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Value Acceleration & Exit Planning

5 Reasons Why Your Business Is Too Dependent On You

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

The Hub & Spoke model is a drive 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 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 is a list of the 5 top 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 get paid? Consider giving an employee signing authority for an amount you are 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 is not 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 narrowing your product and service line by eliminating technically complex offers that require your involvement, and instead focus on selling fewer things to more people.

3. Your vacations do not feel like vacations

If you spend your vacations dispatching orders from your mobile, it is time to cut the rope. 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 is good to have the pulse of your market, but knowing every customer by their first name can sign that you are relying too heavily on your 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 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 signal 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.

Windes may be able to help you resolve any of these warning signs if they apply to you. Learn more HERE.

Rob Henderson
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For more information on Value Acceleration and Exit Planning, connect with Rob Henerson.
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