Value: John Warrillow

Don't be a hub-and-spoke owner

Special to The Globe and Mail

(PHOTOS.COM)

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 Christmas-tree-like organizational chart, or are you stuck in the middle of your business, like a hub in a bicycle wheel?

Recently, I asked this question of a business owner, and he described himself as the hub and his employees, customers and suppliers as the spokes. He proudly reported that all communications came in and out of the hub.

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He managed his company with an iron fist, but as anyone who has tried to fly United when O’Hare has been hit by a snowstorm knows, a hub-and-spoke model is only as strong as the hub. The moment the hub is overwhelmed, the entire system fails.

This is why businesses run by hub-and-spoke owners are usually unnecessarily small and mostly worthless to those in the outside world.

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 sign all the cheques

Most business owners sign the cheques, but what happens if you’re away for a couple of days and an important supplier needs to be paid?

Consider giving an employee signing authority for cheques up to an amount you’re comfortable with, and then change the mailing address on your bank statements to your home (not the office). That way, you can review all signed cheques and make sure the privilege isn’t being abused.

2. Your mobile phone bill is more than $200 a month

If your employees are frequently out of their depth or need to seek your approval for every decision, 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, who can act as a first line of defence in protecting your time. One way to find a VA is by filling out the request for proposal at the International Virtual Assistants Association.

3. Revenue is flat 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.

4. Your vacations suck

If you spend your vacations dispatching orders from your mobile, it’s time to cut the tether.

Start by taking one day off and see 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 does

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 salespeoples’ bonuses to gross margin for sales they generate so that 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 (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 first name

It’s good to have the pulse of your market, but knowing every single customer by 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 that, 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 sporting events can be a sign they see you as the key decision-maker in your business. 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 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. 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.



Special to The Globe and Mail

John Warrillow is a writer, speaker and angel investor in a number of start-up companies. He is the author of Built To Sell: Creating a Business That Can Thrive Without You, published by Portfolio Penguin.

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