Ep631: Susan Frew – Trust but Verify All Your Employees

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning in our community. We know that to win in investing, you must take risks but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives. And that mission has led me to create the become a better investor community where you get access to the tools you need to create, grow, and protect your wealth go to my worst investment ever.com right now to claim your spot fellow risk takers. This is your worst podcast hosts Andrew Stotz, from a Stotz Academy, and I'm here with featured guests, Susan Frew. Susan, are you ready to join the mission?

Susan Frew 00:46
I am, bring it on.

Andrew Stotz 00:49
Here it comes. Well, let me introduce you to the audience. Susan is a renowned, entertaining and value driven speaker and thought leader. She has coached hundreds of companies and nonprofits to great success. Susan and her husband William grew their trade business by 535%. In just one year by creatively using seven deceptively simple tools coupled with some good old fashioned elbow grease. As a result, Sunshine home services now boasts a coveted spot on the Inc 5000 list is one of the Inc best places to work. Susan, take a minute and tell us about the unique value that you bring to this wonderful world.

Susan Frew 01:34
Well, we came at this business a little bit different than I think many. I was a business coach, I just come back from an international assignment with AT and T and I bought a business coaching franchise. And through that experience, I met my husband, and he was in New Home plumbing. So I thought that after we had just gone through a horrible recession that we should start a service plumbing business. And we moved to the Denver market and we started our company. And our big claim to fame is sending a thank you note to everyone every single time, we would send brownies if it was a larger purchase. And they were not Colorado brownies, they were just regular brownies. And we would send gifts we would send booboo flowers if we messed up. And we really got a reputation in the women market for being a little bit different than the average home services company. And that is something that's really taken us you know, from my husband and a truck to having a formidable sized company that we're bringing forward into the future. It's interesting,

Andrew Stotz 02:39
you know, what you're talking about is a very simple thing. I mean, come on, how can such a simple thing as sending messages and gifts and notes and brownies? And you know, all that first question is How could such a simple thing have such a massive impact? And second question is, if it's so simple and powerful, why isn't everybody doing it?

Susan Frew 03:01
I think it's time and people feel oh, you know, that's too expensive. I don't want to do that. But if you look at the lifetime value of a customer in the plumbing or HVAC space, I mean, it's significant. I mean, if I had that same client for 20 years, they could buy two furnaces, they could buy two water heaters, they could buy four garbage disposals. I mean, it adds up, and they can refer us to a lot of their friends and family.

Andrew Stotz 03:28
Yeah, I mean, there's nothing like being treated, you know, in a, in a special sort of way, I guess, friends, you know, friends for life, customers for life, you know, lifetime value is critical. Tell us, you know, you mentioned about seven simple tools, you also talk about your speaking maybe you can just give us a little bit of a hints about what you're doing on the speaking front.

Susan Frew 03:51
Well, I mainly speak to trade convention. So I speak to plumbing, heating, air conditioning, roofing. I mean, you name it, I've coached 19 different trades. So that really lays the foundation for a tom. But lately, what I'm speaking about is this, Andrew, because this is something that is hugely troublesome here in the United States, and probably around the world is finding good workers. And I have a new keynote called Rock Star recruiting for a new generation. And I have come up with these very simple tools that I have been using. I've hired five people in the last six weeks, using my little special secret sauce. And that is something that I'm teaching people how to do. I mean, not my competitors, but everyone else.

Andrew Stotz 04:44
And, you know, it's interesting, because even over here in Thailand, we have you know, it's just a perennial problem for everybody to figure out how do we get better and better people into our business? And one of the little tricks that I've done over the years is well Oh, I didn't do it for the purposes of hiring, but I did it because I'm a teacher. I love teaching. So I started a course where my expertise is in valuation of companies. So I started a course called the valuation masterclass. And then later we started the valuation masterclass boot camp. And for the boot camp, I always where am I? There, ha. And for those listeners out there, I'm putting on my drill sergeant hand, it's a tough six week program, we have about a 30%, you know, dropout rate, but the 70% that survive, they've got the skills in valuation, they got the determination. And imagine, I can hire any one of those if I have a position available, and I can recommend those people to my corporate sponsors. So I see a lot of value in doing like competitions and doing like courses and training because you get to see him kind of from the inside. What do you think about that in relation to what you're doing?

Susan Frew 05:59
Well, my husband does work at the trade school. So that's wonderful. And he teaches the first year, it's now granted, a smaller company like ours probably wouldn't be interested in hiring the first years. But I, you know, a few years down the line, we hope that they think about us if they're looking to go into the service world, but something that I have learned is using video, because we are attracting a new and different generation of worker that wants to be connected more personally. And in a deeper relationship. They don't want to work for a company, they want to work for a human being that they like, know and trust. And so I have been sending personalized videos when I see a great resume and making videos about what it's like to work for our company and what's what's it like here and what we're looking for. And then I doing video interviews. So we're really just trying to take it take a checkup. Right, I always believed that tech first and people second out, you know, when we're trying to find a solution.

