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 a traditional organisational chart, or are you stuck in the middle of your business, like a hub in a bicycle wheel?
Hub and spoke management is common in small businesses where the business owner is forced to wear several hats in an effort to survive. Although, the hub and spoke approach is also common among business owners who want to be in control. These people believe no one can do things as well as they can and oftentimes subscribe to “if I want it to be done right, I am better off doing it myself.”
Many successful businesses are quite profitable and thrive while the hub is actively engaged in the business. However, when the hub is no longer available (through premature death, disability or mental illness) the sustainability of the business is in question. So is the value of the business which could have a profound impact on the owner’s family’s financial security.
And, if you’re one of those hub and spoke, bulletproof business owners who intend to sell your business and ride off into the sunset, think again. You represent much of the value of your business so it is highly likely the purchaser of your business will require you to stick around for two to five years to assist in the transition. In order to maximize the value of your business, you must begin to effectively delegate to your employees.
Here’s a list of nine warning signs you’re a hub-and-spoke owner and some suggestions for pulling yourself out of the middle of your business:
1. You authorise all payments.
But what happens if you’re away for a couple of days and an important supplier needs to be paid? Consider giving an employee authority for making payments to an amount you’re comfortable with. You can review all payments from the bank statement to make sure the privilege isn’t being abused.
2. Your phone is constantly ringing, pinging, or dinging.
If your employees are out of their depth a lot, it will show up in your overflowing message inbox because staff will be messaging you to coach them through problems. Ask yourself if you’re hiring too many junior employees. Sometimes people with a couple of years of industry experience will be a lot more self-sufficient and only slightly more expensive than the greenhorns. Also consider getting a virtual assistant (VA), who can act as the first line of defence in protecting your time.
3. Your revenue is flat year on year.
It could be because you’re at the maximum of your ability to sell, you or your business’s ability to sell because you can’t scale beyond your own capabilities. 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.
4. Your holidays and vacations suck.
If you spend your holidays dispatching instructions 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.
5. You spend more time negotiating than a union boss.
If you find yourself constantly having to get involved in approving discount requests from your customers, you are a hub. Consider giving front-line, customer-facing employees a band within which they have your approval to negotiate. You may also want to tie salespeople’s bonuses to gross margin for sales they generate so you’re rewarding their contribution to profit, not just chasing skinny margin deals.
6. You’re the one who has to close up every night.
If you’re the only one who knows the close-up routine in your business (count the cash, lock the doors, set the alarm), then you are very much a hub. Write an employee manual of basic procedures (close-up routine, e-mail footer to use, voice mail protocol) for your business and give it to new employees on their first day on the job.
7. 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 by hiring a sales team, 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.
8. You get the tickets.
Suppliers’ wooing you by sending you free tickets to sports events can be a sign that they see you as the key decision-maker in your business for their offering. If you are the key contact for any of your suppliers, you will find yourself in the hub of your business when it comes time to negotiate terms. Consider appointing one of your trusted employees as the key contact for a major supplier and give that employee spending authority up to a limit you’re comfortable with.
9. You get cc’d on more than five emails 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.
If three or more of these warning signs apply to you, perhaps it is time to take a different approach to your business. If this was a bumper sticker it would say, “it is time to work ON your business and not IN your business.”