Why Your Business Depends Too Much on You

Most businesses don’t stall because of strategy. They stall because everything depends on the owner.

In this episode of Entry & Exit, Stephen Olmon and Collin Trimble break down the hidden cost of founder dependency — why owners become the bottleneck, how it limits growth, and what eventually breaks when every decision runs through one person.

They share lessons from scaling Alarm Masters, empowering employees to make decisions, and building a company that can grow without the owner at the center of everything.

Inside this episode:
→ Why founders become the bottleneck
→ The danger of tying the business to your identity
→ How owner dependency hurts growth and exits
→ Empowering employees to make decisions
→ What breaks when every relationship runs through the owner
→ Building a scalable company structure

🔗 More Entry & Exit — https://www.entryandexit.co/

Connect:
Stephen Olmon — http://x.com/stephenolmon
Collin Trimble — https://x.com/TXAlarmGuy

Owned and Operated

New Episodes Every Wednesday!

Subscribe For More

Transcript

When Owner Dependence Breaks

SPEAKER_00 0:00

Those sub 1 million are people that the whole business revolves around the owner and they're amazing. They're a unicorn. They're the best at what they do, but they didn't invest in building layers and levels within the organization to expand. That sellers want to brag about how much they know. You want to brag about how little you do in your business and how the business runs without you. That is music to a buyer's ears.

SPEAKER_01 0:26

It's not even that you feel burdened to, Mr. or Mrs. Owner. I think you like being the center. If you ever want to exit, it will hurt you and you'll look back and regret that you operated that way. And at a certain point, that's race.

Meet the Hosts

SPEAKER_01 0:49

My name's Steven. I also have Colin here with me, and this is entry and exit. What do you what do you think?

SPEAKER_00 0:58

What do you think about that?

SPEAKER_01 1:00

It's kind of like it's kind of like Ryan Seacrest, and this is a marathon idol.

SPEAKER_00 1:04

Will you sing for everybody?

SPEAKER_01 1:06

Yeah, here we go. You ready?

SPEAKER_00 1:08

Yeah.

SPEAKER_01 1:10

And uh kid. Um but we're having fun. We're having fun. Um Colin, tell us what we're talking about on this episode.

SPEAKER_00 1:20

Yeah, we're gonna talk about how you can maximize the value of your business, enterprise value of your business. It also happens to be it happens to also be a good operational thing to do. And that is make your business not depend on you. It's a big problem. We I think that it is the most pervasive problem in this industry. And just quickly zoom out. There's a uh massive concentration of security integrators, fire alarm companies that are sub-million dollars of EBITDA, and there is a small but very large group that are in the tens of millions of dollars of EBITDA and plus 100 million for some of them. And that and there's a massive gulf between both of those groups. It's not zero, but it's very small. And I will tell you the reason why I think that is I think that's one of two reasons. One, I think it's because people those sub one million are people that the whole business revolves around the owner. Yeah, and the owner cannot break through that ceiling because it's so dependent on them, and there's only one of them, and they're amazing, they're a unicorn, they're the best at what they do, but they didn't invest in building layers and levels within the organization to expand. You have to invest in your people that then go and build your business. And so the uh groups that are buying businesses know that. And so the ones that are very aggressive, where the owner is involved in all the sales, all the operations, all the purchasing, and all the tribal knowledge. And it's like a really common thing that sellers want to brag about how much they know in the sales process of their business. And that's actually the worst thing you could do. Yeah, you want to brag about how little you do in your business and how the business runs without you. That is music to a buyer's ears.

SPEAKER_01 3:23

The involvement doesn't equal value.

SPEAKER_00 3:26

Yeah. Well, and exactly. And by the way, if you're not selling your business, fine. Like that's great. But again, if you want to break through the million-dollar EBITDA ceiling, you have to be hyper focused on how do I build this business without me? It cannot, I cannot be single-threaded. You should be able to go on a week-long vacation and the business run totally fine without you. And that's I think that's a fantastic litmus test.

SPEAKER_01 3:50

I do too.

Spicy Take on Being the Center

SPEAKER_01 3:51

Uh, here's a really spicy take. And we didn't talk about this, but I'm gonna throw it out there. I'm interested in your response. Okay. I think, and even some of you listening to this, and this isn't just true of our industry. This is small business ownership. It's not even that you feel burdened to, Mr. or Mrs. Owner. I think you like being the center. I think you have I like the identity of everything hinges on you and you're the person, you make it all happen, you're the star. Yeah. I I think some of you need to assess like your relationship with your business because you actually kind of like that reality. But the problem is, if you ever want to exit, it will hurt you and you'll look back and regret that you operated that way.

