John Corcoran 7:47
Well, and how did you react? Did you have to do layoffs? What did you do?
Scott Fritz 7:53
We didn’t have to lay anybody off. Fortunately enough, again, we had no debt in the company. So pretty much what happened is Karen and I just like a lot of our clients went to zero. And one time we got real close to having to loan the company back some money. But we made it if you kind of remember and again, I was a lot older than you were at that time. But uh, you know, it was a pretty quick not hockey stick. But it was a pretty good quick recovery out of that once everybody realized it was kind of a one and done thing. It wasn’t like the pandemics that just dragged on and on or the financial crisis that went on and on. It was more of a 90 day kind of thing, at least in our business.
John Corcoran 8:25
Yeah. And around that time. Were you working 40 hours a year when did that start?
Scott Fritz 8:30
When I moved to Los I moved from Michigan to Las Vegas, in oh two was probably around, ah, I don’t know, I’d say probably 50 hours a month, 60 hours a month. So the 40 Hour Work YEAR really started in oh four when Karen and myself totally transitioned out of the business. We promoted Seth, who at the time was our clo to President and CEO, Karen and I became founders and Seth ran the company and the executive team of five people for the final four years of the business and that that’s really what my story is about is the Oh 407 timeframe where other than a monthly call and doing the annual strategic planning and going back to the office once a year. It was truly a passive investment engagement for me with my company.
John Corcoran 9:17
Yeah. Yeah, for those who are listening to this and thinking that sounds crazy, I’d love to do that. But they have a million different questions. unpack that for us. Whoo. How did you keep people motivated? How did you manage to show up once a year and then give some guidance and and then and then walk away without having to spend time overseeing living states away?
Scott Fritz 9:42
But I do think that I’m always a big believer in the end just at the beginning with the end in mind, right. So the end for Karen and I , even in our original business plan, was to sell the business in 10 years. And so we knew within about four to five years, the way to maximize the value of this company and I haven’t my Which is the ownership paradox, the less involved the owners are in the business, the more valuable it is at the exit, okay, because for many reasons, but the main one is the person who’s buying you, or the equity or whoever is going to private equity is gonna come in, they know they don’t have to replace a key element of the business, which is usually owner, if they’re very involved in the business, and there’s no earn out, there’s no special arrangement that has to be done to make sure that that person’s job duties are being filled. So we very early on knew that we needed to get ourselves as far out of the business as possible to maximize the exit. So a lot of the people I work with in my coaching business, it’s about exit planning. And one of the first things we do is let’s start putting your team together so that when you do exit, you can show that for the last at least two, hopefully up to four years, you’ve had very little anything to do with the actual business. So like Michael Gerber talks about E Myth working on the business is fine, but you’re not in the business, you’re not overseeing sales, not overseeing Ops, you’re not getting you know, a stack of paper, you got to sign off on every day. And so when you can systematize your business and get it even if you don’t sell if you set it up, so it could sell, you can totally transition out of your business.
John Corcoran 11:09
And let’s say you have a business owner come to you who is a potential client and wants your help on exiting their business, but they’re already really involved in it. How can you tell I’m sure you’ve had some come to you. And they just can’t extricate themselves for various reasons, attachment or whatever. And others do a good job of it. What separates those two different types of personalities?
Scott Fritz 11:33
Well, good is a great point. So it’s always the mindset, right. And I again, I talk about this all the time, if you have the mindset and you really want to transition out of your company, I pretty much can help you help anybody do that. However, if you’re like me, I’m not so sure I want to do this, maybe I want to try it. Again, it’s a 5050. And if you’re not really sure you ever want to leave the business, you’re really not, you know, you don’t have that mindset, you’re not going to it’s like a workout program, right? If you really don’t want to lose the weight, you’re probably not going to lose the weight. So that’s kind of where I start. The next point is very tactical. Does this person have a right-hand person, left-hand is a person who could run the business for upwards of 60 days without the owner present? So if you have this right hand person, truly a CEO type person, you’re set. Now most people are working on that, that comes to me, they’ll maybe quite have it, but they have somebody in mind, then have you built the executive leadership team that can cover all those different facets of your business that the CEO and eventually CEO would oversee. Once you’ve got the team in place, I take them through what I call a decision matrix. The decision matrix lists out all the key decisions that need to be implemented in the business on a daily, weekly, monthly, quarterly basis. We set up the x’s in the boxes and slowly shift or transition the owner out of those boxes over a quarterly period. And that typically takes 12 to 18 months, from the time somebody comes to me to the time they can transition themselves, maybe not to the 40 hour work here, but definitely to the 40 hour work month, or something like that. Yeah, I’ve got a lot of clients that go down to five to six hours a week, they don’t really want to go, you know, to four hours a month, but that’s fine. I mean, whatever makes you comfortable.
