Connect with Susan:

Email: susan@raincatcher.com

LinkedIn: https://www.linkedin.com/in/susancoaches/

Lisa Ryan: Hey, it's Lisa Ryan. Welcome to the Manufacturers' Network Podcast. I'm excited to introduce you to our guest today Susan Frew. As the daughter of a carpenter and the wife of a master plumber, Susan used her business coaching experience, having coached over 10,000 hours, 18 different trades, and 150 companies.  

The Frews grew Sunshine Plumbing Heating and Air 535% in one year and made the elusive Inc 5000 list in 2019 along with 43 other awards and accolades. Susan has made it her life's work to help other businesses thrive and avoid catastrophe Susan is a certified business coach, a Fix this next advisor, and a profit-first professional. Susan, welcome to the show.

Susan Frew: Thank you, Lisa. I'm honored to be here. Thanks for having me on.

Lisa Ryan: Absolutely! Susan, please share with us a bit about your background and really what led you to what you're doing today.

Susan Frew: Well, it was a sort of a roundabout way. I started in Telecom. I grew up on the east coast, and I was in New York City working for AT&T wireless, and I got transferred to Denver. I ultimately got transferred to the Caribbean for two years, and when that assignment ended, I decided to come back to Colorado. I bought a business coaching franchise. I started my business coaching franchise up in the mountains of Colorado, and beautiful Breckenridge, where many people listening would know where that is - so beautiful places ski with your family.

During that journey, I met my husband. He was a plumber, and I don't know if this was because I was born the daughter of a carpenter or not, but I ended up coaching all these tradespeople. I'm up to 19 different trades that I've coached. I met my husband through that experience, and then we moved down to Denver shortly after the recession and started sunshine plumbing heating air.

We went into service because we felt it was recession-proof. No matter what happens in the economy, you're not going to live without heat, hot water, and a working toilet. So we thought we had a good niche. We went into business against 950 competitors.

Lisa Ryan: You and I had a conversation about employees. Many times on the Manufacturers' Network Podcast, we're talking about workplace culture and keeping your top talent from becoming someone else's because it is so difficult to find people. But from your tale of finding the wrong person, you do have to be careful to make sure that you're spending the time you're spending the effort to get the right person on board.

Susan Frew: Here's our story. I consider myself a speaker and a business coach, and here we were running the company. We grew it extremely fast. We went from zero to $3 million in no time flat and had a lot of interest. During that time, I felt that I needed to hire a full-time bookkeeper/office manager to go out and do more speeches on how we grew our company.

In a very disorganized way, I dumped all of my responsibilities on my office manager. I went out and fulfilled my ego dream of speaking all over the country. Meanwhile, my employee back home was not doing the right and ethical thing by our company. Part of it was a little fraud, mixed in with a bit of con, mixed in with a little larceny, and ended up with our company in a million dollars in debt.

Lisa Ryan: How did she get away with it?

Susan Frew: Well, I thought I had a good handle on this because I know how to read financial reports. I was a business coach. I've taught "Financials for dummies," which was one of my programs. I would ask questions about certain things, and she would give me some off-the-cuff answers. What I had done is I set up this program for her where she would get a bonus if she could stay on budget every single month. The bonus was significant - it could be up to 1500 dollars a month.

She kept asking me for a raise, and I said, I can't afford it, but we can afford to do this if you can stay on budget. There were some red flags in there - there were quite a few. If you're listening to this, here's one sign: if your employee is visibly living above their means, you need to question that. This employee took a family of five to Cancun for a week at an all-inclusive resort. That is a costly vacation, and they were making pretty much minimum wages for the rest of her family. She was doing pretty well, but they had all kinds of debt they were carrying around.

The way she spent money – especially the way she spent our money. That's why I was trying to keep her on budget. What she did was she would short our bills. So not pay them. Instead, she would pay a portion of them so that red flags wouldn't be waived. She did that with our payroll taxes, primarily.

If we had 5000 due on Friday, she paid 4000. If the bill was for $4000, she pays three. So her budget numbers would look right, and I would sign the form, and we'd send in the check.

In my mind, everything's copasetic. What she didn't realize was at the end of the year, when the w2's would true-up, the IRS would catch her. It was about an 18-month cycle by the time the letter started coming to my home. I was here on a Saturday doing housework, just hanging out on a Saturday. The doorbell rings, and it was the mailman. I opened the letter from the IRS. Nobody likes getting a certified letter from the IRS, but it was for $498,000.

Lisa Ryan: Oh, that does not make your day.

Susan Frew: I am still convinced, Lisa, that the IRS sends those letters on Saturday to ruin your weekend. There's nothing you can do. You can't call anyone. You have to wait until Monday, and of course, that's their busiest day, so getting through to anyone is difficult. There were penalties and interest for all of those quarters that she had shorted the payroll. Then, come to find out that we owed our vendors $175,000 on top of that.

