7 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 of a traditional Christmas-tree-like organizational or accountability 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 Delta when Atlanta has been hit by a flurry of thunderstorms, a hub-and-spoke model is only as strong as the hub. The moment the hub is overwhelmed, the entire system fails. 

 “Hub” focused businesses are inefficient, difficult to scale, and exhausting to run. Acquirers generally avoid hub-and-spoke managed businesses because they understand the dangers of buying a company too dependent on the owner.

Here’s a list of seven 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 everything
    Many owners have approvals or sign checks, but what happens if you’re away for a couple of days and something needs to be purchased or paid for? Consider giving an employee signing authority for checks up to an amount you’re 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 all signed checks and make sure the privilege isn’t being 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 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. 
  3. Your vacations suck
    If you spend your vacations texting, slacking, or emailing, 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. 
  4. 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. 
  5. 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. Create a list of basic procedures (close-up routine, email footer to use, voice mail protocol) for your business and give it to new employees on their first day on the job.
  6. You know all 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. Make customer knowledge a company-wide responsibility and part of your system. Look for ways to hire a salesperson or train someone on your current team to support the sales process.
  7. You get cc’d on more than five emails 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 email; 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.

If you’re feeling trapped as a “hub and spoke” owner, schedule a quick call with me here

Together we can identify some simple steps to move you forward.