Raising your successor Featured

9:54am EDT July 22, 2002

Family succession guru Dr. Cindy Iannarelli grew up in a family business. Now she’s building a multifaceted company that teaches others about the importance of the experience. In this special interview, she tells family business owners how to begin.

By Daniel Bates

Dr. Cindy Iannarelli, remembers vividly the times her Italian-born father would take the family out to dinner in one of his dry-cleaning trucks.

“No matter where we were, whenever he saw another dry cleaner, he would stop, look in the window, and he would always have us count the clothes on the racks,” says Iannarelli, who is known to most around her simply as Dr. Cindy. “Then he would stand back, look at the sign, look to see if the windows were clean, and look to see how far the nearest grocery store was, and I’d be right there hanging onto him.

“He would then begin a discussion in the truck,” she adds, “on how much volume that dry cleaner was doing and whether we should open one of our places nearby. I swear, to this day, I’m an expert on site location analysis because of that.”

So it went for a young Pittsburgh girl who grew up in her father’s growing dry-cleaning and real estate businesses and who, with her brother, eventually helped their mother take over the family businesses when their father got sick and died.

The impact of that childhood experience, she says, didn’t hit her until one day while she was attending a class in post-graduate pharmacy school, where she had hoped to get a pharmacy degree before going on to medical school.

“I didn’t even realize I knew anything about business until one of my professors, whom I credit with much of my success today, brought it to my attention,” she says. “His class was pharmacy administration, which meant he taught how to open pharmacies. And of course, when I got into that class, I realized you open pharmacies the same way you open dry cleaners.

“I was whizzing through this class — location, insurance, customers, employees — I just knew everything,” she continues. “That’s when he said to me, ‘Cin, you know all this stuff because you already had the course. You should focus on that. I think you’d be a good pharmacist, and I think you’d be a very good doctor, but I think you’d be an excellent business woman.’”

Dr. Cindy went on to earn MBA and doctoral degrees. Today, her brother and his family run the dry-cleaning company, known as Fi-Del Cleaners, and Dr. Cindy and her family manage the real estate portion of the business.

But Dr. Cindy didn’t stop there with her lifelong entrepreneurial training. She has converted her experience and studies into a burgeoning family business consulting firm aimed at helping others with succession issues. In working with business owners and their families, she says she came to realize that many owners aren’t doing nearly enough to teach their kids — presumably the business’s next generation — about business and entrepreneurial values. When they do get around to teaching them, it’s often too late.

That’s when Dr. Cindy says she realized she needed to do something about it in a way that would bring her own childhood experience to bear. Her solution: a new company called Business Cents, designed to teach kids as young as 3 years old about business.

Her business is built entirely around the Business Cents brand and a character she created calls Bizbee (because of the industriousness of bees in making wax and honey, she says). Products include specially designed board games, a book called “101 Ways to Give Children Business Cents,” activity workbooks, a guide complete with audio and video tapes for family business owners, a “Bizbee the Business Puppet” toy for kids, entire prepackaged curricula for schools, and even weekly summer camps for kids. And she’s working on the creation of a syndicated TV show around the same theme, which she plans to make the foundation of her business.

Her message, though, remains a simple one, and it’s the subject of this special cover story interview: If you want your family business to survive generation after generation, start teaching your kids early about business, values, honesty — and sacrifice.

SBN: Why did your parents start so early in teaching you about the family business and entrepreneurship in general?

Dr. Cindy: Growing up in my father’s business was more out of necessity than out of any planned training program. My mother says the reason we were in the business with them was because they couldn’t afford baby sitters. And when you look back on those times and those entrepreneurs who started businesses after World War II and into the ’50s, that was pretty much how the children grew up, because they had to pull together all their resources to start the business.

I can remember as early as 4 years old riding on the dry-cleaning trucks and wandering around the dry-cleaning machines. They used to have spray guns that worked on spots. I can remember squirting that spray gun all over, and other fun things — putting your foot on the conveyors and letting the clothes go round and round. And the comical thing is that now, when I take my 4-year-old son to the plant, he goes exactly for the same things.

My father came over from Italy speaking no English and began working for another dry cleaner at night. After he graduated from high school, the other dry cleaner wouldn’t promote him to manager, so he had saved up $500, and he rented a storeroom in Bridgeville. He had no money for dry-cleaning machines or anything, so he just set up a counter to take up the clothes during the day. At night, he contracted with one of his friends to do the dry cleaning. He’d go there and dry clean all night and come back and have the clothes ready the next day.

When you were a kid, what did you think about all of that?

That was kind of before my time, but I heard those stories later, and they were very inspirational to me, because that’s where I began my first lessons in how to be creative in getting those businesses going and how to use your ingenuity a little bit and every resource you have to get them started.