Then, there was what's known as a trust fund penalty for not being a good steward of those payroll taxes and allowing my employee not to submit appropriately. Now in my mind, the bills were correct - that's why my signature was on there. The IRS doesn't care what your story is; it's your problem if your signatures are on there. That's how we got a million dollars in debt. It was a painful couple of years.

Lisa Ryan: What were some of the lessons that you learn throughout this? I'm sure that there were plenty. What do you share about things that they can look for something to do so that this doesn't happen to them?

Susan Frew: Well, first thing, don't buy into your own media and your own PR. I was so high that we were becoming these big celebrities for growing our company and winning all these awards. I'm traveling all over the country, giving these big keynotes that I wasn't watching what I was doing. It turned into a horrible situation for me. I was up there, telling stories of how successful we were, and once I found out what happened, I became a fraud in my mind. I couldn't deliver those keynotes anymore. I would get down off the stage, and I would feel terrible. So that's number one - don't buy your own PR because you need to pay attention to what's going on, no matter how big your britches get.

Secondly, get your own mail. I don't care how important you are or how busy. You need to get your own mail because there is information in there. That goes for your electronic mail too. I have an email address called accounting@sunshineplumbingheating.com, that only I have access to that. If I'm on the road, wherever I am, I can see it concerning the mail it goes to a P O box, I can have it, so I'm going to be gone for longer than a couple of days.

They will scan it and send it to me, but I usually go there on the weekend to pick it up, and I see what's happening. So you learn a lot from your mail in a business.

The third thing, Lisa, is to do two different kinds of background checks. There's a regular background check, which will check the motor vehicle, background, felonies, that type of thing. But there's a second layer that most people are not aware of. It's called civil penalties. An attorney can run that there are services out there that you can buy. I use a service that's $29 a month. It shows you non-criminal things that will give you a clue that this may not be a good hire for you, especially if you're putting him in charge of finances.

Because I found once, I did pull those records. She had filed for bankruptcy three times. She had liens, garnishments, judgments - like judgments from my competitors. They were suing her because she stole money from them. Because of all those liens and garnishments, she and her husband weren't taking home very much money, which prompted them to do a lot of the things they did. They would do something like go down to the tire store and buy a set of tires for all their cars and charge them to our truck account. We have ten trucks on the road. They stole a gas card, and they would fill up all of their cars on a Friday afternoon for two years. It was her job to review the gas bill, so that's how she got away with that one. Now, I have checks and balances in every area of our company, but I was asleep at the wheel. I take responsibility for what happened.

Lisa Ryan: Well, such a good, such a good lesson to learn. The other thing that we were also talking about is the difficulty it is in finding people. You must check out the people you have working for you, particularly if they're in charge of your finances. Share with us some of the things you have done to woo people to work for sunshine plumbing. What are some of the things that have worked or that aren't working? What are you finding out there?

Susan Frew: Well, in the beginning, one of the things that we did is a lot of advertising using Facebook. We were creative and funny with our ads. We used all those awards I was talking about. We've won best workplaces from Inc. magazine and some local places, so we used all of that. We've always had a sign-on bonus, and we always broke it out in quarters. So, if you stay with us for 90 days, six months, nine months, 12 months, you get a bonus from us.

We would try to make your experience here unique and different. We celebrated birthdays. We don't do on-call. We do not do nights and weekends - weird for a plumbing and heating company, but our employees were that important. If we had clients who had a problem, we would put them in a hotel rather than call one of our guys out in the middle of the night. We thought that was unique.

We paid vacation and offered unlimited personal time off. You can win points for getting reviews and the grand prize for getting good reviews from clients trip to Mexico for two. We did all kinds of things -great creative things. Then this market started getting harder and harder and harder. As I said earlier, our top competitor in the market has 950 competitors in this space in Colorado. They were offering a $10,000 signing bonus, which I thought was outrageous. I even did a Ted talk about why can't we get women in the trades - which we've always been looking for. We need more women in the trades. We never seem to find that many of them, so we thought that $10,000 was crazy. So we are now offering a $10,000 sign-on bonus. Lisa, no one is applying. Nobody. I don't know what our future is. What we just did is we are merging with one of our subcontractors. We've joined forces. They're struggling because they don't have good back-end administration. We're struggling because we don't have workers. So we will come together, and we formed a partnership agreement to work out of the same shop. We are sharing resources, and they're coming aboard with a group of employees.

That's been my solution. I've been trying to buy other companies or find strategic partnerships like that. I believe this market is going to turn around this fall. That is my hope. I think that that's, we have to be creative.

Lisa Ryan: Well, that is $10,000 is one thing, but so are the people. People were working before, so have they just left the industry because of the pandemic, and they just totally got burned out? Or are there not enough new people coming into the industry?

Susan Frew: it's all of it. The baby boomers are aging out. There's over a million person work shortage. They call it a blue-collar phrase. So that it's probably much more than that, all of the parents over the last 20 years pushed everybody to go to college, whether you were college material or not. So what we see actually in the trade schools now is people that are a little older. They tried the College route, but that didn't work for them. They're hands-on folks, and they want to go and get jobs with their hands. So we're seeing people in their 30's going to trade school now, which is great, right. But it's been faltering for 20 years. We have this giant gap. That's one of the things that's happening.