Andrew Stotz 06:58
That's interesting. I mean, we do that with our scholarship applications. We always have them submit videos so we can kind of get a feeling. And then and then go to the next step. So you have videos is interesting. You said something that really made me kind of sad, it made me think because when I worked in Los Angeles, I worked for Pepsi. And when people asked me where do you work, you work for Pepsi. But what I learned in Thailand is that people don't work for companies, they work for people. And so if you ask someone who you work for, they say, Well, I work for, you know, so and so. And they don't connect, you know, what they connect with is people. And so here you're saying that that's what the new generation is, you know, looking for, and I guess all generations probably look for that. But maybe even more, so there's less connection in this world. So why not at least find a boss that you feel connected with?

Susan Frew 07:46
I went out and I interviewed a lot of young people. And I asked them, what do they want in a boss, what's important to them and an employer. And those were some of the things that I heard they wanted a personal connection, they wanted to be known for who they are, they wanted to work for a socially responsible company. They wanted to work for a company that had promised for a promotion they wanted. And this is an interesting one, which I think some of the older audiences that I speak with are a little perplexed by this, they wanted mental health to be treated like a real thing. And to be treated just like any other illness or problem where I may have to call out on Monday because I need a mental health day and they don't want to be ridiculed. And they don't want that to be you know, marked against them in any way. And they're very, very open about that where I think older generations really kept that kind of information much closer to the vest.

Andrew Stotz 08:42
Yeah, such huge changes going on in the workforce for sure. Well, what's the best way for people to connect with you where's the best place for them to go?

Susan Frew 08:53
The best place to find me is on LinkedIn and it's Susan through fr EE W to best way to find me or Susan at Susan Frou speaks.com is another way.

Andrew Stotz 09:04
Great. Well, we'll have links to that in the show notes, ladies and gentlemen, so you can learn more. Well. Now, Susan, it's time to share your worst investment. Since no buddy goes into their worst investment thinking it will be tell us a bit about the circumstances leading up to it then tell us your story.

