Micheal Gerber said, “If your business depends on you, you don’t have a business – you have a job!” When you think about your position in your business, does it feel like you are one of those people trying to keep plates spinning on a lot of sticks? Does your organizational chart look more like a hub in a bicycle wheel? If so, then your business may be a little too dependent on you!
I call this the Hub & Spoke model at it is one of the business drivers that shows how dependent your business is on you for survival. The Hub & Spoke model can only as strong as the hub. The moment the hub (you) is overwhelmed, the entire system fails.
Acquirers generally avoid these types of managed businesses because they understand the dangers of buying a company too dependent on the owner.
Here’s a list of the 5 top hints that 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 a significant supplier needs to be paid?
Consider giving an employee signing authority for an amount you’re comfortable with, and then change the mailing address on your bank statements, so they are mailed to your home (not the office). That way, you can review everything coming out of your account and ensure the privilege isn’t being abused.
2. Your revenue is flat
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 narrowing your product and service line by eliminating technically complex offers that require your personal involvement, and instead focus on selling fewer things to more people.
3. Your vacations don’t feel like vacations
If you spend your vacations dispatching orders from your mobile, it’s time to cut the tether. As a child, every time we climbed in our RV to go on vacation my dad would say to me, “If you can’t take your family on vacation and still make money while you are gone – you aren’t building a business.:
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. Your business may be a little too dependant on you if you know all of your customers on a first-name basis
It’s good to have the pulse of your market, but knowing every single customer by the 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 by hiring a sales team. As inefficient as it seems, have a trusted employee shadow you when you meet customers, so your customers get used to dealing with someone else over time.
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 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.
If you can say Yes to 3 or more of these hints, then your business may be a little too dependant on you. Don’t worry. This is fixable!
This is just one of 8 factors that determine the value of your business. Take this simple 15-minute questionnaire to find out the current value of your business.
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