The E-Myth Revisited by Michael Gerber tells us why most small businesses fail. And what we can do to make our small business thrive.
- Bullet Summary
- The E-Myth – Full Summary
- Chapter 1: The Entrepreneurial Myth
- Chapter 2: Entrepreneur, Manager & Technician
- Chapter 3: Infancy, The Technician Phase
- Chapter 4: Adolescence, Getting Some Help
- Chapter 5: Beyond The Comfort Zone
- Chapter 6: Maturity and Entrepreneurial Perspective
- Chapter 7: The Turn-Key Revolution
- Chapter 8: The Franchise Prototype
- Chapter 9: Working ON Your Business, Not IN it
- Chapter 10: The Business Development Process
- Chapter 11: The Business Development Program
- Chapter 12: Your Primary Aim
- Chapter 13: Your Strategic Strategic Objective
- Chapter 14: Your Organizational Strategy
- Chapter 15: Your Management Strategy
- Chapter 16: Your People Strategy
- Chapter 17: Your Marketing Strategy
- Chapter 18: Your System Strategy
- Real Life Applications
- Think systems and replicable results (like a franchise).
- Develop a life vision and make the business a part of that life
- Work ON the business, not IN the business (hire others to do your work)
The E-Myth – Full Summary
The E-Myth Revisited is divided into three parts:
- The current state of American small businesses (chapters 1 to 6)
- A theoretical overview of how things should be (chapters 7 to 9)
- The practical steps to build an effective business machine which will be independent from you -and eventually make you free and independent (chapters 10 to 18).
Chapter 1: The Entrepreneurial Myth
Michael Gerber says that many people who get into business do so because they don’t want a boss. And they believe that because they know what they’re doing, then they know how to run their own business.
Chapter 2: Entrepreneur, Manager & Technician
Michael Gerber affirms most small businesses fail because owners are technicians lacking manager and entrepreneur qualities.
The technician lives in the present and is all about doing the job. He starts a business because after getting tired of working for someone else.
The manager plans and organizes, he clings to the status quo and craves order.
The entrepreneur is the visionary living in the future and moving from idea to idea, often without setting up all the necessary processes for the business to succeed in real life.
Chapter 3: Infancy, The Technician Phase
Most people who start a business are technicians. They know how to do the job and start a company doing what they’ve been doing before. The owner and the business are exactly the same.
But, says Gerber, if your business depends on you and you do what you’ve always been doing before, you don’t own a business, you own a job.
Chapter 4: Adolescence, Getting Some Help
The moment a business start hiring, it’s when the technician moves to the manager phase.
The most common mistakes of early managers -and often of managers in general- is that of doing the most of the work themselves instead of teaching and delegating.
Chapter 5: Beyond The Comfort Zone
Gerber says that ones you start hiring it gets difficult for most people as they are for the first time outside of their comfort zone and have to rely on other people
Some people shirk from it and, out of fear, they go back to being just by themselves. But, says Gerber, there’s no going back after you’ve started hiring. Going back solo is an implosion, and few businesses survive it.
Grow slow if you need to grow slow, but don’t go back.
Chapter 6: Maturity and Entrepreneurial Perspective
Gerber says that great business don’t become great once they mature. Yes you must go through Infancy and Adolescence, but great business started great.
He talks about IBM, and how the company was all about building a business, not doing a business.
Building a business means putting in place replicable systems that produce results for the customers.
And the secret to starting out a great business is to imagine that business, well defined, as it should be once you’re mature. Then go back, map what it takes you to get there and start building that vision into a reality.
Chapter 7: The Turn-Key Revolution
Michael Gerber says that a great, self reliant business is built on systems, not on people.
Chapter 8: The Franchise Prototype
Michael Gerber takes McDonald to explain how the franchise is the best model -and mentality- for small business to succeed.
The franchise has its strongest point in the systems it develops.
The franchise systems allow your business to become independent from you as the owner and founder.
If you get stuck in your business as a technician you will always be a slave of your job.
Chapter 9: Working ON Your Business, Not IN it
Working on your business means starting putting in place all the systems that will make the business work no matter whether you’re there or not. And no matter whether people leave or you hire new ones, because the systems makes it easy for everyone to do the work.
The right questions you to ask yourself are:
- How can you get your business to work without you -you’re free!-
- How can you make your people independent from you
- How can you build a business you can replicate a hundred times
- How can you set your time to do what you love instead of what you have to
Chapter 10: The Business Development Process
Michael Gerber goes into a territory here that some more artistic folks would hate, and something that Seth Godin seems to disagree with (read Linchpin).
The author say you should be able to read everything about your business through number. Quantify everything, and make sure you can easily take your business’ pulse by knowing what the key metrics, the ones that really matter, are.
