Overcoming Setbacks In Business With Susan Frew
When you enter the world of business, you have to be ready to experience setbacks and develop inventive ways to overcome them. We have all read somewhere that good business owners can step away from their business and still have things run smoothly as they envisioned. You’ll know you’re dead wrong when you hear about the sobering experience of Susan Frew, the CEO and CFO of Sunshine Plumbing, Heating & Air, a business coach with Fix This Next, and the author of The Pufferfish Effect. Just when she thought things were doing exceptionally great, Susan found her company being devastated by employee theft. Her experience taught her many lessons about overcoming setbacks in business, which she shares with Bob Roark in this episode. As a bonus, Bob is joined by co-host Marla DiCarlo, the owner and CEO of Raincatcher, the leading business brokerage firm in the US. Susan and Marla have worked with each other and are bound by their passion for helping small businesses overcome adversity and achieve success – something that is of extreme value now as we navigate these difficult times.
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Overcoming Setbacks In Business With Susan Frew
Co-hosted by Marla DiCarlo
We have a special treat. We're going to do a joint hosted podcast. My co-host is Marla DiCarlo. She's a good friend and she's the CEO and Co-owner of Raincatcher located in Denver. Our guest is Susan Frew. She's the CEO and CFO of Sunshine Plumbing, Heating & Air. She’s also a business coach with Fix This Next Advisor. I’m looking forward to it. Thanks for taking the time, Susan. If you would, tell us a little bit about your business and who you serve.
I was a business coach for a long time after a corporate career. I was on an international assignment. When I came back, I became a business coach and coached unintentionally seventeen different trades. Through that, I met my husband who is in the plumbing, heating and air conditioning business. We started our own company called Sunshine Plumbing, Heating & Air. Things were going great. We had massive growth. I started going around speaking about how we grew our company. It was awesome. I wrote a book about all of that. I realized that I had made a very bad hiring decision. While I was traveling, a lot of bad things were happening to my company.
There were some embezzlement and some theft, a lot of mismanagement and we almost lost it. We have been successful in turning it around. It's my passion to go back to coaching and continue speaking as well to help business owners to avoid what I went through because it was a real nail biter. I didn't think we were going to pull it out, but people like Marla who have known me for a long time encouraged me to coach myself for a minute. She knows that I could do it, but it was definitely with a lot of encouragement because I have given up a couple of times.
I think about drinking your own tea where you go through and go, “I'm a coach and I coached before.” There's got to be some level of looking in the mirror and you go, “I coached this, what the heck?” I think about the advice that you might offer to a business owner based on your true veils. What might you tell a business owner based on your experience?
As business owners and what you hear a lot and different books that you read, is you need to be able to step away from your business and it will run without you. You just sit on a beach and collect checks. That is possible and it is probable but you need to put a lot of effort into your systems, key performance indicators, financial drivers, know how to monitor them remotely and know how to wall them off from the wrong people or else you could get in a lot of trouble. That's what happened to us. I thought I was monitoring KPIs, bank accounts, QuickBooks and everything else. Clearly, when you have a wolf in the hen house, it is challenging. It's very difficult to figure that out because you don't expect that someone's going to do that.
Marla, you are a professional CFO prior to Raincatcher for many companies. If they’re the business owners that are reading out there outside CFO, what kind of things might you put in place that might have headed off some of these problems for Susan?
That's an interesting question because the recommendations that I would normally make, Susan was doing all of it. She had her mail going to a different address. She was following her financials. The things that we normally would say, “These are the steps you need to take,” Susan was doing. Susan, correct me if I'm wrong, but I think what happened is you got busy. She convinced you that she was taking care of things and taking things off your plate. She’s hiding things is what it was, because she was hiding payables from Susan. How would you find something like that?
The only thing that you're wrong about in the beginning was that she was getting the mail. I say to every business owner, “You have to get to your own mails.” I don’t care how you do that or even have your grandmother or your best friend.
PO box. That's right. I forgot about that.
I don't want to just focus on the travails. I think about corporate consulting. You met your husband. You went out and decided to start your business. You had great success and growth. What would you attribute that growth to?
I think that we found a niche. This sounds a little unfortunate when I say it out loud. We delivered good customer service. It sounds a little crazy, but there were many service companies out there that wouldn't show up and they wouldn't call people back. If there was a problem, they wouldn't take care of it. We started out against 950 competitors in the Denver Market with a mission that we were going to deliver the best customer service that we could. We were never going to be a 100-truck organization. It wasn't our desire. We're too old to do that. That's for the young of heart to start a company that big. Maybe if we were in our 30s when we started, we might have considered it. We wanted a nice company that was profitable, that would bring us revenue and we could deliver outstanding service and that's what we did. We started our business off with reputation management. We got reviews from everyone and we got everyone's email address. We built upon that and now we have 30,000 customers in our database.