The pandemic and the stipends for unemployment. Those jobs in that 22 probably $30 per hour range, which is where a lot of manufacturing jobs and trades jobs. If you do the math on the unemployment, you can get pretty close to what your salary was, and in plumbing, you can do side work. I can put in water heaters all day long in my neighborhood and make some money in my pocket that nobody needs to know about. I can go to Home Depot and buy the stuff and, am I licensed? No, probably not - but my neighbor's happy, I made a few blocks, and then, of course, there are childcare issues.

When the kids were in school, someone needs to stay home with them. How do we manage that so it's a perfect storm of things happening in the trades and manufacturing? In factories all over the country, so many industries have been touched by this. It's also that our guys go into your house. How do I know you're not telling me a story that you're healthy?

Lisa Ryan: Hopefully, as all the extended unemployment finally ends this fall, we will start seeing more people going back to work. Let's go back to the happier side of business things. What are some of the things that caused you to be the best place to work? How did you grow your company – it sounds like you did some super cool things for your employees.

If somebody's listening to this today is thinking about ideas or needing ideas and suggestions to keep their employees, what are some of the creative things that you did there.

Susan Frew: I didn't elaborate on the unlimited personal time off now that's not paid. That would be cost-prohibitive for mostly all of us. So we said, with proper notice, if you want to take an extended period off, you can.

We had an employee who always had a dream to go hunting in Canada with his son. He was getting a little older, the son was starting to have children, and he's like, if we don't do this now, we're probably never going to do it. So we gave him a month off, and he never forgot that we did that. If you need a day to go, whatever you need to do, we will work with you with unlimited personal time off. You would think that people would take advantage of what they don't. It's something that they liked. We offered a gym membership now. Everyone thinks that's a great thing. Does everybody use it? No, but it was something. We always make sure we recognize people's birthdays and anniversaries, so that's something that we do.

We have in the past and, from time to time, sent flowers home to someone's spouse, or we've sent people out to dinner we've sent employees on a trip. We sent one employee to see his friend, whose son was passing away, and he wanted to say goodbye to him before he went. We used some of our points and miles and sent them on a trip. That's many things that we have done, just really trying to be outside the box.

Lisa Ryan: As we're getting to the end of our time, please share a bit of what you do and how you work with your clients. Then, if somebody would like to connect with you, what's the best way for them to do that?

Susan Frew: Well, in the middle of our drama, and I need to, I need not leave everyone hanging. This is how we got out of the debt. We did a little Dave Ramsey, along with Profit First. If you've not read profit first, you should probably pick up a copy or download it. It's a great premise. We started doing those two things now. We also had this giant shop on the highway with the light-up sign. It's fabulous -5000 square feet - in this huge building. It costs a fortune, so we shut down the big building we moved the offices into the basement of my house.

 How humiliating is that for the big lady on the keynote stage talking about how great they were, we got a little shop down closer to the city? For the last two years, we dug and dug and dug and dug and dug, and last weekend, they moved out of the basement into another shop with an office.

We have effectively paid off over $600,000. Some of the debt we have is for our trucks, so I'm not counting that as too much debt. We will be completely debt-free by the middle of 2022. It took a lot of sacrifices, a lot of hard work, a lot of elbow grease by all of us.

What I do know from all those years of coaching about how great we were and how you could get there, you know what so what who cares, lady. What people want to hear is, hey, how can you help me get out of my predicament? So that's what I do now.

I've partnered with a business brokerage firm called Raincatcher. I'm on staff with them as their professional speaker. I run their business coaching division. We work with business owners who want to sell their companies. They might not want to sell for three to five years, but we start to help them to get prepared. There's my division which is coaching, and then we have brokerage. If a company's not ready to sell but needs some structural changes or an increase in profits to get to the correct number, they send them over to my department, and then I work with them until they're ready. Then they go to brokerage, sell, and off they go into the sunset with their retirement funds. That's what I do now. It's really fun, and I know my story on stage is a lot different.

It is a hey. Anybody can get in this predicament. There's a way out. Let's breathe. I know sleeping is difficult when you don't see how you will make payroll next week. I've been there many times, and I get it, and I think that I'm a lot more helpful now than I've ever been. The best way to reach me is on LinkedIn, and my moniker on there is Susan coaches. It's been like that for a long time. My last name is Frew in Commerce City, Colorado. You'll see me out there.

Hit me up or if you're going to be at FABTECH. Come and see me because I will be there. I'm speaking in two sessions. We have a booth for Raincatcher, so I love to see you there.

Lisa Ryan: Yes, and I will be speaking there too, so it'll be fun to hang out together.

Susan Frew: Yes, absolutely.

Lisa Ryan: Well, Susan, it has been a pleasure to have a conversation with you. Thanks so much for being on the show.

Susan Frew: Thank you. It's been my honor Lisa, and I look forward to spending time with you in...