The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It, by Michael E. Gerber
Today, through the wisdom of this book, The E-Myth Revisited, we will ask ourselves as business owners and entrepreneurs two hard questions. First, is the business that we have created giving us enough of a financial return on the investment of our time and effort that it demands to make it all worth it? And, second, for the business owners and entrepreneurs reading this article, do you actually know what it is that you are selling? In other words, what is your product?
The Entrepreneurial Seizure
The E-Myth introduces us to the common fact pattern in American business of someone who is incredibly skilled at their craft (who The E-Myth refers to as a technician) who becomes convinced, through their own inclinations or at the behest of others, that the next logical step after developing these great talents is to start their own business. The “entrepreneurial seizure” happens when we just cannot stand it anymore, the calls for freedom are beckoning and we tell our boss to get lost and go into business for ourselves, most commonly in a manner not fully thought through or planned for. This step toward entrepreneurship, we are often taught to believe, is the big leap towards the freedom that we hope that owning our own business and being our own boss will provide.
The great lawyer who decides to open his or her own law firm. The incredible doctor who starts his or her own medical practice. Or, the example used throughout The E-Myth, the great baker who makes out-of-this-world pies and whose friends convince her that if she opens her own pie shop and commits herself to making these incredible pies for others that all her dreams of freedom and wealth will come true. Sounds like a dream. What freedom! But the warning is in the statistics. Done incorrectly as it so often is, and this technician-turned-business-owner formula described in The E-Myth is often a recipe for business disaster and a heck of a lot of stress and regret.
Learn from the Mistakes of Others
Fortunately, we have great books that we can use to avoid these traps by learning from the stories of others. The E-Myth is the book you need if you actually want to execute this technician-turned-business-owner transition successfully.
The E-Myth is bar-none the top book in this area of how to go from technician to business owner and then actually succeed. The mistake so many entrepreneurs make, the book tells us, is to build the business around the technician´s technical abilities rather than by creating systems and processes that are easily replicable and that others, even those at the lowest common skill level, can execute. Fail to do this, and you have not started a business, but rather you have merely just, through this business, given yourself a job. A job, in fact, that will be more demanding and provide less return on your effort and time than when you simply work for someone else. Done correctly, however, and with this book you can do what all entrepreneurs ultimately hope to do – create a business that, if they choose, lives and breathes independent of the business owner.
Mature businesses are built from the start when they are in their infancy. By testing and documenting, and testing and documenting some more, yes even the smallest details of your business, you can get it right from the start and then train others to execute on your vision. If you fail to do what The E-Myth teaches you, you will never be anything other than an employee of your own business. Not exactly the dream that we imagine that you started with. If you haven’t yet, make this investment in yourself and your freedom and get this book.
Do You Know What Business You Are In?
The E-Myth is most famous for its discussion of the technician-turned-business-owner. A typical summary of the book would have ended with the last paragraph above. But, as I read this book again in writing this article for you guys, it made me ask some additional hard questions about my own businesses that I also want to share here with you. The most thought-provoking question that The E-Myth prompted – what business am I actually in?
Sell Your Product, Not Your Commodity
Everyone has seen all the commercials on television for makeup, expensive watches, luxury cars and state-of-the-art computers, phones and other technology. When you ultimately make a decision to buy one of those products after seeing their commercial, one must wonder, are you buying the actual thing that you saw in the commercial – the makeup, watch or cool new phone – or are you instead really buying the feeling that the advertising around that commodity creates? Are you interested in the Swiss watch because of its ability to tell you the time, or because of the feeling of pride, success, achievement or even social approval that you will get from being able to purchase such an item?
The E-Myth teaches us that successful businesses are not in the commodity business at all, but rather they are in the product business and the product that these businesses are selling is a feeling. The makeup industry is another great example. When you see the commercials for insanely high-priced creams, lotions, whatever, are you attracted to that item (the commodity) or is the reason that you make a decision to buy that cream because of the hope of beauty and youth that you believe that that product can provide you?
This is not a criticism of the marketing industry. In fact, quite the opposite. What I have learned, and what I think that The E-Myth does a great job of reminding us of, is that there are fundamental aspects of human psychology that we are never going to change. We would be neglectful business owners not to leverage those psychological realities. To leverage these undeniable psychological truths means that we have to take time in our businesses to ask the question “what is our commodity – the item that we’re selling – and, more importantly, what is our actual product – the feeling that we want people to get when they do business with us?” Focusing our efforts on communicating the product rather than the commodity to our audiences will be the critical difference in realizing the sales and profits that we so strongly hope that our businesses achieve!
This is a critical point of analysis for company investors as well. Does the company that you are considering investing in sell a product or a feeling? The E-Myth helps us build businesses, but also evaluate those with the highest probability of enduring success.
A Quick Recap
Please spend the time with this book that it deserves. Read it and take the time to reflect and act upon its wisdom. The result could be creating a business that gives you freedom and that people love because of the feeling they associate with it!
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