The E-Myth: Why Businesses Fail to Succeed

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Have you “fired” your boss and are now the “new boss” of your business? After becoming the “new boss”, do you feel like a failure because your business is not as successful as it should be? Is your business becoming more and more like a chore rather than something to look forward to due to unforeseen problems in the day-to-day operations? If the answer is yes to any of these questions, then you need to read the book,[easyazon_link identifier=”0887307280″ locale=”US” tag=”earweaforyouf-20″]The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It by Michael E. Gerber.[/easyazon_link] This book is truly one of the best books written on the subject of how most people initially set up their businesses with the best of intentions but end up becoming almost blindsided with unforeseen problems that lead to failure. Read my review Mr. Gerber’s E-Myth to see how you can transform your business from failure to success.  (This is the first post of three parts)

Question marks

What is the E-Myth?

Mr. Gerber defines the E-Myth as “small businesses being started by entrepreneurs risking capital to make a profit”. He contends that this myth is not true; most small businesses are not even started by people who classify themselves as entrepreneurs. Instead, they most likely fit the following scenario:

1. They have a job, such as a carpenter, mechanic, bookkeeper, or hairstylist.

2. They perform their work very well. However, they work for a boss.

3. One day, they get the feeling that they should start their own business and be their own boss. This feeling of going into business for themselves can happen for no apparent reason, such as their boss does not appreciate their work effort, or they are not paid enough for work performed, or the weather, or a birthday.

4. When this happens, Mr. Gerber describes this as The Entrepreneurial Seizure.

This is classified as the point when they start asking questions or making statements  such as,  “Why am I working for this person?” “I know more about this business than him/her. If it weren’t for me, he/she would not have this business”.  Once this entrepreneurial seizure takes hold, it will not let go…until the decision is made to start their own business.

5. Once the decision is made to start their own business, Mr. Gerber states that people then make The Fatal Assumption–which is: if one understands the technical work of a business, then one then understands the business that does technical work. He calls it fatal because this assumption is not true. For instance, just because someone is an excellent carpenter or hairstylist does not mean that he/she will automatically know what it takes to run a carpentry business or hair salon. He states that this is the root cause of why most businesses fail.

The problem with above mentioned scenario is that those who love doing technical work and decide to go into business for themselves end up in reality owning their jobs rather just working at their jobs for a boss. The job no longer is fun because it becomes a chore. When you own your job, you are actually wearing three hats–the Entrepreneur, the Manager, and the Technician.

The Three-In-One Person: the Entrepreneur, the Manager, and the Technician

Image courtesy of ratch0013 at freedigitalphotos.net

According to Mr. Gerber, the main problem some business owners have is that each of these personalities wants to be the boss but does not want to have a boss. The characteristics of each are listed below.

The Entrepreneur

  • The visionary; the dreamer
  • Lives in the future; likes to deal with the unknown
  • Creates new methods or new markets
  • Has strong need to control people and events in the present in order to focus on the future

The Manager

  • Craves order and stability
  • Does not like change; clings to the status quo
  • Tends to see problems rather than opportunities
  • Cleans up the messes made by the Entrepreneur

The Technician

  • The doer; lives by the slogan, “If you want it done right, do it yourself”
  • Not interested in ideas; just wants to know “how to do it”
  • Likes to control the work flow
  • Happiest when working on one thing at a time

 

The Dilemma                                              

According to Mr. Gerber in order to have a successful business, the business owner needs to have a balance among all three personalities.  For instance, the Entrepreneur would be free to explore new areas of interest; the Manager needs to make sure the method of operation runs smoothly; and the Technician needs to do the actual work. However in reality, few business owners have adequate balance. Instead, the typical business owner is 10% Entrepreneur, 20% Manager, and 70%  Technician.

image courtesy
of www.clker.com

The best way to overcome the dilemma of how to balance all three personalities is by having the business set up as a what Mr. Gerber describes as The Franchise Prototype.

 

The Franchise Prototype

According to Mr. Gerber, this prototype has the following characteristics:

  • All assumptions are put to the test to see how well it works before putting it to actual use.
  • The “system” runs the business and people run the “system”.
  • The franchise is system-oriented rather than people oriented. In other words, you don’t need to hire experts to run your business but hire average people who have adequate skills to run the system effectively.
  • Once the franchisee learns how to run the system, he/she is given a “key” to his/her own business–hence the name, Turn-Key Operation

One well known living example of a super successful franchise is McDonald’s created by Ray Kroc. They may or may not have the best tasting hamburger, but the system developed and put in place is probably one of the best in the US and around the world. (There are 1000’s of McDonald’s restaurants)

 

Conclusion

I hope I have piqued your interest in learning more about the [easyazon_link identifier=”0887307280″ locale=”US” tag=”earweaforyouf-20″]E-Myth[/easyazon_link] by buying the book. I think that this book is a must read for all business owners and entrepreneurs who are serious about wanting to have a successful business. If you are still not convinced, that’s okay. Stay tuned for my second part of my review of Mr. Gerber’s E-Myth where I go into more detail about the Franchise Prototype and how it works. My main purpose of writing this review is to get you thinking about how your business needs to be set up so it can have the best chance to succeed. Therefore, I welcome any comments or questions you may have– just place them below. Have a great and productive day!

 

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2 thoughts on “The E-Myth: Why Businesses Fail to Succeed

  1. Dear Diedre,
    Love the title of your blog and I really like your design and content. You are rocking the color brown and it really is well suited. The first part of your review is well informed and I learned a great deal!
    Keep up the great work!
    Shelia

    • Deidre says:

      Hi Sheila,
      Thanks for commenting. Before I read this book, I did not realize that running a business involves more than just the
      day to day operations; it also involves giving customers the best service or product the same way all the time. It’s all about
      having the right mindset of all personalities–the entrepreneur, manager, and technician.

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