VALUE DRIVER NUMBER 8 OF 8: HUB AND SPOKE

02.03.24 05:21 PM By John Kearney

VALUE DRIVER NUMBER 8 OF 8: HUB AND SPOKE

Hello, this is Jack Kearney, Managing Director of Trinitas Business Valuations.

The eighth driver of company value and sellability is HUB & SPOKE.  Hub & Spoke refers to how dependent your company is on you personally.  When an acquirer comes in to buy your business, they are going to want to know how is this thing going to operate when you leave? The more dependent the company is on you personally, the lower you are going to score on Hub and Spoke. The name comes from twenty years ago, I was talking to a business owner, and he was describing his role in the company. He said, “I am a hub in a hub and spoke model, where all of my employees come to me when they have got a question, my customers come to me when they need a quote, my suppliers come to me when they want me to buy something.” He was proud of that operating style, saying that that is what makes his business efficient. Well, it may be efficient, but if you have ever flown through Chicago O’Hare when there is a snowstorm and the hub breaks down and gets locked up, it is a disaster. The same thing is true of a hub and spoke business owner. When everything is dependent on the hub and spoke, or that hub manager, there is not much value left in the company. The key here to improve your score on hub and spoke is to make sure that your business becomes less dependent on you personally. One of the quick ways that you can do that is to start documenting your processes. If you have ways of doing things, get them down on paper. Make sure that employees are aware of the seven steps of closing up at night, or the three ways that we change our brand, or the things that are important to us as a company, our values and so forth. Make sure that all of this stuff is not just in your head, but it is documented in writing, that employees can read it, digest it, and operate when you are not there. One of the fun ways that you can measure how you are doing on hub and spoke is to take a vacation. Start small, take a couple of days and just see how your business operates when you are not there. Come back and find out where the breakdowns were and start plugging those holes, again with training, process improvement, making sure things are documented for employees. Take another vacation, a week or two and again, see how the business performs, because it is at those points where the business breaks down that you know you must reinforce before you score better on hub and spoke.  If you would like to learn more about eliminating your company’s dependence upon you, go now to fill out The Value Builder Questionnaire™.


The Value Builder System™ is a statistically proven methodology designed to increase the value of a privately held business. The Value Builder Score™ is an evaluation system driven by an algorithm that evaluates a business on the eight core value drivers that acquirers (or investors and lenders) consider when buying (investing in or lending to) companies. The Value Builder Score™ gives a comprehensive assessment of the "Sellability" (“Investability” or Credit Worthiness) of your business, whether you want to sell next year or just to know that you're building a valuable asset for the future.  After analyzing more than 52,000+ businesses, analysts at The Value Builder System™ have discovered that companies with a Value Builder Score™ of 90+ received offers that are 71% higher than the average-scoring business.  The Value Builder System™ is available exclusively through an experienced and authorized group of advisors, known as Certified Value Builders™, such as Trinitas Business Valuations.  Click on one of the buttons below to discover whether you are ready to sell your business (The Value Builder Pre-Score™) or whether your business is ready to be sold for the best price, terms, & conditions (The Value Builder Score™). 

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