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byHoratio/Tools/04 · Owner dependency

How much of your business lives in your head? Here is what that costs.

Every question that can only be answered by you is a queue. This counts the queue: how many a day, how long each one takes you and the person waiting, and what stops when you are not there. Nobody has this number, and every owner recognises it instantly.

Tool04 · Owner dependency
InputsNine, from an honest week
OutputHours, wages, stalled revenue, weeks of your year
Proven inCase study 004
CostFree · nothing stored
Questions a year per day × working daysYour hours questions × minutesTheir waiting the person who askedWhen you are away what stallsWeeks of your year the honest unitWorth less than it should be Questions a year per day × working daysYour hours questions × minutesTheir waiting the person who askedWhen you are away what stallsWeeks of your year the honest unitWorth less than it should be

A business can survive with its operating knowledge in one head at four people. At fifteen it cannot: every day queues behind one person, nobody else can cover, and growth stops at what that person can hold. This puts a number on the queue — your hours, their waiting, and what stalls when you are away — and then a second number underneath: the weeks of your year it comes to.

Cost of being the answer, a year

Your week · honestly

The queue
What the time is worth
£
£
When you are not there
%
£

The cost of being the answer · every year

—a year — your hours, their waiting, and what stalls when you are away
Questions a year
Your hours answering them
as weeks of your working year
at what your hour is worth
Their hours waiting
at their wage
Revenue that stalls when you are away
Cost of being the answer, a year
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Defaults are illustrative. The wholesale nursery in case study 004 moved its operating knowledge out of the owner's head and into a pipeline per role — and went from four people to fifteen without the office growing. Nothing you type is stored.

What the number means

  • Count the questions a day only you can answer. At 25 a day and four minutes each that is 6,250 a year and 417 of your hours — ten and a half working weeks.
  • The person asking waits too. Two minutes each is another 208 hours at their wage, and it is the smaller cost.
  • When you are away, some of the day's work stops. Fifteen days at 40% of £4,000 is £24,000 of stalled revenue.
  • Total at the defaults: about £52,000 a year — and the honest line under it is that a business which cannot run without you is worth less to anyone who might buy it.

How is the cost of owner dependency calculated?

Three costs, added. The first is your own time: questions a day times working days, times the minutes each one takes you including the context switch back to whatever you were doing, valued at what an hour of yours is worth to the business — which is not what you pay yourself, but what the business earns when you are selling, leading or building rather than answering. The second is theirs: the same questions times the minutes the asker stands waiting, at their wage. The third is what happens when you are not there: the days you are away, times a normal day's revenue, times the share of that day's work that stalls until you are back.

The tool also converts your hours into weeks of your working year, because that is the unit owners actually feel. Four hundred hours sounds abstract. Ten weeks a year answering questions that had a look-up-able answer does not.

What are the questions actually about?

Almost all of them are facts, not decisions. What does this customer pay. What is really in stock as opposed to what the list says. Who gets the good material when there is not enough. What went wrong last time. What order things go out in. In the wholesale nursery every one of those routed through the owner because the order system was a folder on a shared drive, and everything the folders did not hold sat with him. Nobody else could run a day without asking.

Getting it out of his head was mostly not a technical job. It was sitting in the seat, watching which questions actually got asked, and writing the answers somewhere the rest of the team could reach them — then making the system the place those answers live, so they stay current without anybody maintaining a document. Once the facts are in a pipeline with a stage, an owner and the data that stage needs, the owner is consulted for decisions rather than facts, which is the job.

4 → 15people at the nursery, with the office unchanged at three — possible only because the next ten people did not have to queue behind one head.

A worked example

Twenty-five questions a day at four minutes each across 250 days: 6,250 questions and 417 hours, or 10.4 working weeks, worth £25,000 at £60 an hour. The askers wait two minutes each: 208 hours and £3,125 at £15. Fifteen days away with 40% of a £4,000 day stalling: £24,000. About £52,000 a year, which is the cost of being the answer — before the growth that never happened because of it.

What does the number leave out?

  • The ceiling. The largest cost of dependency is the growth that does not happen because the business cannot take on more than one head can hold. It is not in the total because it is not a line item; it is the shape of the whole thing.
  • What you would have done instead. The owner's hour is valued at a rate, but the real loss is the sale not made or the hire not coached during those 417 hours.
  • Errors. Answers given from memory at four o'clock are sometimes wrong, and a wrong price or a wrong priority costs more than the four minutes.
  • The value of the business. Buyers discount an owner-dependent business, sometimes heavily, because what they are buying walks out of the door with you. The valuation calculator puts a figure on that; this one does not.

What do you do with the number?

Count the questions for a real week rather than guessing, then sort them into facts and decisions. The facts go into a system — a stage per step, an owner per stage, the data that stage needs attached — and the decisions stay with you. That is exactly what the operations audit maps in two days inside the working week, and it is the first move in every engagement written up in the case studies. The other calculators put numbers on the rest, and the short version of the method is on the byHoratio homepage.

Questions people ask about owner dependency

What is an owner-dependent business?

One where a normal day cannot happen without the owner — because the prices, the stock truth, the customer history, the priorities and the order of work live in their head rather than in a system anyone can read. It works at four people. At fifteen every day queues behind one person, nobody can cover, and growth stops at what that person can hold.

How do I count the questions honestly?

Keep a tally for one real week — a mark on a pad every time someone comes to you for something they could not look up. Include phone calls and messages. Most owners guess ten a day and count thirty. Then note whether each was a fact (what does this cost) or a decision (should we take this job); the facts are the ones a system removes.

What should an hour of my time be valued at?

Not your drawings. Use what the business earns when you are doing the thing only you can do — closing a sale, coaching a hire, negotiating a supplier — divided by the hours you actually get to do it. For most owner-operators that is between £50 and £150 an hour, and it is why 417 hours of answering questions is a five-figure cost rather than a nuisance.

Is this a reason to hire a manager?

Sometimes, but a manager inherits the queue rather than removing it unless the facts are written down somewhere first. The nursery in case study 004 got the knowledge out of the owner's head and into a pipeline per role before it grew, and the next ten hires went onto the nursery and the lorries rather than into the office. The system came first; the people came second.

Does owner dependency affect what my business is worth?

Yes, and usually more than owners expect. A buyer is purchasing future profit they can rely on, and if the customer relationships, the pricing and the daily decisions all depend on one person who is leaving, they discount for it or walk away. The business valuation calculator on this site puts an illustrative figure on that discount; it is not a valuation and you should take proper advice before acting on it.

—One next step

If a normal day needs you, that is a ceiling.

Facts belong in a system. Decisions belong with you. The audit finds which is which, inside your working week. Twenty minutes, no deck, no pitch.

HORATIO@BYHORATIO.COM

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