John Corcoran 13:10
Right? Right. You end up selling the business at the end of 2007, which of course, in retrospect makes you look like an absolute genius, because in 2008 we had the whole financial crisis, banking meltdown. But you said that as a staffing business, you did see some indicators that led you to conclude that it might be a good time to sell.
Scott Fritz 13:35
So the very beginning of this was summer of 2006. So I went out to Michigan because I want my once a year trip. And before I would leave Karen and I would go have lunch with our CPA, and it was much more of a business advisor than a CPA, which is what a CPA, a good CPA should be I think. And he said because he had an M&A arm in their organization. He said, Hey, we’re seeing the valuation spike in your space. And we’ve got some interested parties, would you guys be interested in doing, you know, some sort of a buyout, maybe not a full buyout, but some sort of a partial buyout of your business? And I was like, I don’t know about that. You know, I was already kind of living the half retired lifestyle, but I said maybe we’d be interested in selling in general. But Karen, I talked it over, we got back to him. And we said, Yeah, we’d be interested in selling in general. But leading up to that. And as we went through the preparation for this about 18 months out, we started seeing in a lot of the states we were in not a lot Well, I’d say a lot probably 20 we started to see some some slowing and or some easing off the gas pedal of hiring and wage increases that we had not seen. It’s been kind of like full speed ahead for the last three, four years. And we also in a lot of our states, this was a big thing for us because of what we did. We were the outsourced HR department, a lot of heavy regulation and changes in the way that things are being done on the employment side. I mean employment laws are a mess anyway, but the real onerous things were being put in place itself. By the states, and we just knew that as time went on, it was gonna be harder and harder for us to make the kind of margins we needed to make to operate in those states. So it was kind of a two edged sword, a double edged sword on that it wasn’t so much. I knew the banking crisis was coming. I’m not saying that. But in our space, we did see some things that made it a good time for us. And I mean, honestly. I mean, I’m not saying we wouldn’t have made it through it, but we would not have come out the other side. I don’t think anywhere, in as good a shape as we were at the time we sold it.
John Corcoran 15:29
Yeah, I mean, in retrospect, it seems impeccable timing, right. Yeah. Yeah. Um, and, you know, I want to ask you about your involvement eo, which is such a wonderful organization. And more broadly, just in who you turn to, yo or beyond, you know, you took a business from zero to 170 million. That’s insane. That’s amazing. Did you have mentors along the way, you could turn to you mentioned this CPA business advisor, who else did you have along the way? Was it your father? Was it? Who did you turn to and learn all the things you needed to do to take a business that far?
Scott Fritz 16:10
Well, great question. So I’m, I’m probably like a lot of people you have on here. I’m an avid reader. I mean, I read a lot and I don’t read like I used to, I hate to say that, but I don’t. But Matt went out of business because I didn’t know what I was doing. I mean, I was reading, I was reading two or three books a month in the beginning, especially on sales, because I didn’t know I had to learn how to really sell. I thought I could but I need to learn how my EEO experience was huge. I can tell people this a day, when we sold the business, at least 50% of that business that we had in the Midwest especially, was either connected directly or was directly eco based business, an infant, it’s a non solicit organization. So this was not me out selling. This was just, you know, I always say your network equals your net worth. This was just leveraging that network of eo which is incredible. Right? And I mean, my forum was a big help to me, by far, I mean, the beauty of a forum for those who don’t know, typical forums, you’ve got people that are a little further ahead, the new a little not far as how to do some people right where you’re at. And it was just a great experience. As you were mentioning, you’re an accelerator to bounce off, hey, we’re thinking about doing this? Or do you know somebody who is a specialist in this? Or can you refer me to an attorney who’s done this before? And it just cuts through all the, you know, the guesswork of trying to find these people because you’re being referred to by people that you trust and respect, and they’re in the same boat you’re in? It’s just great from a mentor standpoint, he Oh, and I mean, there’s, you know, dozens, hundreds of people, like I mentioned, I mean, they’re too numerous to mention, but I mean, they’re there. Every little conversation was another example of mentorship or help in my business.
John Corcoran 17:50
I’m fascinated by entrepreneurs that managed to operate or run or found businesses and in vastly different fields. And you have, you know, you had your human capital, which was outsourced HR. But you also had your insurance business as well. And you now are in your real property management, acquisition and management. Is there a commonality between the three of those? How have you managed to have businesses in such different areas?
Scott Fritz 18:25
Yeah, I’m about and I’m, in fact, I’m getting on a plane on Friday, I’m going to go help do a physical therapy roll up out in Arizona. So this goes back to my angel. You know, my, my just
John Corcoran 18:36
total banana, and I didn’t even mention those. But yeah, what were 20 or so different acquisitions? over 20 years? Yeah.