SPEAKER_00 4:52

I totally agree with that statement. But I but I think I I think here's another thing. We we actually talked about this on a previous episode that um what happens is owners get some success and then they start to take a draw out of their business, and so they want to spend the least amount of money. A lot of the owners we see, and this is great, like you if you watch your pennies, the dollars will follow. Like we subscribe to that. Um but I think there's some things that you should try to be. There's a difference between being scrutinizing where spending is going and being cheap. And I think if you're being cheap, particularly around talent, you're gonna get cheap results. And so if you want to be cheap in technology, if you want to be cheap in your uniforms for your employees or your vehicles or your rent, fine. You especially if you want to be cheap on how you purchase, like great, get a really tight purchasing, like find the levers, but cheap with your employees. I just I don't think that's gonna work out long term. And so as a result of that, you're gonna have to get comfortable not taking as much money out of your business every year. It's like, oh, I pay myself $250,000 a year and I scoop out $400K at the end of every year. I like that. I'm comfortable with that. My life is built on that. And so um, I think you're gonna have to get used to spreading those dollars around into your business. So again, how do you what are some common signs um of or like what is the like symptoms or yellow flag of founder dependence or key man risk? What do you think, Steven?

Bottlenecks That Kill Scale

SPEAKER_01 6:20

Way too much has to flow through you. Like, even things that are in the weeds, every single proposal or estimate, like it all has to be kind of green-lighted by you. Um, and it depends on size. Like, if you're a team of eight people, like you probably are involved in every single hiring decision or interview process. I understand that. But you know, as you start to grow, like if every single little thing is running through you, you're never gonna scale.

SPEAKER_00 6:56

Yeah, I agree. I think uh another one is we just talked about this earlier, is no second layer of management. Um, if you if you have little to no second layer of management, that's a problem. Um I think a really good litmus test is you have at a minimum one third layer of management somewhere in your business, and that just shows that you're maturing. Um, how about this one? No documented SOPs.

SPEAKER_01 7:23

Yeah, it's uh that's a bad habit. Yeah, that's um that's a that's a no-no in uh alarm master's world.

SPEAKER_00 7:32

Yeah, yeah, it is. Um, and so when you are selling your business or thinking about selling your business, you're gonna get asked questions like who runs operations? Who runs sales? Who does the billing? What happens if you disappear for 90 days? And the way that you answer those questions is gonna determine some valuation that your company is, you know, being assigned. Yep. Um, and so you got to be truthful because the the due diligence provider is gonna find it out anyway. But I would ask yourself those questions today and start to rectify them today. And if you've got to place some bets, we're a growth forward business. So we're always investing, we're sales led. We're very unique in the industry in that we're a sales-led organization, not operations led. So we're gonna invest a lot of our resources into sales and marketing um to begin, to start. And then that pulls operations forward, and we uh naturally have to invest in operations versus the other way around where it's like, oh, we have overhired for technicians. It's like, hey, yeah, get that, gotta do that, gotta solve for that. But also, like, we're gonna really go heads down on sales and marketing.

SPEAKER_01 8:38

Um I mean every customer, every single relationship. There was no separation between the owner and hundreds of customers. Like, and at a certain point, that just breaks.

SPEAKER_00 8:51

Yeah, it breaks and it makes it really hard. It also what what it flags is higher churn risk, right? Like it's it's telling whoever's buying or valuing your business that there's a higher churn risk of emplo of employees and I really meant customers, but also employees, right? Like you potentially have a bunch of employees that really rely on that owner and they're like, hey, and here's the scary part about the employee thing. By the way, we've discovered this. Employee churn doesn't happen day one. So if you have this fear that like you're gonna walk in and your employees are all gonna leave, I mean, that that hasn't happened to us yet. I hope it never does. That's not been our experience, and we haven't really heard stories about that. It happens slowly, and it happens because the owner is involved, is the duct tape that holds everything together, and that's what the employees are used to. And and they're also used to a certain amount of lack of micromanagement in areas because you know, like, for example, when we bought Alarm Masters, the owner, God bless him, he was amazing. He did everything, but there were certain parts of the business where it's like nobody was really paying attention to this, so the employees were kind of just doing whatever they wanted. And and it was like, no, we're not gonna do that. Like, we're gonna be productive, and here's how we're gonna handle that. We're gonna have a standard for how we, you know, whatever. And and they didn't like that. So it wasn't that they didn't like us, it's just that they didn't like that we were enforcing some KPIs and structure the business. So I think that like if if you're if you're there's a lot of key man risk or or whatever founder dependency, you're gonna see that pop up a lot.

SPEAKER_01 10:20

Yeah.

SPEAKER_00 10:21

Um, how do we just to kind of like close the loop on it? Um how do we reduce the founder risk? Like, what are the steps we can take today, aside from just second layer management, whatever? Like, what are the things we can do to reduce that today?

Inventory Your Responsibilities

SPEAKER_01 10:37

Well, the very first thing you have to do as an owner is take an inventory of everything that you're responsible for. So I think that's great. A lot of owners don't even really realize how much they're doing. Like, I sat with an owner last year, and he started out telling me how he's got this great team and all these things, and he's, you know, it's not all on him. And then progressively through the conversation, as we started to kind of talk things out, he literally said, Man, I guess I do kind of have two or three jobs now that I think about it. And it's like, we're all the way here, you know, talking to him, you know, over a burger about you wanting to sell your business. And it was really the first time he had fully realized and acknowledged just how much he was responsible for. So I think that's the first big step. And I would encourage anyone in that scenario to be very detailed.

