E-Myth Revisited is one of those classic icons of the small business/entrepreneurialism genre, up there with the Richest Man in Babylon, the Four-Hour Work Week, and Rich Dad, Poor Dad. I had come across references to the book and it’s author, Michael Gerber, while taking the Entrepreneurial Learning Initiative many times and I really respected what the man had to say and what he accomplished, but I never got around to reading the book. Finally, while doing research for a blog entry I came across the E-Myth web site and it is class. No more excuses! I picked up a copy of the book and began to read.
EMyth.com
What It is All About
The central point of the E-Myth Revisited is that most small businesses don’t work because most small business owners have really created themselves a job, not a business. A real business should have structure and planning and a system in place that is so flawless that it does not require the owner to work in the business as an employee, but rather on the business as an entrepreneur; doing the heavy work of thinking, planning, and refining the system.
In Gerber’s eyes, most business owners get the entrepreneurial bug and leave the business that they are in, in the profession that they have trained for (people Gerber calls “Technicians”), to start a competing business in the exact same field, because that is what they know how to do. The problem is what the Technicians don’t know how to do, which is actually run a business. But because they are uncomfortable or unfamiliar with that role, they put it off by burying themselves in other tasks. Gerber puts it much more eloquently as “most businesses are driven by Technicians who lose themselves in the minutiae and the work because that is what they know how to do.”
How Do I Make My Business Work?
Alright, now that we know what’s wrong what are we going to do about it? In Gerber’s eyes we all, and especially those of us whom already have a small business, have an Entrepreneur lurking within us. This Entrepreneur needs to be nurtured, developed, and brought into the running of our small businesses. Gerber says, “to the Entrepreneur, however, the customer is always an opportunity. Because the Entrepreneur knows that within the customer is a continuing parade of changing wants begging to be satisfied. All the Entrepreneur has to do is find out what those wants are and what they will be in the future. As a result, the world is a continuing surprise, a treasure hunt for the Entrepreneur.” This is about as beautiful of prose as you will find in a small business book.
Once this inner Entrepreneur is given his rightful place in the business, he immediately gets to work reorganizing the business so that it becomes a system and not a job. The system is modeled after the most successful business model for developing entrepreneurial success of all time, the turn-key business franchise and specifically that of McDonald’s. Gerber really drums in the necessity of consistency for success and lays down the following rules.
- The model will provide consistent value to your customers, employees, suppliers, and lenders, beyond what they expect.
- the model will be operated by people with the lowest possible level of skill.
- The model will stand out as a place of impeccable order.
- All work in the model will be documented in Operations Manuals.
- The model will provide a uniformly predictable service to the customer.
- The model will utilize a uniform color, dress, and facilities code.
According to Gerber people crave consistency, which is why the fast food restaurants do so well, they create a uniform experience wheresoever in the world you may be. It is not enough for service to be excellent, it must be excellent in the exact same way every time.
The Importance of Accounting and Other Key Points
In one of my favorite sections Gerber gives up a little love for the nerdiness that is my profession, accounting. Gerber stresses the need for the quantification of your efforts. In this he is not just talking about products sold or dollars made, he is talking about the quantification of the consistency of your business model. Gerber says, “because without the numbers you can’t possibly know where you are, let alone where you’re going. With the numbers, your business will take on a totally new meaning. It will come alive with possibility.” An appeal right to my heart.
“Find a perceived need and fill it,” is another great line from the book. The emphasis here is on perceived. If someone needs something (like great accounting and help in the quantification of their success) but doesn’t perceive that they need it then it is really of little use to the entrepreneur.
Some other great lines include:
“In fact, there isn’t a function or position withing the company that is free of asking marketing questions, if by marketing we mean, “What must our business be in the minds of our customers in order for them to choose us over everyone else?”
“The customer that you’ve got is one hell of a lot less expensive to sell to the the customer you don’t have yet.”
What This Book Can Do for You
Man, if you have a new business or are planning on starting a new business pick this up and read it now. I’ve laid out the bullet points here but Gerber really drives it home with some top-shelf, beautifully written prose. The book is actually an incredible relief for most of us, as you don’t have to have an MBA to run a small business and you don’t have to re-invent the wheel. You don’t even need tons of money or a revolutionary product. Just follow the trail blazed by Ray Kroc and make a quality system that allows your business to thrive an removes you as far a possible from being an employee of the business and allows you to focus on direction, organization, and innovation.
If you read as many business books as I do then some of this might seem to be very familiar. That’s because the book was written in 1995 and so many later writers have borrowed from it’s teachings. I read some passages and was reminded of Robert Kiyosaki or Tim Ferriss only, of course, it is they who were influenced by Gerber.
Bottom line, if you’re in the trenches starting up a new business and putting in the hard hours and incredible effort that it takes to get there then Gerber provides you with a road map and shows you the light at the end of the tunnel.
Please leave your questions or offer your solutions below. As the WebCPA and the author of WebBizFinance.com, my job is to help you grow your business and solve your business finance and accounting problems!
Tyler
