Business Succession or Exit

Sellability Driver 8 of 8: Hub & Spoke

Sellability-Driver-8-of-8--Hub-and-Spoke
The Hub and Spoke elaborates the impact of the business being dependent on you personally. The more independent the business to you is, the lower the score.

Video Transcript:

Hub and spoke refers to how dependent your company is on you personally, again when the acquirer comes to buy your business they’re gonna wanna know how this thing operate when you leave and the more dependent the company is on you personally the lower you’re gonna score on hub and spoke. The name comes from, I spoke with a business owner, describing his role in the company, I’m a hub in the hub and spoke company, where all my employees come to me when they’ve got a question, customers come to me when they need a quote, my suppliers come to me when they want me to buy something, and he was proud of that operating style saying that’s what makes his business efficient. Maybe efficient, but if you ever flown through Chicago and there’s a snowstorm and the hub breaks down and gets locked up, it’s a disaster, and so the same thing is true to hub and spoke business owner, when everything is dependent on the hub and spoke or that hub manager, there’s not much value left in the company.

The key here to improve your score on the hub and spoke is to make sure that your company becomes less dependent on you personally. One of the quick ways you can do that is to start documenting your processes, so if you have ways of doing things, et them down on paper, make sure your employees are aware. The things that are important in the company, make sure these stuff are not only in your head, but expressed and written down so that employees can read it, digest and operate when you’re not there. The fun ways to measure on how you’re doing on hub and spoke is to take a vacation, start small – a couple of days, and just see how your business operates when you’re not there. Come back, find out where the breakdowns were and start plugging those wholes- again with training, process improvement, making sure things are documented for employees. Take another vacation, for a week or 2, and again see how the business performs. It’s at those points where the business breaks down, you know you’re gonna reinforce before you score better n hub and spoke.

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