this is all about. It's also, you it's, you watch the video because you're going to see these grandkids talk about things that they were, you know, now they're nine and 12. So they started, it's been a three year project, four years, going into 13. And they just talk differently than a lot of the kids that are stuck to their screen all the time. And I just think there's some power to that.
Domenic Cortese (58:28.526)
I can't wait to see it.
Michael Palumbos (58:30.766)
All right. Well, thank you for your time. Appreciate you sharing your family's story. Dominic Cortese from Cortese Construction Services in Buffalo, New York. My name's Michael Palumbos. You've been listening to the Family Biz Show. I'm with Family Wealth and Legacy in Rochester, New York. Thank you, everybody, for listening. Really appreciate you and look forward to having you on the next episode. Take care, everybody.