Susan Frew 09:21
Well, I as I mentioned, I left my at&t assignment. I was in the Caribbean for two years. So I was in Grenada and St. Vincent and the Grenadines. And when I came back I bought a business coaching franchise. Actually an Australia based business coaching franchise in Breckenridge, Colorado, started coaching and met my husband through that we moved down to Denver and I was still coaching and speaking and he was starting this little plumbing company using my office. And you know, all of a sudden we started growing and growing and growing. And I left my coaching practice I'd become sick around that time too. So it just wasn't wasn't in the cards for me to continue coaching at that point. So we started the plumbing company and things were, like rocket ship launching. And we were undercapitalized. And, you know, there's no shame in that in most businesses are we were undercapitalized. We were bootstrapping, I joke that I was sunshine, Home Services, sugar mama. And sometimes I still am. And so what started happening is I started getting busier and busier, was speaking again. And I really, that's what I love to do, I love to be on a stage, I love to be delivering a Keynote or a breakout and, and working with people out in the world and traveling. And that's, that's what lights me up. And so I started doing that. And I left my company in the hands of an employee, that really wasn't the best employee idea ever, you know, she had passed all the background checks, but that was about it. And as I was traveling and traveling, and you know, this has a lot to do, and I'm gonna take full responsibility. The next part of this is due to my ego, right, because I was the boss, and I could do what I want. And I could not add not delegate things to employees, I could advocate and dump all the crap I didn't want to do on employees, which is what I did. And of course, I didn't have the proper supervision in place. And I didn't have the, you know, trust but verify model. And my employee was allowed to get mail and they were allowed to use my credit card. So they had access to my bank accounts. And to all of our accounts all over like our Tiger accounts and auto repair, you name it, tools. So one day, I'm home and I had dismissed the imply we had had a blow up a few months before this happened. And I was really starting to peel back the onion of what would have happened. And I get a knock at the door on a Saturday. And it's the postman with a letter saying that I owe the IRS Internal Revenue Service for those of you who are outside of the US $498,000 In fact, taxes and fees. And then I got a $209,000 fine for not supervising my employee. So how the heck could that happen? Right? I was a business coach. I'm very student financials I've taught financials. But this is what she was doing. She was I put her on a Pay Plan, which I thought was genius at the time that she would get a bonus every month if she could stay on budget. Well, her way of staying on budget was to short the bills, not not pay the bills, but short them. So if we owe the IRS on Friday, 5000 she paid for if we owed four, she paid three, so on and so forth all the way down the line. And she didn't realize though at the end of that period, it would take about 18 months for the IRS to match up the W choose with all of the 941 deposits and signature sheets and I would submit it without with my signature on them that all of that would catch up. So that is what happened. Then, peeling back the onion even further. We figured we found out that she had used our tire account and Lockhart tires for everyone in her family's cars. She had taken one of our gas cards because it was her job to study the gas bill every month, which is a big project. We have a lot of vehicles and that's always an area for theft in the trades where you know you can fill up somebody else's car while you're filling up your own right. And she bought tools at the local parts store on our account. So it was just nonstop she ended up getting charged with six felonies during the pandemic, which she didn't get any jail time or anything. She just had to pay me $100 a month. But we were a million dollars in debt. Oh my god. Yes. Yes. So humiliatingly. Well, first of all, I should wrap up, because if I'm going to be really honest and blame this on my ego, I need to share with you what happened next. You know, we all heard Brene Brown's fabulous TED Talk about being vulnerable, right? Well, I went in and told my team, guess what, guys, we're a million dollars in debt, but we're gonna get through this. Ah, yeah, bad move. She later said, Hey, don't be so vulnerable, that you're gonna like hurt yourself and others, like that part was left out in the beginning. So I lost 10 employees almost right away. And then I realized that the big facility that we had the big ego facility with a lighted sign on the side of the highway that had to go and we moved. We moved the entire office operations into my house into the basement, and then we moved our shop into this little small shop down the down the road. And our revenue dropped significantly, but our AI was able to make us profitable again. And we were able to dig out over $750,000. In the last two years, it's actually getting closer than we're getting I, I'm gonna run my numbers here pretty soon, with a grand total, but we're getting really close to being completely paid off of everything that had been transpired during that time. And, you know, it's still a struggle, right? Like, I'm not ready to sell this company. Because you know, being a, you know, valuation expert, that my EBIT, dA is not where it needs to be if you're in that much day, you know, I actually have a new word for EBIT that I call an EBIT, exit before it tanks. That's rubbish. That's what I should have. So, my focus in the next five years, we're doing some really disruptive things in our industry, we have put all of our prices on the website, my competitors are going to hate that. And we're adding more and more every single month. And that's just the way we're gonna run. We're gonna run full transparency, you want it out, you wake up in the middle of night, you have no heat, you're freaking out. We don't want you to have anxiety, please look on our website, put in your address, we will get the dimensions from Zillow. And we will give you a quote, right. And you know, if that works for you, then we'll come out on Monday and we will conduct our service call. But that's, that's our story. And then we're offline.

Andrew Stotz 16:46
Wow. And was there a day that you can remember that was like the worst day where you just like kind of it all caved in on you talking to your husband or you were alone? Or what was the day?

Susan Frew 17:01
Yeah, so we had belong to this peer group with the plumbing Association, and we would meet in different cities around the country, each quarter. And we would go to different people's shops and whoever shop that, you know, we went to, they had to host the meeting, they had to buy the food. They had to you know, they had to put on the show for the rest of the people. Well, everything had just hit the fan about a week before. We had no money. Nothing, we were busted. And we couldn't afford food. We couldn't afford the hotel room that we rented. We couldn't have at our office, because you know, we're already behind on rent. And it was so humiliating. Yeah. And then I think the second batch of humiliation, if you will, is I wrote a letter to every single one of my vendors. And I told them, I know I owe you money. And you know, pretty much you must think I'm an idiot that I didn't already know that. But I didn't. And now I know. And so I promise you to my dying day, I will pay you back. And every Friday, we would have fun Friday payday. And we would send whatever money I could to each of these people. And I had all of these slip charts all around in my cubicle in the basement. And I would chalk off that I was paid this 120 $5.50 100 Whatever I had, they would get Yep. And every single vendor was phenomenal except for one. And that's just one we'll never use again.

Andrew Stotz 18:41
So well, it's a good lesson. That I'll come to my lessons I take away but let's review. How would you summarize the lessons that you learned from this experience?

Susan Frew 18:52
Um, don't take yourself too seriously. You need to trust but verify every single employee, you need to find metrics of accountability. Please do not advocate to someone and dump it on someone else to do your work. You need to have an accountability process in place. Definitely don't take yourself too seriously and get your own mail. Because if I had been getting my mail, this wouldn't happen.

Andrew Stotz 19:20
You would have seen it.

Susan Frew 19:22
I also think you need to always have an outside bookkeeper, who is really a very strong taskmaster and can really dig in and has no emotional attachment to your office manager, whoever's doing your internal accounting so that they can you know, scratch down in there and find any variances.

