The E-Myth Revisited

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About Michael Gerber

Michael Gerber is an American author and founder of Michael E. Gerber Companies. This company is a business skills training company based in Carlsbad, California. Inc. Magazine calls him “the World’s #1 Small Business Guru.” Additionally, Michael E. Gerber has written 19 industry-specific E-Myth Vertical books co-authored by industry experts.

Introduction

The E-Myth Revisited dispels the myths about starting your own business. Michael E. Gerber points out how common assumptions, expectations, and even technical expertise can get in the way of running a successful business. The E-Myth Revisited walks you through the steps in the life of a business. It also shows you how to apply franchising lessons to any business. Gerber draws the vital, often overlooked distinction between working on your business and working in your business.

StoryShot #1: Understanding One Business Doesn’t Mean You’ll Understand Similar Businesses

The E-Myth is the myth of the entrepreneur. This myth states that understanding a business’s technical work will allow you to understand any business that does this technical work. This false assumption is the primary cause of several business failures. Connected to this point, Michael Gerber describes what he calls the ‘entrepreneurial seizure.’ This is when workers decide to become their own boss and start a business in their field.

StoryShot #2: The Three Personalities of Business People

Everybody who goes into business is a combination of three people: the entrepreneur, the manager, and the technician. Issues can arise with these three roles, as they are continually in contact with each other. 

1. The Entrepreneur – This part is associated with being a visionary and creative personality. Entrepreneurs crave control.
2. The Manager – Managers are pragmatic and hyper-focused on planning, order, and predictability. Your manager personality craves order.
3. The Technician – The final personality is the technician, characterized by doing and tinkering.

Every business person will have a combination of these three personalities. They will not show up in equal proportions. So, sometimes certain personalities can dominate to the detriment of others.

StoryShot #3: Do What Your Business Needs

Most businesses are run according to what the owner wants rather than what the business needs. Your business is destined to doom if you run a company doing what you want rather than doing what your business needs. This error is often associated with entering the technician personality phase. 

A business has three phases of growth: infancy, adolescence, and maturity.

In the Infancy Stage, the business owner must be a master juggler. They are running all parts of the business. This stage ends as soon as the owner realizes the business must transition and evolve to survive. This transition is often extremely dangerous, if important, for the business.

StoryShot #4: Ask For Help When You Need It

The business adolescence phase starts when you decide to obtain technical help. You have decided you are out of your depth in a specific area and need the experience or skills somebody else possesses. The most common issue associated with this stage is management by abdication. In this position, the owner hands off tasks to employees and then neglects to oversee these projects. So, once the employee has become overwhelmed, the business owner must then take over and start juggling tasks again. Gerber explains that the solution to this problem is to engage your manager’s personality.

StoryShot #5: Look For Solutions When Your Business Grows Past Your Capabilities

Your comfort zone is the boundary in which you feel secure in your abilities as your business owner. These boundaries can vary depending on your mix of the three personalities. If you are a technician, then your boundary relates to how much you can do yourself. If you are a manager, then your boundary relates to how many technicians you can effectively supervise. Finally, if you are an entrepreneur, your boundary relates to how many managers you can engage with to pursue your vision.

Once your business has grown past your ability to control the workload, there are three solutions:

1. Getting small again – Going back to being a business operated by a technician, i.e., business infancy.
2. Going for broke – Growing the business until it eventually self-destructs from its own momentum.
3. Adolescent survival – Adapting and changing to meet the growing needs of your company.

The most important approach as a business owner is to remain educated with a clear plan.

StoryShot #6: The Business As a Network of Integrated Components

A mature business is in control and knows the next step required to get where it wants to be. This stage of the business requires you to harness your entrepreneurial perspective. This does not involve starting with a picture of the business to be created. Instead, the entrepreneurial perspective focuses on the customer for whom they are creating the business. An individual adopting the entrepreneurial perspective views the business as a network of integrated components. These components combine to produce a pre-planned, desired result. 

StoryShot #7: Sell the Business Model

Gerber offers the example of Ray Croc, who was crucial to McDonald’s growth as a business. Ray realized that the hamburger wasn’t his product, McDonald’s was. He used that knowledge to sell the business model (i.e., business franchises) instead of directly selling burgers.