With our children, we’re trying to recount those stories to them. Of course, they’re living now 30-some years later where the business has grown, and now all of those little jobs and those experiences I had just because they couldn’t afford baby sitters — those are all gone because now we can afford baby sitters. And this is what happens in every successful business. There actually become fewer opportunities for the kids to be exposed.

Given where you are today, how important were those experiences in your own entrepreneurial endeavors?

I never thought anything of it — I never even thought of going into business at all until I got to pharmacy school, where one of my professors said to me, “Cin, you have an uncanny business sense.” But I was still only 19 years old and never thought of going into business because my dad wanted us to become professionals.

It wasn’t that he didn’t want us going into this, but he never had a chance to get an education, so, ‘No. 1, get an education because you’re going to have an opportunity that I didn’t.’ And maybe an education would lead to an easier life because all those professionals —his customers were all professionals — he saw them having an easier life.

So he didn’t see himself as an entrepreneur?

He didn’t even know that word. I think he saw himself as self-employed. It wasn’t savvy. I can remember being embarrassed, putting down in school, when they asked what your father did, being self-employed, because all my classmates’ dads worked at U.S. Steel and Gulf Oil and these big companies, and they had expens e accounts and four weeks of vacation. In grade school, [being self-employed] wasn’t in vogue.

Obviously, that’s what you’re looking to change. But what does that mentality do for the region, especially since we seem to be way behind in this whole entrepreneurial view?

The reason I think we’re so behind is that there was so much emphasis placed on the large corporations, and so in my age of children growing up, most of them were in larger corporate homes, so they didn’t have that hands-on entrepreneurial experience.

So that’s what made you embarrassed?

Yeah, way back then. And that didn’t change until I got into college.

But you still didn’t, at that point, have an entrepreneurial excitement that made you want to go into business just like your dad?

Not early on. He passed away, actually, when I was in pharmacy school, so that was a turning point where I had to make a decision about what I was going to do and how I was going to focus. I was 20 then. I was accepted at Pitt to do my MBA and I was accepted at American University in Washington, D.C. I was considering doing the program in D.C., and I’ll never forget one of the executives down there told me, “Cin, you have an option here and you certainly could excel. But if I were you, I would stay home and do my MBA and take over the family business.”

And how did you feel about this, weighing the pharmacy, med school or dry cleaners options?

I know at that time I made the decision because of my feelings for my family and my sense of responsibility, needing to be with my family to do this, versus a personal career choice. So I made the decision to come to Pitt, work in the family business during the day and go to Pitt at night. We had about eight stores at the time.

My father was sick, and we were trying to manage all of this. We were just thinking about how to pay the bills and how to keep it all going. It was very scary because we really didn’t know the back operations of the dry cleaners. My father had taught my brother — he would tell my brother what to do over the phone. Here was this 16, 17-year-old kid now trying to fix these machines and deal with suppliers. My dad used to say, when he was sick, “My head and your hands.”

And my mother was trying to keep the office going and deal with a sick husband. People ask how we got through it, and I look back and think, if we didn’t have a strong family bond, that family foundation, we would have never survived it.

That’s probably why I’m a family business consultant today, because I lived through such horrors which I don’t want anyone else to have to go through, and back then there were no family business consultants.

Family business wasn’t something people

looked up to then anyhow, was it?

In the early ’80s, that’s just when entrepreneurship started to flourish, and everyone advised us to sell the business. In fact, I’ll never forget those salesmen who said to my mother, ‘You should do this, you’re a woman in business. You’re never going to make it because there are no women in dry cleaning. In fact, you should sell it to us.’

My mother says she would have gone down the tubes, but we weren’t going to sell to those guys. I credit them with giving us the strength because we were going to do anything — she was going to show those guys. You could just see the steam coming out of her. But my mother showed them, because she eventually became the first woman president of the state dry-cleaners association.

I also want to say that, if it wasn’t for the family business — we used the family business as an incubator for this new company. I tell my students that, even though they may not like the industry that their family business is in, it’s what they can learn from that business — almost anything is possible to leverage from that business. And business owners don’t seize that opportunity.

At what age are children old enough to understand and appreciate the family business?

We start with them at age 3, and we’ve found through our research that age 3 is when they begin remembering things about the family business. Also, that’s when they have a firm knowledge of money because they know it takes money to buy those toys. And they’re all interested in how to get more money at age 3. Our thought is to give them a foundation of how they can be a producer because they learn very early how to be a consumer.

At age 3, what kinds of things can — and should — family business owners teach their kids?

The first stage is the exposure stage. That runs from ages 3 through 9. That’s the age to expose them. Some great opportunities are to take them to the warehouse. A lot of people used to do this naturally when mothers were home all week, and Saturdays were the day when it was the dad’s turn and the mothers wanted them out of the house. It was a great opportunity because then, the kids got to go to the office on Saturday and run around the warehouse or ride around on the trucks or just check on things. But these days, a lot of business owners don’t do that. They have day care during the week, and Saturdays are a different day now.

