If you were to draw a picture that visually represents your role in your business, what would it look like? Are you at the top of an organisational chart? Or, are you stuck in the middle of your business like a hub in a bicycle wheel?

The Hub & Spoke model shows how dependent your business is on you for survival. This model can only be as strong as the hub. The moment the hub is overwhelmed, the entire system fails. Acquirers generally avoid these types of managed businesses. They understand the dangers of buying a company too dependent on the owner.

Here are the top 5 warning signs that show your business could be too dependent on you.

1. You are the only signing authority

Most business owners give themselves final authority… all the time. But what happens if you’re away for a couple of days and an important supplier needs to be paid? With cloud accounting systems like Xero, it’s easy to keep an eye on transactions in real-time and make sure the privilege isn’t being abused.

2. Your revenue is flat when compared to last year’s

Flat revenue from one year to the next can be a sign you are a hub in a hub-and-spoke model. Like forcing water through a hose, you have only so much capacity. No matter how efficient you are, every business depends on its owner reaches capacity at some point. Consider reviewing your product and service line. For example, are there complex offers that require your personal involvement that can be simplified to enable selling fewer things to more people?


3. Your holidays… don’t feel like holidays [if you are taking them at all]

If you spend your holidays dispatching orders from your mobile, it’s time to cut the tether. Start by taking one day off and seeing how your company does without you. Build systems for failure points. Work up to a point where you can take a few weeks off without affecting your business.

4. You know all of your customers by their first name

It’s good to have the pulse of your market, but knowing every single customer by their first name can be a sign that you’re relying too heavily on your personal relationships being the glue that holds your business together. Consider replacing yourself as a rainmaker, and as inefficient as it seems, have a trusted employee shadow you when you meet customers so over time, your customers get used to dealing with someone else.

5. You get cc’d on more than five e-mails a day

Employees, customers and suppliers constantly cc’ing you on e-mails can be a sign that they are looking for your tacit approval or that you have not made clear when you want to be involved in their work. Start by asking your employees to stop using the cc line in an e-mail; ask them to add you to the “to” line if you really must be made aware of something – and only if they need a specific action from you.

Changing these types of behaviours takes time, a leap of faith and an environment in your business that gives your team the confidence to try things knowing they are free to fail within agreed boundaries. The benefits of breaking the hub and spoke can include improved business performance, a more engaged team and ultimately less reliance on you. In addition, these changes will make your business more valuable and more attractive to potential buyers.

To learn more about breaking the hub and spoke in your business and creating a more valuable business, get in touch with the businessDEPOT’s business advisory team.

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