September 1


9 Warning Signs You Are a Hub-and-Spoke Owner

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 (or bottom) of a traditional Christmas-tree-like organisational chart, or are you stuck in the middle of your business, like a hub in a bicycle wheel?

As anyone who has tried to fly British Airways when Heathrow has been hit by weather problems knows, a hub-and-spoke model is only as strong as the hub. The moment the hub is overwhelmed, the entire system fails. Acquirers generally avoid hub-and-spoke managed businesses because they understand the dangers of buying a company too dependent on the owner.

If you know you're a Hub-And-Spoke owner and want to break free from the trap, you need to move from being the Rainmaker (the person who makes everything happen) and become your business's Architect. Find out how now by clicking here to download your free ebook

If you're not on to discover 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 sign all the cheques

Most business owners sign the cheques (whether physically or by approving invoices). I know one owner who needed to review and approve every invoice over £500. He worked 80+ hours a week. Nearly 30 of those 80 hours were spent on that one activity (it was a £10m+ revenue business).

But what happens if you’re away for a couple of weeks and an important supplier needs to be paid? Consider giving an employee signing/approval authority for invoices up to an amount you’re comfortable with, and then introduce review processes to make sure that people aren’t abusing the privilege and ‘stuff’ isn’t creeping through unseen.

2. Your mobile phone statements are pages long

If your employees are out of their depth a lot, it will show up in your mobile phone bill because staff will be calling 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 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 dependent 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 (and things that you can teach employees to deliver).

4. Your holidays suck

If you spend your holidays dispatching orders from your mobile or dealing with customers, 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 close-up every night

If you’re the only one who knows the close-up routine in your business (eg: count the cash, lock the doors, set the alarm in retail businesses), 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 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. It also allows you to remain aloof from the negotiations and better control the result.

9. 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.

Many years ago, I set a rule that automatically put all cc'd emails I receive into a separate folder which I seldom review. It immediately and dramatically reduced the number of emails in my inbox. And, slowly, over time people stopped cc'ing me in as they knew I never read them.

The pain of being a Hub-and-Spoke Owner

If you answered yes to two or more of those questions, then you're falling into the Hub-And-Spoke trap. You're also likely finding there are more and more customer complaints to deal with and more and more fires to put out.

And the harder your work to solve the problems the harder it becomes to escape. Until it seems impossible to break free, and you're wondering how you can ever find anyone without your personal experience to run the business and deliver for customers.

But you do know if you don't change things, you're facing burnout? Yes?

How do you break from the Hub-And-Spoke Owner Trap?

One option is to shrink the business so you can more easily cope. If you can't control the chaos and work, get rid of it. Go back to the way it used to be before you started growing and employing people.

But, that's not easy to do. And your overhead costs (rent, rates etc.) may be such that you can't afford to do it. Even if you can manage it, you no longer have a business, you've gone back to having a job.

The other option is to change the way you run the business. It's not rocket science. It's a straightforward process. The first step is to start migrating your role from the Rainmaker to the Architect.

To discover how to become your business's Architect and have it operate without you, start by reading the Rainmaker's Dilemma, and how your greatest strength becomes a debilitating weakness for your business.

PS: If you can't be bothered reading about how to become an architect and want help making the transition, then stick some time in my diary for a discovery call. It's not a sales call, I'll just ask you a few questions to understand if I can help or not. Click here to book a 30-minute chat


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