StoryShot #8: Work on Your Business

This mantra means your business and personal life should be completely separate entities. Your purpose in life should be to serve your life rather than your business. The best way to adopt this approach is to imagine your business is merely a prototype of 5,000 more just like it. Pretending you are franchising your business will take away the pressure associated with making your business your life. Imagining your business as a franchise will also push you to develop systems and processes for the business’ employees, suppliers, lenders, and customers. 

StoryShot #9: How to Develop Your Business

Innovation

Your business’ innovation does not need to be expensive or complicated. It must be an alternative and more effective approach. Crucially, innovative approaches almost always take the customer’s point of view into account. To innovate, ask yourself, ‘What is the best way to do this?’ Your changes should make things easier rather than more complicated for you. Changes to your business that make matters more complicated are complications rather than innovations.

Quantification

Quantification is necessary to measure innovation. Use quantification to determine if innovation is working or failing. For example, quantifying how many customers you have each day or how many people ask for prices. Thinking of your business in terms of numbers will let you know where you are and where you are going.

Orchestration

Orchestration is the elimination of discretion at the operating level of your business. If you can remove discretion, then you can own your business and maintain order. This order and dependence allows you to have a franchise. 

StoryShot #10: Develop Your Own Business Development Program

Your Business Development Program is the step-by-step process through which you convert your existing business. Specifically, converting into a perfectly organized model for thousands more just like it. Gerber offers seven distinct steps to establish this development program:

1. Your primary aim
2. Your strategic objective
3. Your organizational strategy
4. Your management strategy
5. Your people strategy
6. Your marketing strategy
7. Your systems strategy

StoryShot #11: The Aim of Your Business

The primary aim of your business is to answer the following questions:

• What do I value most?
• What type of life do I want?
• Who do I want to become?

Identifying your primary aim is all about actively creating your life rather than waiting to see where life takes you next.

StoryShot #12: The Standards of Your Strategic Objective

Your strategic objective is not a business plan. Instead, it is your business and should reflect your life plan. So, your strategic objective consists of standards. 

1. The first standard is money. Set up financial targets defined by metrics, like gross revenues, gross profits, or another financial measure.
2. The second standard is determining whether your idea is worth pursuing. You can define this standard by considering your true product rather than your commodity. The commodity is the thing your customer walks out with in their hand. The product is what your customer feels as they walk out of your business.

StoryShot #13: Functions Rather Than Personalities

Your company’s organization structure is one of the most important systems. You should be aiming to develop your organization’s structure based on functions rather than personalities. Despite this, most businesspeople prioritize personality, and the result is chaos. Develop an organization chart with the company’s needs and define the key roles. Try to remove the individual from the function/role. Utilize organization charts to fuel your prototyping process. Document and codify the important innovations for each role in an Operations Manual. This can include things like checklists for different tasks. Once the Operations Manual is complete, the business owner can run an advert for the job and attempt to fill the role. 

StoryShot #14: Your People, Marketing and Systems Strategies

People

The work you do is a reflection of how you are. If you are sloppy with work, then you are being sloppy inside. Similarly, if you are late with our work, then you are late inside. So, when completing work, try to look inside of yourself. This also applies to work generally considered undesirable. Gerber believes there is no such thing as undesirable work. Instead, there are simply people who view work as undesirable rather than an opportunity to discover who they are. Even typically undesirable work offers a reflection of your personal character. This also applies to recruitment. Find people willing to work within your system, not people who believe they have a better one.

Marketing

Your marketing strategy should be all about your customers. What you want is unimportant; it is what your customer wants that matters. When marketing, consider promises no competitor would dare to make. Then, make these promises yourself and keep to them.

Systems

There are three main types of business systems: hard systems, soft systems, and information systems. 

Your hard systems include inanimate items, like the physical space and hardware your business owns. So, your factories and machines are part of your hard system. Comparatively, your soft systems are animate and include the ideas and business processes supporting your business. Finally, information systems offer the bridge for and provide information about the interaction between the two other systems. Examples of information systems are inventory control, cash flow forecasting, and sales reports. 

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