Is your business key-man dependant?

Key-Person Dependency is the term used when a business is heavily reliant on the knowledge, relationships or skills of an individual or a very small number of people. (Often the business owner or owners). Typically, this is found in SME’s, however, it can be found in organisations of all sizes.

Let’s put this in straight forward terms. Are you a business owner or manager? If something happened to you tomorrow (god forbid) and you couldn’t work would the business survive?

The loss of an owner or key operator can be a real blow to a business.

Small businesses are particularly vulnerable to key person risk as they often take on all the business functions or maintain control of all the business functions. These can include all aspects of sales, marketing, operations, HR, accounts and the list goes on.

There comes a time when the risk of burn out becomes very real.

But before we get to some helpful hints let’s look at the importance of small business to the community.

Over 97% of Australian businesses are small businesses. That is they have between 0-19 employees. It’s a large and vibrant sector which is vital to the health of the Australian economy. Small business accounts for 33 per cent of Australia’s GDP and they employ over 40 per cent of Australia’s workforce.

Now to bring this a bit closer to home to WA the State Government reports that there are 224,270 small business who contributed $48 billion to the WA economy. 491,993 people are employed by small business in WA and 41% of the private sector workforce is employed by small business.

So as a collective we’re looking at a sector which is the heartbeat to business but they’re in a high risk situation where their business is dependent on them. Not only that, as individuals they’re left feeling as though everything is up to them. When you’re in this situation somethings got to give and their personal lives often suffer.

So how can business owners start working on their business (being more strategic) rather than working in their business?

What we’re about to suggest here is embarking on the beginnings of succession planning so that small businesses can grow and then sustain that growth, without them. They need to move from being the technician to instead and trying to do everything to overseeing the business.

Collaboration

Yep, it’s a simple one but we’re not talking about drinks and an early finish on a Friday. We’re talking about working together and using team cohesion to deliver the best services or products possible to your clients. Nothing brings people together like a common goal. Your strategic goals for the business should be shared with the team so they understand where the business needs to go and what role they need to play in that.

Empowerment

Once your staff understand where the business is going and what their part is you can then ask them to start thinking about how they can deliver on the goals. Why ask them? Isn’t it quicker to do it yourself and just tell them? In short no. By handing down a strategy with what they ‘need to do be doing’ we liken it to giving a kid a map of an amusement park and telling them they need to follow it and not get distracted on the way. It’s hardly engaging or fun. Instead get them to give you the answers. Let them think about what they want to achieve and how they plan to get there. Listen to their ideas. Let them have a few wild rides and trial some things. If it doesn’t work then move on to the next trial. Before you know it you’ll find new ideas spreading. You’ll find engagement at an all-time high and you’ll have staff that aren’t dragging themselves to work to follow a manual.

Encourage open communication

We heard that mumble under your breath. “What I just let the staff run wild and do what they want and try new things? They could ruin me!” Okay not exactly. This is within reason and within resources available. By encouraging open communication if one of your team come up with something that may never work hear them out give them the opportunity to talk through it and if you have an environment of open communication you will find that someone will critique the idea and bring them back to reality. In amongst that wild idea you may have an element that could be simplified or adapted to work.

Automate your process

Yep, we just got boring. By automating processes, it not only saves you time but it also ensures that more people can be capable and easily trained to complete day-to-day tasks.

This is where big business excels. Large organisations are twice as likely to innovate in the area of operational processes as small business’. (Reported by the Small Business and Family Enterprise Ombudsman, Commonwealth Government.)

Capture your customer data

If you got great sales and business development personnel ensure the details of your clients don’t leave with them. You should own and control all your client records.

Business owners need to invest in their future and the future of their business by empowering their staff and setting up processes that help people move towards one common goal. This will allow their staff to feel like they are contributing. They’ll feel more included and confident and they will be more likely to go the extra mile. They’ll be happier at work and in effect happier people in general.

Here’s the mic drop. You’ll not only be responsible for uplifting your team but you’ll also free yourself from the treadmill of business problems and tasks and instead rise above this and start looking ahead into the possibilities of the future of your business and for yourself.

This article is by Olivia O’Connor, Founder of Liv By Design a creative business solutions company. Liv By Design is dedicated to helping business owners grow their business and start strategically planning their initiatives.
Through facilitated workshops Liv By Design harnesses the creativity of your workforce to achieve effective innovative results.