Andrew Stotz 19:45
Maybe I'll share some of the things that I took away. The first thing is that I've talked to so many people who have lost money in startup companies and running their businesses and I always say if there's one piece of advice for anybody that's doing their own business it has. It is the following, get on time and accurate monthly financial statements. And every single month without fail, and don't let anybody like an accountant may say, Well, you don't need that as much, you know, just a revenue thing or what? No, no, no. Because actually, in many cases, if you have a sizable business, you're gonna have to do accrual accounting in the accountant will do that. And then you'll be able to see that okay, wait a minute, hold on, we paid 5000 to the IRS, but here, there's an accrual or there's a liability building up here. What's that? Oh, wait a minute, that's, and that's another 100,000 that we didn't pay. So that is one big thing. I would say. The second thing that I would say is, I remember when I made a mistake in my career at one point in, it was a difficult time. And I talked to my mom and dad. And you know, I felt really ashamed about it. And I had apologized to the people that were involved with it at the company and all of that stuff. And, you know, it was just it was difficult. And I was like, bad, how am I gonna, like face, the community or whatever. And he said, You don't need to say anything. You've already said, you know, you're wrong in you, you're sorry, to the people involved. You've talked to us about it, and therefore get on with it, and get on with what you got to do. And so the lesson that I learned is, it's very important to be vulnerable, but you know, be vulnerable with a small group of people that you trust, and then get out there. And you know, and that doesn't mean that I would avoid talking about it. If I was asked, you know, I'm not trying to run away, but it just that you don't need to go out there and share everything with everybody. And then the last thing that I just want to say is I wrote this down, when you're speaking, profit is glorious.

Susan Frew 22:04
Yeah, this is true. Or exit before it tanks, you know, so one of those.

Andrew Stotz 22:11
Yeah, I just think that, you know, ultimately, profit solves so many problems. And so for everyone out there that's struggling, focus on continuing to build the profit in your business. All right. Now, let me ask you, based upon what you learned from this story, and what you continue to learn, what action would you recommend our listeners take to avoid suffering the same fate?

Susan Frew 22:38
Well, I knew my books pretty well. And I'm in QuickBooks a lot, but you can still monkey around with them. What I would say is really have an understanding of your financials. I mean, I even recommend more than monthly, like if you can be in there every day, and looking at your transactions. I mean, and plumbing and heating, we have so many transactions, right? You got 10 trucks running 10, three, three jobs a day. And that's a lot. So really watching that money. And, and also being very humble with your team. I mean, I have now put my desk, I'm in my home studio here, but I have a desk in the middle of our plumbing shop, right. And that is where I am most effective. Because I can hear I can feel it, I can smell it, I can understand what's going on. I can catch little annoyances before they become big annoyances. And it's just been a remarkable experience for me, which I never expected.

Andrew Stotz 23:41
Fantastic. What's a resource of either something of yourself that you've got or anything else that's inspired you or helped you that you'd like to recommend to the audience,

Susan Frew 23:52
I'm going to recommend self care. And I know that sounds really overused, okay, and everyone has a different level of what self care means. But if you're going to go out there and run a company, and you have employees that are counting on you, and you know, families that are counting on you, you need to be in a one shape. And that does not mean you know, eating pizza at 11 o'clock at night and never going to the gym or getting some fresh air, whatever it is, you need to make time for that because it's going to make your focus better, it's going to make you stronger, it will give you better opportunity to make better decisions. So don't let that slide because that really is the fuel of the engine that you need to be a peak performer.

Andrew Stotz 24:36
Great advice. Well, last question, what's your number one goal for the next 12 months?

Susan Frew 24:42
My number one goal for the next 12 months is you know I recently in the last 90 days have come back full force to run sunshine. And that's what I put my desk in the middle of the shop. And I have not done that in a number of years. My husband was in charge he doesn't really love that part of the business and, and that's fine, everyone's got to do their thing. He needs to be him, I'm gonna be me you can't turn zebras into llamas. So for me the next five years, starting with next year is we are looking for the exit at the end, and having a nice big EBA healthy, big, big EBA number, serving our clients first and doing an amazing job because that's what's going to drop to the bottom line. And really being involved in every facet of the business and driving us to where we need to be

Andrew Stotz 25:35
exciting. Well listeners, there you have it another story of loss to keep you winning. If you haven't yet joined the become a better investor community just go to my worst investment ever.com right now to claim your spot. As we conclude, Susan, I want to thank you again for joining our mission and on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Susan Frew 26:03
You know, make sure that you surround yourself with really loving, supportive people that you can trust because you need them. And you do not need to be dumping all your problems. Have your employees find that really coveted group of experts that are your friends, maybe they're your family, you know, mentors, and you got to keep them close because those are the people who are going to get you to where you need to go.

Andrew Stotz 26:28
Beautiful and that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. This is your worst podcast host saying I'll see you on the upside.