It was nearly 30 years ago that Michael Gerber wrote a best-selling business book titled “The E-Myth: Why Most Businesses Don’t Work and What to do About It.” One of the most quoted concepts from this book is “You need to take time to work on your business, not just in it.” That advice is as relevant today as it was in the 1980s.
Updating his work in the early 2000s as “The E-Myth Revisited,” Gerber brings additional insight and tools to help improve the dismal odds of business success – nearly 30 percent fail in the first year.
The myth in the E-Myth is that most businesses are not started and run by entrepreneurs, but rather by technicians who have a momentary entrepreneurial seizure while working for someone else, thinking, “If this moron can do it, so can I”, and from that moment forward, the thought of being ‘their own boss’ can’t leave their mind.
If in fact they were bold enough to take the plunge, that was the end of the entrepreneur, as the technician kicked in to get the work done. The graveyard of failed businesses is full of technicians who thought that knowing how to do the work was the same as building a business that could do the work.
A true entrepreneur sees an opportunity in the market, raises capital and builds a team to turn an idea into a viable business. Few businesses are started by entrepreneurs, but rather are started and run by technicians.
Although technicians are important, a business needs the entrepreneur, the manager and the technician to survive. The entrepreneur creates the vision and sees opportunities, the manager creates order out of the chaos, and the technician does the work.
When a business first starts out, the owner has to be all three of these personalities. If they survive and begins to build a team, they are best served to fill the personalities where they are not strong.
But in the beginning, they have to be all three, and the truth of the matter is each personality can’t stand the other. The technician doesn’t want to be managed, and is certainly frustrated with all the wacky ideas coming from the entrepreneur. The manager simply wants order, but is constantly reorganizing based on the entrepreneur’s latest venture, and is continually frustrated that technicians won’t follow the processes and procedures. And entrepreneurs are frustrated that their managers and technicians are holding them back from the next great idea. It’s a recipe for business schizophrenia.
Most business owners don’t even know this is happening, and that’s why the failure rate is so high. Of the 70 percent that make it past year one, 50 percent of those fail by year five. That’s a mere 35 percent that make it to year five. Owners just give up.
But by utilizing the wisdom of Gerber’s E-Myth, businesses have a fighting chance to succeed. Here are three key points.
1. Owners come to understand that business is their product, not the widgets the business sells. The role of the business is to get and keep a customer, provide value to that customer in exchange for value. The value provided to the customer is rarely the product or service itself, but rather the customer experience.
2. Success comes from building a business that can consistently and repeatedly provide that customer experience.
3. Talent is certainly important, but building an operating system that provides the consistency and repeatable customer experience is what will give you efficiency, profit and freedom. This operating system includes everything it takes to successfully attract, obtain, serve and maintain a customer.
The challenge of every business owner is to build a team and maintain the right balance of views among the entrepreneur, manager and technician in order to get things done, win in the marketplace and keep everyone happy. As Gerber states, “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!”
Tom Garrity is managing partner at Compass Point Consulting LLC in Hanover Township, Northampton County. He can be reached at firstname.lastname@example.org