For all the benefits of running your own business… there is one big potential risk that we have all exposed ourselves to. A risk that is waiting behind the scenes to bite you on the bottom if not managed correctly!
And that is… the business’ dependence on you as the main cog in the wheel. You started your business as an expert with a bunch of knowledge in your head that people want to learn from, and experience the results of.
But as your business evolves and grows, this “key person dependency” will begin to hold you back.
It either means that you can never fully relax and take time away from your business, as without you, everything comes to a halt. Ultimately this will negatively impact on your personal health and wellbeing.
Or, if disaster strikes, and you are forced to take time away for health or choose to take time out for a holiday, or as I have recently, to spend time with Greg and James, your business will suffer.
To determine if your business has “key person dependency”, ask yourself these two questions;
- Am I solely responsible for any or every task/decision making process in my business?
- If I were to take a couple of weeks (or more) out of my business, will it run as efficiently as it does with me there?
What is “Key Person Dependency”?
Key person dependency is when you or one of your team members is solely responsible for something, and there is no back-up plan. This could mean the techie stuff, the accounts or the copywriting and there is no-one in the business to call upon to do the same skills.
So, if that key person disappears… your business would collapse in a heap.
Here are my 3 risk management strategies to combat key person dependency in your business:
Systems and training:
Teach someone else in your business how to carry out the same tasks, and at the same time, create a systems manual detailing each step of the process.
The manual will be useful for holiday leave, or any other cover requirement, or if your key person suddenly disappears.
This is also known as succession planning.
Succession planning is basically making sure you have a contingency plan if you or one of your key people should get run over by a bus tomorrow!
The disadvantage to training another person in your business is that a key member tends to be specifically trained in one area… so another staff member might not get such good results.
Picture the copywriter trying to do accounts . . . it could get messy. So although it is good to train in the basic skills, another solution is to identify outsourcers who are specifically trained in your key-person area. These outsourcers tend to work on contracts.
A key risk management strategy is making sure you have some outsourcers on tap – ready to turn to in busy periods or as a short-term stop gap should your key person get sick, take a holiday or have a baby!
One of the best risk management tools I know is also the simplest. It’s called having a system!
So this means getting your key person to systematize as they go along. Whatever they are doing, get them to make notes along the way, and then record these notes in a central Systems Manual where everyone can access it.
For example, if your techie person has a system around the launch of a new product, get them to transfer this system into a ‘How to Guide’. So if an outsourcer has to come in unexpectedly, they have a check-list to work off.
If you are the sole key person in your business, then it makes good sense to start compiling this Systems Manual immediately. Start by making a detailed list of every single task you do in your business this week, then make some time to go back and compose a “How to Guide” for each task – clearly stating where it fits into each process.
Then repeat this list on a weekly basis until you have recorded the details of every process and related task in your business.
Store your Systems Manual where it can be accessed easily by a couple of trusted people around you – for example your partner or parents. Then if the situation ever does arise that requires you to take time out, any necessary handover process can be carried out efficiently.
Risk management is one of those processes a business tends to ignore until it’s too late. So to avoid risk in your business, make time this week to implement the above strategies to minimize your key person dependency.
Ladies: Joanna will be in London on the 24th of September to deliver her very special, and hugely popular “Feminine Way To Wealth” workshop. Attending will give you the chance to meet Joanna, and hear firsthand how she built her own successful business based on sound business knowledge and strong personal values.
If you’re a woman in business, or you want to be a woman in business, and you want to learn feminine strategies for marketing, sales and other core business skills, check out the details for the Feminine Way To Wealth and book your place now