Ep126: Key Person Risk - The Silent Killer in Your Business

Alrighty, welcome back to the show. Hope you guys are having an epic week so far. So we're going to talk about key person risk. So it's the silent killer in your business. A lot of business owners that I'm talking to are basically doing everything in their entire business and they wonder why they're so burnt out and so stressed all the time. Um, so I'm going to give you guys some live examples of what I've been talking about to a few different business owners about key person risk. But I'm going to firstly explain what key person risk is and how it can affect your business and how can it actually destroy your business as well. So basically, and let me start by saying I've been in this position quite a bit in previous businesses, previous businesses as well. So everyone goes through this part of business. But when you get to a stage where you've got a proven system, a proven, proven offer, then you start to eliminate key person risk and then you get your time back, which is what I help people with. So before we get into this full episode, if you guys are needing help getting your time back, click the link in the description. You can apply for our program. It's a done-for-you one-on-one coaching experience where we come in and get 20 hours a week back. Completely guaranteed. So click on that link in the description if you want further information on that. So let's go through key person risk. What is it? So basically one person holds all the knowledge in their head and if they left, the business would break. It could be you, it could be the team, it could be any type of staff member. So what we essentially need to do is we need to slowly eliminate the key person risk. So basically I spoke about in a couple episodes previous to this one is you need to basically basically keep firing yourself from roles and replacing them with systems and processes and team members so you don't become the bottleneck in the business. Okay? And if that person leaves, then you've got systems and processes, SOPs for someone else to come in and do that role for them. So most founders think it's a people problem, but it's actually a system problem. And you don't see it until it's a bit too late. When you see someone hand in their notice or goes on leave, and then it's too late. Well, it's, it's not necessarily too late, but it's an extremely stressful time because you've got no system or process in place and they're leaving, so they can't, they can't save you. So it comes back to you, the business owner. So unfortunately everything comes back to you. So you need to make systems and processes to mitigate that risk. Okay, so let me give you a couple of examples. One that I'm speaking to at the moment um, that is looking to do some work with us is a business owner that is relatively off the tools, uh, so to speak, which is awesome. I think they're allied health practice, um, so she doesn't do as much, uh, stuff on the tools anymore. She's got a practice manager and she's got a few different team members, but the practice manager actually said she's actually going on maternity leave in October, which at the moment of filming this recording, it's almost the end of June. So a couple of months' time and there's no handover system, no SOP, no system, no nothing for a new person to come in and take over that role. Everything is in this manager's head. Okay. And that is the problem. Everything's in their head. There's nothing on paper for someone if they're sick or if they're going to leave as this person is, they can't, um, like the it comes back to the founder or the owner. And then the owner is actually doing something else, like a different project. So she's got no time. She's got no time to do this stuff. So it's a big risk for the owner to have all this faith in this one person to basically run the entire business for her. So I mean, this specific business owner has done quite well to be able to remove herself from the tools, which is great. But it just, it's just another layer. You gotta keep you gotta keep firing yourself from these positions so you don't have to, so you don't have to keep coming in and put out the fires. That's where you get proper freedom. It's the same as when I ran my PT business and the gym. I wasn't doing any work in the business for a long time. It took me about 2 years to do it. Just after I had the gym, I had 12 team members, we're doing about $50K a month, which is awesome. But I wasn't doing any PT sessions, no sales. So I actually got rid of myself from sales as well. So it takes a bit of time, but, you know, key person risk is one of the things that a lot of founders never get to because they're constantly just doing everything. They don't even get to the part where they are off the tools. So yeah, it's one part of business obviously make good, good money and good revenue, but the second part is obviously getting your time back. So another example that we'll go through is, um, property styling business, and they actually started working with us, which is super exciting. Um, a business partner is leaving for a month in August, uh, so realized she couldn't run the installs herself there's no delegation and there's no system in place. So again, this is coming straight back to the founder or the owner because if someone leaves, then you know, there's no backup system, there's no system in place to hire someone to do that role. So it's all, all in the head. Okay, so this is, this is where you gotta get everything out of your head onto, onto paper, onto systems, onto SOPs so someone else can come in and do that role for you. Otherwise, you're going to be, you're going to be forever needed by people to hold your hand. Another one, cafe owner that we're, that we're working with at the moment, not able to make a decision on a new venue opportunity because they don't have the right systems and processes in place to run the numbers to see if it's possible and a good option for them. This is a little bit different for Keep Us on Risk, but they had the same problem with team members. They've got, I think they had like 15 or 20 team members in the cafe, but the owner or the founder is still caught up in the day-to-day because there's no systems and processes to be followed. So when we talk about key person risk, like this is the stuff that you should be thinking about. If you're doing everything yourself right now, the first thing that you should be kind of getting rid of off your plate is the admin side of things like we talked about in the last episode.. So either automating it or delegating it to like a VA or an admin person, training up the, the VA or the admin person. So you basically remove yourself from that role. So even if that person left, you've got the systems and processes, just get someone else to come in and do that role so you don't come back to that role. Okay, this is how you eliminate the key person risk. Once you've done that, then you gotta get yourself off the tools, off the delivery. So if you're, I don't know, if you're a trade, if you're in trades, how can you get yourself off the tools? You hire someone else, but you need to train them as well. So you need to create systems and SOPs, expectations to train them. Same thing if you're doing, you know, online coaching, like mentorship. Can you get someone else to take one-on-one calls? Do you have to do all the group coaching calls? Can you get a client success team? Every business is obviously a little bit different, but how can you get yourself off the tools, off the delivery, off doing the things in the cafe as an example? Okay, so then you get real time back and then you can even focus more and more on more systems and processes to get more and more time back. So then what you then become is basically the people manager essentially. Where you just create the vision, you inspire the team, and you keep the team accountable. You don't micromanage and that type of stuff, but you just keep the team accountable. Okay, and that's essentially what you do. Bit by bit, you take yourself— you fire yourself from one position, admin, then off delivery. Like, sales and marketing is the last thing that you guys should be removing because, um, that's, that's what moves the business forward. I'm a big believer of the founders should do sales and marketing for as long as possible, to be honest, because no one can sell as good as the founder. No one's as passionate as the founder and no one knows the ideal client like the founder as well. So that's gonna give you the, the biggest return on investment for most people. So I'll just be careful not to get rid of that too quickly. Everything else like admin management, um, that type of stuff should be done first before you get rid of that. So hope that gave you some really good insights on what key person risk is and how you can get out of key person risk. I've spoken about it a little bit on a couple of episodes ago, but I just wanted to make this episode so you specifically know what key person risk is. So you can start to, uh, do that process. And it's the same thing that we always talk about— either delete the process, automate the process, or delegate the process. And one, uh, job at a time, or one, uh, system at a time, you slowly remove yourself from these types of, uh, work in the business, and you slowly get your time back. So if you ask to come in and do this for you we do a done-for-you, um, done-for-you program, one-on-one coaching where we come in and we do this for you. We make the systems, we make the processes. In some cases, we're working with other team, the other team members as well, training them on the new processes that we're doing. Uh, and in some cases, we're also building AI softwares, AI, um, dashboards and that type of stuff to help you guys as well. So if that sounds like a something you might want to explore, click on the link in the description and you can apply to work with us. And if you qualify for it, you'll be able to book in a call and we can do what we call a Leverage Audit, where we basically audit your entire business and see what's possible. And then ideally, we all want to be able to see if we can get 20 hours a week back. But anyway, that's it for today. I'll see you next week. Bye for now.