Do you think family business owners’ kids are neglected today?

They’re not so much neglected, but they don’t get the same opportunities in the business unless the parents are consciously giving them to them.

Why should business owners even worry about their 3 year olds, especially at such an early age?

Your business is like a classroom. Your child will have so many more life skills that most people aren’t teaching in the classroom. Even at the college level, there’s still controversy as to whether you can teach entrepreneurship because, by the time somebody is 18 or 19 years old, in my estimate, you’ve bypassed the prized opportunity.

When they’re young — pre-aged 12 — they’re ripe in terms of their development. I personally believe children are born entrepreneurial. I believe it’s a human trait, and what we do through our system is we slowly take it out of them by structure — all the way through the MBA program, which I think is the most anti-entrepreneurial thing you could ever do. Really. I’m a professor — I can say that.

What we’ve found is that growing up in a family business absolutely is the best way to pass on entrepreneurial traits. Those kids have the best chance of being our next entrepreneurs. Think of how much further we could be as a nation with more enterprising young people.

In your experience working with family businesses, what do you typically see, relative to how they deal with their kids? Are they missing the opportunity?

There are a couple of different stages. In the very early stage, when people are just starting businesses, if the spouse is involved, there’s normally a better chance the kids will at least get exposed. It’s back to that baby-sitting theory. They don’t have the resources, so they all have to help out. But when those businesses grow, what I find in second- and third-generation family businesses is that there are less and less opportunities.

For instance, in our dry cleaners, I used to sweep the floors. Now we have janitors. I used to make the signs. Now we have a professional sign company. I used to wash the trucks. Now we have a car wash service. As we grew, all of those jobs I did to really help out are filled.

So what are you suggesting for the future for business owners?

Business owners should just follow this method. For those between ages 3 and 9, they should actually make a plan. We actually work with the families to work as a team. So what can the kids do between ages 3 and 4? In our business, we bring them in to do little jobs and grandma supe rvises. If you can give them at least an hour a week, it’s the best method, at least for the little ones. They go with my mother to the bank. They pass out honey at trade shows. They help put together our newsletters.

At that age, it’s exposure; it’s not work. It’s more work to expose them, and that’s why many parents don’t do it. But this is a great opportunity for maybe grandparents or a spouse who isn’t in the business. Someone has to be in charge of the process.

At age 5 or 6, they can move on to more things for, say, two hours. They really want to work. In my company, I pay them [Dr. Cindy’s own son and the four young daughters of her brother] a penny a piece for every newsletter they put together.

They keep track of the pennies and then add up how many they have. It’s amazing, even at that age, how they put two and two together that, the more they work, the more pennies they get. And then we take them to the bank, and they have little bank accounts to start keeping track of what they earn.

As a group, we have them all working together because we already have some properties in trust for them. We want them to be able to function as a team. None of them may want anything to do with our particular businesses, but we know that if they work here, they’ll have a great business sense that will help them in any career they choose.

Our family philosophy is to be stewards for the next generation. We’re trying to build this for them and hopefully they’ll build it for their kids. When you look at successful family businesses in Europe and Asia, you’re in, like, the 12th or 13th generation. That’s the philosophy — that this isn’t ours, we’re just stewards for the next generation.

So when new tenants move into one of our buildings, I have all five wash the windows. Now they make more mess washing the windows, but it’s the idea that they’re all there helping and the feeling they get doing it.

Do they like doing it? Don’t any of them say, “I hate this, I’d rather be out riding my bike?”

Pre-8, you usually don’t get that. What I do get is, “I don’t want to be a team. I want to do it all myself.” You get that nonsharing attitude. We keep reinforcing that you’ve got to be a team, that this is your building and you’ve got to work together.

The other problem I see a lot in very successful businesses is when the owners make enough money where they say, “We have the resources, so why should my kids have to do anything? So the children have no identity and no sense of what they can accomplish because their mothers are saying they basically don’t have to accomplish anything. These are the same children who, if they had creativity or they had innovation, they could do something great. Otherwise, the money can actually destroy their lives.

So what do you say to those business owners?

You try to explain to them that they’re robbing their children of the joy of accomplishment.

What’s the most important thing family business owners need to teach their kids?

I want my kids to know what the word sacrifice means. You can never build a company without knowing what that word means. That’s a hard concept if you’ve never learned it before the age of 12. When you study all of these successful entrepreneurs, most of them became successful because of early sacrifices in their lives.

Why is sacrifice so important?

If you’re going to build a business, it takes sacrifice. It takes hours, it takes resources, it takes giving up something today for something bigger tomorrow. I had a business owner call me recently and ask me to come in a try to teach his 27-year-old son the same business values he has. I told him this: “You should have called me when he was 7.”