The E Myth: Why most small businesses don’t work and what to do about it
Michael Gerber
Description
Gerber walks you through the steps in the life of a business – from entrepreneurial infancy through to adolescent growing pains to the mature entrepreneurial perspective: the guiding light of all businesses that succeed – and shows how to apply the lessons of franchising to any business, whether or not it is a franchise. Most importantly, Gerber draws the vital, often overlooked distinction between working on your business and working in your business.
Key words: Business, entrepreneurship, leadership
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My Notes
E-myth – 1: The entrepreneurial myth: the myth that most people who start small businesses are entrepreneurs 2: the fatal assumption that an individual who understand the technical works of a business can run a business that does that technical work
What to do
The Business owner is three people in one: an Entrepreneur, Manager and Technician.
The Entrepreneurial Model - When the entrepreneur creates the model, he surveys the world and asks, ‘where is the opportunity?’ Having identified it, he then goes back to the drawing board and constructs a solution to the frustrations he finds among a certain group of customers. A solution in the form of a business that looks and acts in a very specific way, THE WAY THE CUSTOMER NEEDS IT TO LOOK AND ACT, not the entrepreneur.
The entrepreneurial model looks at a business, as if it were a product sitting on a shelf and competing for the customer’s attention.
The commodity isn’t what’s important – the way it’s delivered is.
The entrepreneurial model does not start with a picture of the business to be created, but of the CUSTOMER for whom the business is to be created. The entrepreneur understands that without a clear picture of that customer, no business can succeed.
The customer is always an opportunity to the entrepreneur. 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.
What not to do
The technician on the other hand, looks inwardly to define his skills, and only looks outwardly afterward to ask, ‘How can I sell them’? – The resulting business almost inevitably focuses on the thing it sells, rather than the way the business goes about it or the customer to whom it’s to be sold.
To the entrepreneur the business is the product – to the technician, the product is what he delivers to the customer.
Create and mould your product (your business) to the customers need, do not create a product (the thing you sell) then try and sell it within a business to a customer.
Start with the customer, then mould your product (your business).
Don’t start with the product (the thing you sell / or your skill) and then try and meld your customer to buy it.
Sell the business instead of the product.
You’re Business
Your businesses sole function is: ‘to find and keep customers’.
How can I give my customers the results he wants systematically rather than personally?
Think of your business as something apart from your-self, as a world of its own, as a product of your efforts, as a machine to fulfil a specific need. I need to conceive my business as a product. Then think ‘How must my business-as-a-product work and act in order for it to successfully attract customers?
Innovation: What is standing in the way of my customer getting what he wants from my business?
The system runs the business, the people run the system. Every problem has been thought through, all that’s left is to manage the system. The system isn’t something you bring to the business, it’s something that is derived from building the business.
How do you build a business that works without you?
Pretend that you are going to franchise your business. Pretend that the business you own is a prototype for 5,000 more like it. Perfect replicas.
Work on your business, not in it. Don’t do business, build one (IBM).
Business Development Programme
Part One - Primary Aim
Personal Vision – The ‘Why’
What would you like to be able to say about your life after it’s too late to do anything about it? That’s your primary aim. To change lives.
Great people create their lives actively, while everyone else is created by their lives.
There is no one else out there but you.
Part Two - Strategic objective
Business Vision – The ‘Where’
There is only one reason to create a business of your own, and that is to sell it.
The commodity is the thing your customer actually walks out with in his hand.
The product is what your customer FEELS as he walks out of your business.
What he feels about your business, not what he feels about the commodity.
The commodity is cosmetics, the product is, hope.
The truth is, nobody’s interested in the commodity, PEOPLE BUY FEELINGS.
How your business anticipates those feelings and satisfies them is your business.
What would you like to do that would make your life better, life easier, simpler? How would that make your life better? Then boom do it. Changing lives will be the true product of my business.
Part Three - Organisational strategy
The ‘How’ How do we achieve the business vision?
If everybody’s doing everything, who is accountable for anything?
Good for strategy;
How many potential buyers are there in the market they want to do business?
Is the population growing?
What is the competition?
What is the anticipated growth of the territory?
Org chart and PDs = Create an organisation chart for xxx as it will look when it’s done xxx years from now, rather than the way it is now. And that once I’ve created that organisation chart, I need to create detailed position contracts for each of the roles.
Write a position contract for each position in their organisation
A position contract is;
A summary of results to be achieved by each position in the company
The work the occupant will be accountable for
A list of standards by which the results are to be evaluated (KPI)
And a line for signature of the person who agrees to fill those accountabilities.
It is a contract rather than a position description. A summary of the rules of the company’s game.
Accountability literally means ‘stand up and be counted’.
Therefore, the position contract is the document that identifies who’s to stand up and what they’re being counted on to produce.
Prototype the position: Replace yourself with a system
Tactical work is the work all the technicians do.
Strategic works is the work their managers do.
System means – to organise yourself and the world around you as clearly as possible so you can function as clearly as possible.
Part 4 - Management Strategy
Implement systems
Part 5 - People Strategy
If you want it done, you’re going to have to create an environment in which ‘doing it’ is more important to your people that not doing it. Where doing it well becomes a way of life.
Believe – start with why…we need to make sure employees understand the idea behind the work they are being asked to do.
The work we do is a reflection of who we are. If were sloppy at it, it’s because were sloppy inside. If were late at it, it’s because were late inside. If were bored by it, it’s because were bored inside. How we do our work is a mirror of who we are inside.
The people need to play the game!!
You need people who want to play your game. Not people who believe they have a better one.
The hierarchy of systems in your business;
How we do it here
How we recruit hire and train people to do it here
How we manage it here
How we change it here – innovation.
Part 6 - Marketing strategy
Essentially know your client better than he does. Understand your clients’ needs so you can determine why he buys.
Learn your Clients language. Then speak that language clearly and well so your voice can be heard above the din. Because if your client doesn’t hear you, he’ll pass you by.
What must our business be in the mind of our customers in order for them to choose us over everyone else?
Commit to keep a promise, no competitor would dare to make = I change lives.
Part 7 - Systems Strategy
A system – to free you to do the things you want to do.
Summary
You must analyse your business as it is today, decide what it must look like when your finally got it just like you want it, and then determine the gap between where you are, and where you need to be in order to make your dream a reality.
The gap will tell you exactly what has to be done to create the business of your dreams.
The gap is always created by the absence of systems.
System means = to organise yourself and the world around you as clearly as possible so you can function as clearly as possible.