Scott Fritz 18:43
So it’s just I love, I would say, like, I like the buffet of business, right? I mean, pick me. Take me to the Golden Corral. You know, I mean, I want to try a bunch of different things, right? So I’m not I’m not I’m not tech only or I’m not restaurant only or I’m not transportation only or HR only. I like to dabble in everything because the common noun, here’s a great one. And you I know you’ve probably heard this so I’ll get called by somebody and they’ll say well, Scott, I know you help so and so and maybe you can help us but you know, maybe you don’t understand we’re very unique. You see you hear that all the time, right? Oh, yeah. And I’m not sure I’m not sure what you’re doing is going to work. I say look, you are very unique. But now you’re talking about your culture. What you’re not unique is your business. And I believe and I’ve seen it hundreds of times now, probably 1000 times. Most businesses should all be run pretty much the same way right? hire people to run the systems not to run the business right make sure you have your people overseeing your key metrics and up in the park to your current company. Create an incredible culture that makes you unique, right customer first all these things you can read books about. And so when I look at business, what I love is I can say oh, I can go transfer to this property management business. I helped do this furnish, I was a big investor to furnish Confederates, a company 15 years ago. Some of the things we did in the furniture company work there. I mean, it’s just fun to see, you know how you can cross pollinate these ideas, and you’re coming in with not the blinders on that the business owner has because typically, they’ve only been in that space, they’ve only been in that lane. Yeah, that’s what kind of gets me a kick about it. You know, there’s obviously service and HR. I’m a little more knowledgeable, because I really was in that for a long time. But it’s fun to see just the entrepreneurial side, if you have the entrepreneurial spirit, and you’re willing to step out and let some other people do the work. You can. I think, you know, at least in America right now, you can still grow an incredible business.
John Corcoran 20:36
Yeah. And how did you end up in property management and acquisition? How did that end up being the latest one that you do other than the business coaching and exit planning strategy that you do?
Scott Fritz 20:50
Well, we talked about it earlier. So my business partner now in Phoenix, he was a former accelerator member. So I was facilitating the Phoenix chapter. And my rule was this, when I facilitated, I would not go into business or strike a check or partner with anybody who was in the accelerator because I was facilitating the group. I thought that was a little bit of a conflict of interest. There were no rules against bias and I didn’t feel right about it. I said, Look, get to that million dollar mark, get into EEO, and then give me a call or whatever. And so this is named Tim Melton, he called me I just stopped facilitating Phoenix about a year later he goes, I got into eo we passed the million dollar mark. Would you be interested in coaching and helping us take this thing to the next level? And so that’s how I got involved. About five years ago, I got involved with SGI and we opened up the Dallas operation, I think four years ago.
John Corcoran 21:38
Now, did you get involved as a coach or as an investor or partner? What was your involvement?
Scott Fritz 21:43
So I’m 30%. Owner, I was the money guy. So I stroke the check. We got the broker in Dallas, who got a percentage and then Tim and the company in Phoenix, they do the back office. And then my rule also when I do angel investing is I either need to have a separate annual coaching agreement, and or be on your advisory board, if I’m going to invest in your company, because I need to be able to see more than just the dashboard. I need to be able to get into the engine if I need to. So that’s one of my requirements. So I do an annual coaching agreement that I worked with SGI on.
John Corcoran 22:13
got it, got it. Yeah. And that it seems very important to you. Yeah, you need to. It’s not enough to just put in the money and hope that it goes well.
Scott Fritz 22:22
Right. Well, absolutely. It always sprays and prays as they say in the angel world, right. Yeah. I mean, if you want to throw a few 100 grand out there and hope it turns something up Sunday, I mean, that’s fine. But I’d call that gifting not investing, you know, right? Little, little difference there. So, and I learned early on, I mean, I’ve done so many things. Now, I did a few, just wrote the check and said, Hey, you know, let’s talk once a month and see how things are going. Although they didn’t always fail, they didn’t do nearly as well as when I’ve got a little more involvement, at least on a monthly basis with the company.
John Corcoran 22:50
And I think you would want an entrepreneur and founder that would want that guidance and that wisdom that you can bring to the table.
Scott Fritz 22:58
Right, right. And that’s why I was saying I’ve had this conversation. People go well, you know, yeah, minimum, the minimum is 150. Grand. And I’m like, Okay, so how does it work on the advisory board site? Oh, no, we were all set on that. We just, you know, we’re just looking to raise money. And I’m like, Well, I mean, honestly, if you really can do that, so well, you don’t need me. Right. But that’s kind of where we would Yeah. And I’ve said this before, some of the best deals I’ve ever done are the ones I didn’t do. Because you see what happened, you know, down the road. So right? We said this or it’s a mindset, right? Yeah, somebody is really into learning and growing and moving forward. I’m probably a pretty good fit, if you just kind of just look to raise some money. And you know, we’ll let you know if you ever get a return. Those aren’t really for me. Yeah, I can do it. I can do that in the stock market. Right.
