Author: Michael E. Gerber
|The E-Myth Revisited (1995) is the book that explains why 80% of small businesses fail, and how to build a company that’s based on systems and not on the work of a single individual. The book asserts that most businesses need more than just a good idea: they need an owner who understands the processes needed to run a business.|
As the founder of a small business, you have both a hard job and a dream job. You’re obliged to do both the hard details of managing your business, and the inspiring leadership of growing it. Like many, you may be riding the roller coaster between anxiety and excitement—hopeful one day, desperate the next. You work harder than you ever imagined was possible—and there’s still so much to do!
To rescue your sanity, you must learn the fundamentals of how to be a business owner, rather than just a business manager. You need a plan for your business, and so does every other small business owner reading this book. You need a system that lets you focus only on those details that are within your control, delegating all others. You need to know how to find competent people to take the responsibility off your shoulders, so you can concentrate on what matters—growing your business.
The E-Myth focuses on entrepreneurs and the essential traits they must have to be successful. The main idea of The E-Myth Book Summary is that starting a business doesn’t mean you have to start a business, because you are the business. Being the business means working with your customers, suppliers, employees, etc., rather than for them.
The E-Myth Revisited Summary Key Points
Having different skills does not mean you know running a business
Gerber believes that people who start businesses often get trapped within the myth of the “self-made man.” They think they can do anything. They can be the CEO and COO, the CTO and CFO. Whatever it takes, they’ve got it covered.
Gerber says there are two kinds of businesses. The first kind is those who start a business because they have a product or service that they want to sell. This is what he calls the “I have something to sell” companies. The other is being in business to create, change and improve your industry. He calls them “I want to change something” companies. And he says businesses that fall into the second group, grow much faster and towards profitability than those who don’t.
Think about all the Silicon Valley companies of the past few years who have changed the world: Uber, Slack, Airbnb, Facebook, Instagram, and so on. They all started with this mindset, but not all of them had it from the beginning. So, they start something and then find out that new skills are required to make things happen. The entrepreneur will take on tasks he isn’t good at, just to move the business forward.
We’re seeing this with the recent crowdfunding trend, where founders think that crowdfunding is an easy route to raising investments. This can be a mistake because we all have different skill sets and you don’t need to be good at everything. That stifles creativity. Allow other people to help you do what they are good at and pay them for it.
Think of your business as a franchise, then start with a store
“Do an amazing job in that first store, and create a culture. Does it look different? Yes. Does it move differently? Yes. Does it act differently? Yes. Does it talk differently? Yes. And then go through that funnel process until you can multiply that one great store into five, 10, and ultimately multi-unit franchises.
Details are the secret sauce of a business. Since you’re reading this blog, the chances are that you’re an entrepreneur or a professional in a field with a lot of competition. You have an idea, a vision, a prototype, and maybe even some customers and revenue. But your start-up is going nowhere.
Gerber says that if you want to create a nationwide business, a good place to start is with a single business location. How do you get started? He suggests after thinking of your business as a franchise, think about how you can start with one store. He says it’s about creating amazing customer service for your first customers. For example, he describes a time when he went through a drive-thru at a Dunkin Donuts and the person was so rude he had his donut sent back. Although they apologized, the damage was done. But then he gives an example of the opposite.
We have this concept called “pick-up express,” where every day, there’s coffee or donuts that are waiting for you when you arrive. If you’re late, they’re cool with it. They know you have things to do.
Build up a business based on systems
Imagine you’re trying to get to work and your GPS fails you. If you only knew how to fix the GPS, you might get some help from a friend who knows how. But if you know how to fix the car and the navigation system on your phone, you can do it yourself.
The same idea applies to your business. If it’s made up of several interrelated systems, it’s much easier to add new skills to improve one or two of them — like adding a new developer to make tweaks to an application or hiring a new marketing person — instead of having to address issues as they arise. This is something you have learned the hard way.
A business is a collection of systems, the 3 kinds of systems are:
- Hard systems – things like products, services, and manufacturing processes.
- Soft Systems – like your culture, policies, and procedures.
- Information Systems – like your data and reporting.
Soft Systems are often “how we do things around here” or “the way we do things around here” and can be harder to measure than hard systems as you often don’t know if you need to change them or not as much as hard systems. It’s not about developing a complex structure of systems, but rather a more flexible structure, making the business work without any specific individuals. The perfect system of systems is constantly growing in capacity, so it can grow with your business.
The E-Myth Revisited Quotes
“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!” –Michael E. Gerber
“You should know now that a man of knowledge lives by acting, not by thinking about acting, not by thinking about what he will think when he has finished acting. A man of knowledge chooses a path with heart and follows it. Carlos Castaneda” –Michael E. Gerber
The E-Myth Revisited Review
This book is old but valuable! Everything explained in this book is even relevant today. Because many people start their businesses and fail. So, the author has given many advanced how to build a successful business. A very interesting yet helpful book.
To whom I would recommend The E-Myth Revisited Summary?
- Anyone who wants to start their business.
- Any person who is going to retire.
- Anyone whose business has failed and fears another.