The Single-Point Sensitive Business

Jun 25, 2019
 • 
3
 Minute Read

Imagine you are starting a business. It’s opening day — you’ve got a product, you’ve identified your market, you’ve set your targets, and you’ve just cut the big red ribbon. Now it’s time to run the business. You need to go get business cards, email, phones, computers, internet, set up mail, get office supplies, hire employees, on-board them, train them, set up payroll, and that doesn’t even include marketing, sales, production, and customer service.

You have become woven into daily operations — maximizing revenue and minimizing costs and the cycle continues. Before you know it, you can’t take a day off, otherwise your business would stall.

Your business has become Single-Point Sensitive.

In a Single-Point Sensitive business, only a single person holds all the knowledge. This is common for many business owners. They get caught up in the daily whirlwind and forget to take a step back to look at the overall trajectory of the business. They end up working ‘in’ their business instead of ‘on’ their business. In smaller businesses, it is likely that the business owner is the sole person responsible for business strategy, so if they are stuck in operations, no one is performing this strategic role in the business.

Smaller companies can still manage to operate in this way, and many run very successful businesses. However, as the company grows, having more people to bridge the gap of strategic responsibility between staff and owner becomes significantly more important. The tipping point varies across industries, but commonly we see it when a company eclipses $5m and again $20m in revenue.

Here are some questions to ask yourself to see how reliant your business is on the owner:

  • What are all of the daily responsibilities the business owner has?
  • What are all the things in the business that only one person knows?
  • Is the senior management team involved in strategic decisions for the business?
  • When was the last time the business owner was able to work ‘on’ the business?

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