John Corcoran 23:41
So yeah. Well, I want to wrap things up with the two questions I always ask. And first, yeah, I’m a big fan of gratitude. So if you look around at your peers, look around your contemporaries. It could be you know, other business advisors, other founders, entrepreneurs, other EO form mates, you name it. Who do you respect? Who do you admire that’s out there these days.
Scott Fritz 24:05
That’s probably the man a minute investment with these guys in a different business. And we were just hanging out together in Vegas a few weeks ago at our annual meeting. So it’s a guy from Toronto. His name Steve clearly met him through Leo runs a very successful insurance and financial planning company that had a lot of great sessions with him and learned from him. A guy from MIT named Mike Cato. I don’t know if you know him. He is out of California.
John Corcoran 24:33
He’s Oh, yes. He also does Oh, accelerator training. Right. And he was president at will. Yeah,
Scott Fritz 24:39
yeah. And he bought map coaching systems. He sold restaurants, Rhonda grub hub about six years ago,
John Corcoran 24:46
I attended one of his sessions. He was awesome, amazing energy.
Scott Fritz 24:50
Yeah, Cato and I go way back. He’s about my age, but he started having kids a lot later. So like, my kids babysit his kids, so I’ve known him a long time. Yeah, we’re always great. It’s just kind of Spooky like it’s one of those things where you finish each other’s sentences. And then I got to Michigan named Darren Casey to start appraisal, a really, really incredible rocket ride and his service business and the appraisal business, which is a really cutthroat, tough business to be in. And he’s usually grown like that thing. So those as I sit here today, those are really my three main go to guys that we bounce stuff off of at least at least twice a month, or maybe more.
John Corcoran 25:24
Yeah. And you go and you do investments together. Sounds like you said,
Scott Fritz 25:27
Yeah, well, I’m in two different ones with Cato. And then we’re all we’re all three in one, in that one other investment that we’re in,
John Corcoran 25:34
cool. And then looking back even further in your career, perhaps to your childhood, you know, let’s pretend we’re at an awards banquet, like the Oscars or the Emmys, you’re receiving an award, Scott, for everything you’ve done up until this point, and what we all want to know is in addition to family and friends, who do you think who are the who are the mentors? Who are the coaches? Who are the investors? Who are the business partners, the people that you would acknowledge in your remarks?
Scott Fritz 26:00
Yeah, well, I mean, I would say my business partner, Karen, I mean, you know, when you’re starting out in a business, so this was another thing I meant to say earlier, too. You know, when you are struggling as a business owner, a lot of times what you really need to do is get a business partner who complements your skills. So if you’re really great at sales, but not so great at Ops, getting that other side of the seesaw, so to speak. So Karen was a great help to me, and honestly, I don’t know, I probably would have launched the business anyway. But having a business partner was really huge to me. And I mentioned my CPA back then, Steve McCarty’s name, and we formed a pretty good bond and friendship and he was a very helpful man as a finance major in college. But uh, it’s a whole different thing, being a finance major, and actually being a CPA. He was very formative. And a lot of the things we did in the business and the way we structured the entities that we had in the way that the company was able to grow.
John Corcoran 26:56
Like, it’s interesting that you say a CPA versus it’s not the way you describe it. It sounds like more of a CFO or, or something along those lines.
Scott Fritz 27:03
Yeah, he’s the most entrepreneurial CPA I’ve ever met. And you know, you don’t my brother, my second brother, and he’s a CPA, and he’s a little bit entrepreneurial, but nothing like Steve. I mean, Steve really was an entrepreneur masked as a CPA. So it’s kind of funny, I think he, I think he always wanted to kind of be more CPA, you know, as a partner for me. He got to live vicariously through his clients on their entrepreneurial journey.
John Corcoran 27:27
That’s great. Well, Scott, this has been really great. Thank you so much for sharing some time with us. Where can people go to learn more about you or connect with you?
Scott Fritz 27:34
Yeah, well, I love John, to connect on LinkedIn. So if anybody wants to just type in Scott Fritz on LinkedIn, I’ll come up at the top. I love the network and to help people find connections. And then my email is [email protected] or growthconnect.com is my website.
John Corcoran 27:51
And The 40 Hour Work YEAR is still available. You can check it out. Go Google it. You can find it on Amazon. Scott, thanks so much.
Scott Fritz 28:00
Thank you, John.
Thank you for listening to the Smart Business Revolution Podcast with John Corcoran. Find out more at smartbusinessrevolution.com. And while you’re there, sign up for our email list and join the revolution. And be listening for the next episode of the Smart Business Revolution Podcast.