How many people do you have in your company?
[caption id="attachment_5319" align="aligncenter" width="600"] Overcoming Setbacks: It is possible to step from your business, but you need to put a lot of effort in to your systems, key performance indicators, and financial drivers.[/caption]
We have twelve. We should have more, but there is a fair number of people out there in the United States collecting unemployment that is making them not willing to come to work right yet. We will have a lot more employees when that program runs out so we're excited about that.
When you're communicating with your employees, you say, “This is who we're going to be. This is what we're going to do.” When you were looking for evidence of delivery, what were you hearing from your clients and customers that either confirmed or refuted what you were trying to do?
We do a thing called happy calls. First things first, when we're sending our technician out, they get a link with our technician’s photo and his bio. They know exactly what their technician looks like and something about his professional background. We try to put something personal in there. They already feel like they know him and they like him by the time he gets there or her. We haven't had her yet, but I keep hoping. We then follow it up with a link to review, and then we follow it up with an email, and then we follow it up with a phone call, and then we follow it up every month to ask, “How did we do?” We have a good key performance indicator. Our technicians get rewarded for good reviews. They get points and they can take those points and parlay that into prizes. The top prize is a trip for two to Mexico. We've sent three technicians on trips because they earned enough points through reviews. That was one way to keep everyone accountable and make sure that our customers were happy.
Susan, when you're doing all the follow-up, do you use a CRM system for that?
I use a high powered system that's proprietary to the trades and it's called ServiceTitan. It's an interesting story. It’s a brilliant company out of Glendale, California. Two young men brilliantly educated out of Ivy League schools, but their dads were tradesmen. They met in college and they came up with this brilliant software platform. They got an $8 billion IPO, all this funding, and they're growing leaps and bounds. It was plumbing, electrical, garage doors, anything in service you can think of. They thought about it from a technician's perspective and a small business owner. That's why we've always been paperless. We record every single call between the technician, the office, and everywhere so that if there's a customer service problem, we can pinpoint it right there and address the issue on the spot.
Marla, you've known Susan for years. From your perspective in the business and brokerage side of the house, when you hear about a company like this, what types of things go off in your mind about, “That's transferrable. That's highly desirable. That's a value creator?” What goes off for you?
The Net Promoter Score. How high is it? Do you know the score? Do you mind sharing it?
I’ve seen it because in ServiceTitan it’s 9.5 in the scale of 1 to 10. We have 4.5 stars everywhere. I joke that if we had five stars, that would be fake. There’s no way. When people threaten me with a bad review, I'm like, “That would help me out because I have so many good ones. It looks fake anyway.”
I think you’re the leader in your industry with customer service. Most of the stuff you did are completely out of the box.
At the time. Now, I'm starting to see many more companies that are doing that because you have to. We’re sending thank you cards and we would send brownies.
For the people that don't know, what is the Net Promoter Score?
On a scale from 1 to 10, how happy are you with this company and how likely are you to refer them to a friend? They just have to pick a number.
[bctt tweet="Don't trust your gut on anything. Work with a professional to help you identify the problem and the solutions to fix it." via="no"]
Is that standard?
Pretty much. Even after you go to AT&T and buy a phone or anywhere, they'll text you and be like, “How did we do on a scale from 1 to 3, 1 to 5, or 1 to 10?” They all use a different metric, but it's all in there. It's the same thing.
The other thing that she and her husband have done is the way that they have set up cross-training and your organization itself. I'm not going to try to remember everything you said, Susan, but it's impressive. Do you mind sharing a little bit about some things that make you different or your uniqueness from your competitors?
My husband knows a lot of different trades. Early on in his career, he was a journeyman electrician. He became a master plumber like his dad. He's a second generation. He did a lot of boilers when he was in Detroit and then up in Breckenridge. That's a combo of heating and plumbing. It’s just water but it's heat. He then got into HVAC when he came down to Denver. He knows all of the trades. He's been able to train a lot of our guys. I always joke that we're a business incubator because I lost count of the guys that worked for us. Now, they have their own companies. We made it look easy but someday I'll get proud of them. Our office team does well on cross training. The Fix This Next Advisory program recommend that every business has employees go on vacation for one month a year so that they can remove linchpin redundancy. To make sure that there's not one person in your company that's got too much control over too many things. That means that everybody else needs to fill in the gaps. I think it's a brilliant idea. It's something we probably need to work up to, but it's a good goal.
