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October

23rd

2018

The Hub and Spoke Value Driver

By

How much does your company depend upon you, the owner?

The Hub and Spoke Value Driver is a measure of how heavily your business relies on you. It may appear efficient for there to be only one decision maker in a business. The reality is however that it makes a business overly reliant on your presence and input.

How does the business react in your absence? Do tasks get ignored and decisions stall? If so, the likelihood is, your company is operating in a hub and spoke manner to the detriment of its own success.

What happens if a spoke gets broken?

Well, this is when the whole model can fall apart and why the hub and spoke value driver is so important.

The lower your score on the hub and spoke value driver, the lower your business valuation is likely to be. It’s an important factor if you’re looking to sell your business. There are number ways to stress test how your business will cope without you and it can be as simple as taking a (well earnt) holiday.

Using that example, see how your business copes in your absence. See where the breakdowns occur and then find a way of fixing them. Step away for longer to see how much of a difference this will make on the running of your company. First step away for a few days, then next time a few weeks. If the business can’t cope you need to understand why and put measures in place to add security.

Document all your systems and processes so your management style isn’t just in your head, but on paper too. Systems and processes are key for your business to work in your absence. By having ridged protocol to follow there can no mistakes in how your business should run without you at the helm.

Your team should know exactly how to perform to your standards. McDonalds did it with burgers, Ford did it with cars. If you want to see consistency of delivery, whether product or service, this is vital. Remember in this modern business world, teams don’t have to be your employees, they might be subcontractors or a virtual team, they still need clear instruction.

What will buyers be on the lookout for to determine if you are a hub and spoke business owner?

– Your revenue stream is at a standstill – with only you to help grow the business, your revenue stream has plateaued. Effectively, you have reached your personal capacity.

– You are the person responsible for payments and purchases. If no one else has the authority to do this on your behalf, this can cause delays in important payments being cleared.

– Is your phone constantly ringing? – Again, add distance by giving someone else responsibility. Give instructions to deal with certain clients, suppliers or team members on your behalf. Are you the person first in and last out each day? What tasks are you performing that could, with a little trust and training, be delegated to others.

– Your clients and customers always ask for you – again this is about distancing yourself and removing yourself as the ‘hub’. As the owner, your clients should only really need to speak with you if there’s any major issues or they’re talking business. Any other time they should be liaising with your team as they’re the one’s who deliver the service.

What can you put in place to ensure your team are able to deal with the majority of the daily running of your business, without your input? For more information and to see where your business fits into the Hub and Spoke score in our Value Builder, please contact us today in the strictest of confidence.

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