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9 Warning Signs That You’re a Hub-and-Spoke Owner

How would you draw a picture to represent your role in your business? 

Is your business organized in a Christmas-tree-style organization, or are you stuck in the middle, like a hub in a wheel? 

A hub-and-spoke model is only as good as its hub, as anyone who has flown United during a snowstorm at O'Hare can tell you. The hub fails the moment it becomes overloaded. Most buyers steer clear of hub-and-spoke managed companies since they know the risks associated with purchasing an organization that is so dependent on its owner. 

The following are nine warning signs you're a hub-and-spoke owner, along with suggestions for pulling yourself out: 

1. You sign all of the checks 

Most business owners sign the checks, but what happens if you’re away for a couple of days and an important supplier needs to be paid? You might consider giving an employee signing authority for checks up to an amount you are comfortable with, and then change the mailing address on your bank statements so they are sent to your home address (rather than your office). You can then review all signed checks and make sure the privilege is not being abused. 

2. Your revenue is flat compared to last year 

In a hub-and-spoke model, flat revenue can indicate that you are the hub. Like forcing water through a hose, you have only so much capacity. Eventually, every business dependent on its owner will reach capacity, no matter how efficient it is. Consider narrowing your product and service offerings by removing technically complex offers that require your personal involvement, and instead focus on selling fewer things to more people.

3. Your mobile phone bill is over $200 a month 

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. Many times, 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 a first line of defense in protecting your time.

4. Your vacations suck 

Your vacations should not be spent dispatching orders from your mobile device. Consider taking one day off and seeing how your company does without you. Develop systems that account for failure points. Build your business up to the point where you can take a few weeks off without affecting it. 

5. You spend more time negotiating than a union boss 

You may be a hub if you are constantly involved in approving discount requests from your customers. If your front-line employees deal directly with customers, consider giving them a range within which 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 (count the cash, lock the doors, set the alarm), then you are very much a hub. Write an employee manual that describes 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. 

7. You know all of your customers by first name 

Knowing every single customer by first name can be an indication that you are relying too heavily on personal relationships to sustain your business. Consider replacing yourself as a rain maker by hiring a sales team, and as inefficient as it may seem, 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 

When suppliers woo you with free tickets to sports events, it can be an indication they see you as their main decision maker. If you are the point of contact for any of your suppliers, you will be the hub of your business when it comes time to negotiate terms. Consider designating one of your trusted employees as the key contact for a major supplier and granting them spending authority up to a certain limit. 

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.

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