The model that Gerber here describes reminds a bit of Charlie Chaplin’s movie and of Taylor. He says that your business should be predictable, and to be predictable your employees should have no discretion on their job. Because if you depend on people, you get chaos and you can’t replicate it a hundred times. And if that’s the case, ultimately, you don’t own the business.
Chapter 11: The Business Development Program
How do you build such a replicable business? With the Business Development Program, consisting of the following steps:
- Primary Aim
- Strategic Objective
- Organizational Strategy
- Management Strategy
- People Strategy
- Marketing Strategy
- Systems Strategy
Chapter 12: Your Primary Aim
Michael Gerber asks what’s your life goal.
Because Business is a part of it, but your primary goal should be bigger than the business itself. Once you know your primary aim, it allows you to bring your business to life AND life into your business.
Chapter 13: Your Strategic Strategic Objective
Your strategic objective tells you how does your business fit into your Primary Aim. What does the business have to do so that you can fulfill your life’s Primary Aim?
This is not a business plan, it’s a life’s plan.
Chapter 14: Your Organizational Strategy
The organizational strategy ties back to working on the business rather than in the business. It means doing strategic work and then hiring technicians -Michael Gerber recommends as lowly skilled as possible- to do tactical work.
Example: at the very beginning you sell in the position of sales rep. But you start working right away on the sales rep position as a VP marketing by producing manuals and script for the technicians that will soon replace you.
Chapter 15: Your Management Strategy
By now you probably understand Michael Gerber, and the management strategy is no different. A perfect management strategy, of course, is automated.
A system where managers won’t have to make decisions at all. You can’t depend on highly skilled and too smart, big ticket people. They will come with too much power and when they leave it’s hard to replace them.
Effective and automated systems for low skilled workers is the answer and the key to your freedom.
Chapter 16: Your People Strategy
Michael Gerber says that you can’t get people do what you want, but you can create an environment where doing is more than important than not doing it.
The author gives the example of an hotel manager training a young employee, explaining the primary aim and
acting as a life mentor. He teaches concepts such as work as a reflection of ourselves and as an opportunity to be the best person we can be.
It’s not clearly stated, but I loved how the the chapter highlights that if you want to have great people working for you, you gotta become a great man first.
Chapter 17: Your Marketing Strategy
Michael Gerber says you should learn your market demographics (science telling you who buys) and psycho-graphics (the science of perceived marketplace reality, why they buy something).
How do you find out? Ask them and give them freebies for their answers. Ask them their favourite colors, perfume, brands. And see how those brands advertise.
The E-Myth Revisited has examples such IBM and UPS brand colors, but the book here is more about raising questions than answering them -unluckily-.
Chapter 18: Your System Strategy
Make sure that all the systems work well together and then you’re set.
There’s a beautiful example of a selling process called “powerpoint presentation method”, and it was very good. Definitely worth checking out the book: get The E-Myth Revisited on Amazon.
Real Life Applications
You know by now how to apply it. Don’t just do the work, think how you can automate the work and replace yourself with a system that doesn’t always need you.
Then you’ll be free.
Michael Gerber uses the popular writing method of “imaginary dialogues” where he speaks with a struggling small business owner.
The dialogue takes quite a bit of space and some simple concepts didn’t need that much space.
- Manuals for perfect systems.. ?
The idea of “detailed manuals” to give to low skilled workers is appealing and it’s an important concept.
It’s presented a bit simplistically though in what seemed the “external consultant way”. Most manuals I’ve seen gather dust and risk demeaning the workforce.
And my first reaction was that if you’re into reading and acting on it, chances are you wouldn’t be low skilled 🙂
- People Easily Replaceable?
The suggestion of hiring low skilled workers on purpose and building systems around it is, well… Quiet a goal that would deserve discussion under the moral and ethical codes.
Also, if in the process of building a system that uses people like pawns you fail.. It’ll come across you didn’t really care for the people and at that point you’ll just have a shi**y company (read more on how to treat people in Leader Eat Last by Simon Sinek)
The E-Myth Revisited by Michael Gerber is a great book, and particularly useful if you’re heavily into one of the 3 workers Gerber outlines because it will open new doors for you.
Three great lessons I will keep from the The E-Myth:
Make your life bigger than your business
A life vision bigger than the business will help you bring your business to life and bring your life -and passion- to your business.
It’s a key concept for a successful, happy and balanced life.
Business as a dojo
Michael Gerber introduces us the concept of business as a dojo: a place to learn about yourself and improve.
That’s an incredibly healthy and productive way of looking at business.
Become a great leader to get great people
And this is true for every other area of your life.