Given the pandemic timeframe, we might have had a little bit of that unenforced.
We did with one of our employees out for about that long. We all did learn a lot about his job. That's also the time that we had everybody start writing down policies and procedures. We’re keeping them in a Google Drive so that should someone not come back or they’re going to be out longer or whatever, that we have a back up.
One of the things I want to bring up that Susan did as well, and I’m still in awe in how she handled things. When everything went down with your bookkeeper, your office manager, and you're going, “What the heck do I do? I don't even know how to make payroll tomorrow.” I love your story of how you were able to go through the emotions of that frustration and that anger. I say, “Put on your big girl panties,” but maybe that's not appropriate. The way that you were able to get through the grit that you had and resilience of getting back in there and jumping in and fighting your way through. I love that about you. I love that story.
The thing is I didn't have a choice. My husband and I have always said this, “We support 12, 15, 18 families, however many employees we have at the time.” That's what we do. If you ask him what we do, he says, “We support fifteen families.” We take that responsibility seriously.
I think about that moment. You've gone through the shock, denial and all the emotions and then you go on, “No.” When you're thinking about that transition point and tenacity, what was that mental story like when you're shifting from, “Are you kidding me?” to “This isn't going to take us out?” What was that like?
One of the hardest things for me is I do a lot of professional speaking. I was telling the story of this book I had written called the Pufferfish Effect, which is how we grew our company. It was becoming a point of making me sick to deliver that talk. I couldn't do it because I knew what was happening in the back of the office. I also was, “No way.” This was the thing, I was not going to file for bankruptcy. I made up my mind and I’ve created a vision board, which I look at it all the time. I have had customers and clients do in years past. I was like, “Do your vision board because that’s what everybody tells you to do.”
I did it and this vision board is now all coming true. It was a singular focus every day. “I am not filing for bankruptcy and I am going to become debt-free.” That was it. Those two things or those two drivers. We lost all of our employees for a while. Everyone except our office staff quit, for one reason or another during this transition. Part of it was adjusting their pay to right size and a part of it was this former employee in their ear. There were a lot of different things that were happening. We had to hire a whole new staff.
If I ever run into you in a dark alley, I'll turn around and go the other way.
Part of my vision boards says debt-free life on there. It's got healthy food and somebody working out. Those were the things that I needed to do. I needed to eat healthy food and work out so that I could get the stress out of my self, so that I could do the best me that I could be. I had let that slide, my health and fitness slide for a long time. In the past, I had been an active person. For one and a half years, I sat here doing nothing, eating bad food and not working out and being more stressed. I said, “I'm going to take care of myself,” and I'm hoping that's going to change everything. The worst-case scenario, it wasn't going to suck. That's what I did. That was a thing that helped to get that stress off because otherwise, I probably would have had a heart attack.
[caption id="attachment_5320" align="alignleft" width="187"] Pufferfish Effect: Secrets to Crush Your Competition[/caption]
I think about key relationships that we haven't touched on. In that compressed period, there's the relationship with your husband and the relationship with whatever lenders. You've got this large meal that you have to digest. We’re in the COVID crisis. For the people out there who have had significant problems, what advice might you offer to them to take and maintain that relationship with your spouse?
A lot of people do work with their spouse, which makes it hard. My husband works out in the field. We closed down our big office. We had a 5,000 square-foot shop and office. We moved our executive office into my basement. We got a shop down in the southern part of our city, which is more convenient. I wish we have done that a long time ago. We didn't need to be spending all that money. We reduced our overhead by about $7,000 a month. For a while, because we lost all these employees, my husband had to go back out in the field. That works better for us in our relationship when he's managing the field and I'm here in the office. Him in the office is not his thing. He is not sure what to do. He's good with customers but he enjoys being out there in the field with the guys. That's what he does and we have our lanes. That's important to us to stay in our lanes and sometimes we cross over.
With the relationships with the lenders, I don't need to know the details, but what was your philosophy in approaching your partners in the lending world?
We have a lot of debt. The IRS debt alone was over $400,000 at the end of the day, with penalties, interest and trust bonds, loans and everything else. We're close to $700,000 to $800,000 altogether. What I did is I wrote a letter to every single vendor, everyone that we owed money to. I said, “We have been through a catastrophic event at our business and I know that we're behind. I know that you want us to pay you right now, but we can't. This is what we're going to do. We can pay you a little bit at a time. I promise you and you have my word, I'm going to pay you back.” The...