SPEAKER_00 11:30

Yeah. Yeah, I agree. I I would say uh one thing is to document SOPs. Everything that's in your brain that you verbally hand off to employees, you should start uh documenting those SOPs. Hey, use ChatGPT or Claude or something, pay a $25 a month subscription, talk in natural language, use your voice to text, doc, and it will document it for you with a nice, pretty graphics and words. And then just throw that thing in Google Drive or wherever. Um, have it documented. Due diligence providers will ask for that. Um, I think another thing is figure out a way to start transitioning your customer relationships. That's probably the most important one is like, how do I get these key customer relationships to have a relationship with somebody that's not just me? You don't have to go away, but if they're calling you for every service call, every sales call, every billing issue, you've got to delicately be handling, handing those off to other people in your department. And I'll just say, like, again, we put my I put my phone number, direct phone number, on our website for customers to call anytime they have a problem. And inevitably, I do get calls, got a call yesterday, had some billing issue, and somebody called me and I called them back. And I listened for two and a half minutes and I said, Hey, I'm not even in the loop on that, and I'm super sorry that you had that experience. Let me get Brian involved and loop him in here. Can I loop him in on this phone call? And they're like, Yeah, yeah. So I get Brian involved, Brian starts talking to him. The problem is solved, Brian handles it. Next time that customer's not gonna call me, he's just gonna go to Brian. Or what's gonna happen is I'll be traveling, the guy will call me again, I'll say, Hey, Brian, can you call this customer real quick? Tell him I'm traveling. The whole relationship's been transferred. And that doesn't mean I'm not available. If something bad happens and the customer really needs to get a hold of me, they can get a hold of me. Right. Right. But but I think transitioning those customer relationships, and it's not it's not that you're transitioning the ownership of it, you're just transitioning certain pieces of that relationship are going to other people that are not just you. You're still there, and that's the message to the customer. And I think if you talk to the customers at Alarm Masters

Empower Decisions and Wrap Up

SPEAKER_00 13:31

that are strategic customers, they would say we've done a decent job at that.

SPEAKER_01 13:34

Yeah. One one other thing, which I alluded to earlier, is just not being the center point of all decisions. And so you have you have to be intentional to start to push all of that decision making kind of down the org chart. And um it that really is, I mean, it kind of sounds like a woo-woo word, but you have to empower your employees to make decisions and for them to feel comfortable like it's allowed. Like, no, no, no, no. It's not because I'm busy. It's it's not because you know, uh, I don't want to deal with it. That's a bad attitude, right? It's it's because I'm trying to help you become X, Y, or Z, right? I'm I'm trying to help you be empowered to make significant decisions in our business. And now that happens on a daily basis at Alarm Masters where people are entrusted to make really important decisions all day long.

SPEAKER_00 14:26

Yeah. One way that you do that is every time an employee asks you a question about how to handle a situation, you say, What would you do? What do you think? Because like sometimes they're not gonna nail it, but a lot of times they are. A lot of times you're they're gonna surprise you and they have the right answer already. But if they don't, it's almost a win-win. Because if they don't, you can say, Hey, I'm just gonna correct that a little bit. And let me explain the why. If you get into the why of the way you're thinking about it, your employees can start to reason like you reason, right? Like they can start to think through the lens of everybody jokes in the office all the time about like what would Colin say about that? Like, that's always they're just like, What would Colin say about that? And and it's like it's always usually something like he'd have a one-word response because all my emails are just like one word or two words, like yes, or do better. I'll always sit like somebody will send me something and I'll just reply jokingly, I'll be like, do period better. And um, and so they they like they start to get like, hey, this is how he thinks. Like, I don't even necessarily like so. The great thing for me is when they there's a customer problem and I'm not even involved in it. And but then I get to talk to him afterward, like, hey, how'd you handle that? How'd you think through that? What was your thought process? So, yeah, I think uh whether or not you're selling your business or not, like enterprise value and growth and structure, those two things go hand in hand. We talk about this all the time. There's a reason buyers pay more and you have higher enterprise value, and that reason is you have a better operating business. That's that's just the simple truth. Those two things are not mutually exclusive. It's like, hey, you keep an enduring business, keep it for decades, but some of these are just fundamental truths.

SPEAKER_01 15:59

Um that's right. And if these fundamental truths are appealing to you, especially in the way we express them, then you should you should like them and you should comment on them and you should subscribe to them further and share them with your neighbor, uh, your mom, anybody. We invite them.

SPEAKER_00 16:19

I would love if your mom would listen to this podcast, honestly, at the end of the day. Well, we appreciate it. Thanks for listening. Have a great week.