Since 1986, businesses across the world have been devouring the pages of Michael Gerber’s book, the Entrepreneurial Myth or ‘E-Myth’. In fact, it was so successful that in 1995 an updated version was published – the E-Myth Revisited.
According to the E-Myth website, the E-Myth Revisited is one of the five top-selling business books of all time and has been translated into 27 languages. Evidently, it has struck a chord with business owners over the years, and continues to do so to this present day.
So, what wisdom does Gerber convey in this slim volume? Well, it is all founded on the basis that –
- Most businesses are blighted by the entrepreneurial myth: that is, the myth that most people who start small businesses are entrepreneurs, and
- The fatal assumption that an individual who understands the technical work of a business can successfully run a business that does that technical work
As a business owner reading the E-Myth, you might find that you know a lot of the information already. Or it might confirm that you are already doing the right thing. Or it might provide you with an entirely new perspective. You have to read it to find out.
Whatever your opinion, the E-Myth has helped countless businesses focus their energies in the right direction. There are a number of important to lessons to learn, and while it is not possible to list them all, here are seven to get you started.
Being a technician is not enough
The E-Myth all comes down to the fact that most businesses fail because they are started by technicians. In other words, people who are specialists in their field. Perhaps you are a lawyer, so you start a law firm. Maybe you are a letting agent, so you start a lettings agency. Or perhaps you are a barber, so you open a barber shop.
The problem is that a technician does not know anything about running a business. You may give the best haircut in the world, but that is not enough to succeed. Instead, a business owner must take on an ‘Entrepreneurial Perspective’ and ask questions such as ‘how must the business work?’, rather than ‘what work has to be done?’
You might think this is a subtle difference, but it isn’t – it is all about the way you approach your business, and ultimately this can be the difference between success and failure.
Strive to be mature
According to Gerber, there are three stages of a business – infancy, adolescence and maturity. Some businesses go through each stage in a linear fashion, others do not make it out of infancy or adolescence, others go back and forth.
Ideally, however, you should start out as a mature company. To do so, you need to have an Entrepreneurial Perspective from the get go.
As a mature company you will still go through infancy and adolescence. Yet you will do so knowing what path you have taken to reach your current destination, and what path you must take to reach your desired destination. And that destination, Gerber says, is ‘a business that works because of you but without you.’
Work on your business, not in it
Which leads on to the next important lesson – as an entrepreneur, you must work on your business, not in it. Gerber reiterates this sentiment time and time again throughout the book. As he puts it: ‘if your business depends on you, you don’t own a business – you have a job. And it’s the worst job in the world because you’re working for a lunatic.’
Your business should not depend on your presence. That is not why you started a business. You started a business to have more freedom, to have more fulfilment, and yes, maybe even to make more money. But none of this is possible if your business relies on you. In fact, you will probably have less freedom, less fulfilment and less money.
Remember, ‘your business is not your life.’ How do you avoid this from happening? Be more like McDonalds, of course.
Be more like McDonalds
Gerber holds up a number of businesses as examples of good practice. But none more so than McDonalds. He describes that when Ray Kroc invented McDonalds, ‘he set about the task of creating a fool proof, predictable business. A systems-dependent business, not a people-dependent business. A business that could work without him.’
And that is what all business owners should aspire to achieve. Every McDonalds across the globe uses the same systems. Why? Because they work, regardless of the turnover of staff. By this, he means that the customer receives exactly the same product in exactly the same way every single time. Consequently, the customer is never disappointed because their expectations are always fulfilled.
So, how do businesses do this? Firstly, by organising the company around their functions. Secondly, by implementing the necessary systems.
Gerber states: ‘most companies organise around personalities rather than around functions. That is, around people rather than accountabilities. The result is almost always chaos.’
That is not to say that your business should not be human. It’s just that each person needs to know what their job title is and what their accountabilities are. It is not enough to share the work as and when it arises. You must give everyone a position, tell them what that position entails, and decide how each of their tasks must be performed. Ideally, this involves writing clear job descriptions for each role, and instruction manuals for each task.
Otherwise, you may find yourself in a situation where only one person knows how to complete a particular task. What if that person goes off sick, or leaves the company altogether? You may be able to muddle through, but it will take time, effort and your service will not be consistent – meaning it falls short of your customer’s expectations. None of these things are good for business.
Systems are the solution
Once you have organised your business around the functions, you then need to implement the systems. Because guess what? People don’t run businesses – systems do. Or at least, they should if you want to increase productivity, improve customer satisfaction, and make your business more efficient (so you can spend more time working on your business, rather than in it!)
Gerber reminds us that people are ultimately unpredictable. They don’t show up for work, they move companies, they forget things, they make mistakes. But your customer doesn’t want unpredictability – he wants his expectations fulfilled each and every time. Just like we know what we are going to get when we visit a McDonalds. There are no surprises.
Systems, then, are the solution. Systems make your business operate consistently. Systems ensure anyone can complete the same task, even a new member of staff. Systems allow you to step back from your business, because your presence is not required – everyone just needs to follow the system and the work will get done in precisely the way you want it.
Change is needed
Lastly, change is not a bad thing. In fact, it is a good thing. All businesses must change in order to grow, particularly those which are not currently realising their maximum potential. As Gerber says: ‘if you are unwilling to change, your business will never be capable of giving you what you want.’
So, cast a critical eye over your business and consider whether you have the necessary organisation, structure and systems in place to thrive. If not, change is a must.
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