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, your business may be too dependent on you!
I call this the Hub & Spoke model, one of the business drivers that shows how dependent your business is on you for survival. The Hub & Spoke model can only be as strong as the hub. When the hub (you) is overwhelmed, the 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 few days and a significant supplier must 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 that 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 dependent 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 customer by their first name can be a sign that you’re relying too heavily on your personal relationships as 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, your business may be too dependent on you. Don’t worry. This is fixable!
This is just one of 8 factors determining your business's success and not to mention value.
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Bingo! I scored a 3-ish! Is that pushing it?? LOL.
At my business, I am in control of the $$, so I am the only signer.
The vacation item – I haven’t really been on a vacation PERIOD in the past few years, but it has not been because of work (this one is the -ish in my 3-ish score).
I know all my clients by their first name, Ms. Mere. Does it help that I am not the one that interacts and works with them? I think can I can this an -ish as well!
All in all, I get the point. And I need to get out of my own business on a day-to-day basis.
Thanks for the reminder.
Well Mr Taubman, LOL, it really helps that you are not the one interacting with them and that you have built a team that is doing a lot of the work. 🙂 Congrats! I would call it a win.