How well does your company run when you do not show up for work?
The answer to this question has a significant impact on the value of your business. Suppose your company could survive your absence for a while. In that case, you will score well on something we refer to as “Hub & Spoke,” a key driver for increasing your company’s value.
To understand the Hub & Spoke value driver, visualize a big airport like Toronto Pearson or London Heathrow. They act as a centralized routing location for the airlines that rely on them. The system works efficiently enough until a snowstorm shuts down a hub and the entire transportation system grinds to a halt.
Now imagine you are the hub, and you run your business with important issues coming through you. It is efficient right up until the point you are no longer there to run things, which is why anyone valuing your business will levy a steep discount.
The trick to removing yourself is simple: document your standard operating procedures so your employees have instructions for how you want things done when you are not around.
How a Maternity Leave Created a Business That Was Built to Sell
Just like many young couples, San Francisco based Ben and Ariel Zvaifler got a puppy and found themselves trying to figure out how to train their new dog. They also wanted to understand what toys and food they needed. The couple figured they were not alone and decided to launch PupBox in 2014, a subscription box for new puppy owners.
Ariel was responsible for operations, among other things. She took great care in selecting products and merchandising them inside each PupBox. She even considered details around how each package would be shipped and how it felt when the customer received a PupBox.
When Ariel found out she was pregnant with the couple’s second child, she set to work documenting her standard operating procedures. She put together instructions for her staff describing how to order products, merchandise each item, and ship boxes. It took Ariel six months to document everything, but by the time she was ready to give birth, PupBox was prepared to run without her.
These standard operating procedures were a big part of how PupBox grew, which led to a US$250,000 Shark Tank investment and eventually a sale to Petco (NASDAQ:WOOF) in November 2017.
How to Get Your Company to Run Without You
Start by breaking down your job into tasks, and then prepare instructions for your team so that they can follow your standard operating procedures when you are not there.
Test your team’s knowledge by taking a couple of vacation days to identify gaps in your processes. Plug the gaps with more details, and then take a more extended vacation. Keep lengthening your time away from work and tweaking things upon your return so that by the time you are done, your company can handle your extended absence, similar to a maternity or paternity leave.
Contact Whitehorn Merchant Capital today to find out how we can help you build value in your business.
