In 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,[/easyazon_link] by Michael E. Gerber, he talks about how many small business owners make the mistake of working IN their businesses rather than ON their businesses. In other words, most of their focus is on the day to day operation of the business rather than focusing on what needs to be done to increase business as well as how to consistently produce the same quality of service their customers expect. Read my review of Mr. Gerber’s book on how business owners can make the transition from working IN the business to ON the business to achieve overall success. (This is the second post of three parts.)
Why Most Small Businesses Don’t Work
For those of you who have not read my previous post, “The E-Myth: Why Businesses Fail to Succeed”, here is a brief summary.
Mr. Gerber defines the E-Myth as the belief that most small businesses are started by entrepreneurs who simply put up money to start a business. In reality, most small businesses are started by people who are tired of working for a boss and make the decision to become their own boss and go into business for themselves. The main problem most people have when they go into business for themselves is that they spend most of their time focusing on the technical or actual work that needs to be done to produce the product or service to the customer. Mr. Gerber states that in order for a business to be successful, the owner must wear 3 hats–the Entrepreneur, the Manager, and the Technician. The dilemma for most business owners wearing 3 hats is that they do not know how to set up their businesses so that all 3 hats can be worn effectively. His solution to this dilemma is that the business should be set up as a system that he calls The Franchise Prototype.
Your Business is NOT Your Life
If for whatever reason you don’t remember anything from reading this book review, at least remember the following concept: Your Business is Not Your Life. In other words, your business should not be a part of you; it should exist as a stand-alone entity. It should not take up so much of your time that you have no time for anything else in your life that is important, such as friends and family. According to Mr. Gerber, the primary purpose of your business is to serve your life–give you the means to do the things that you truly enjoy doing. You are not to become a slave to your business where it dictates almost everything you do in your life. The best way to set up your business so that it can stand on its own two feet, so to speak is to it set up as a Franchise Prototype. The Franchise Prototype involves the business being run as a system of operations that help the business owner deliver consistent products or service to customers.
Important Rules of the Franchise Prototype Model
Mr. Gerber points out that you do not have to actually consider making your business a franchise (unless you really want to) but it has the best chance for success if you set it up as if that is your goal. However, there are important rules that must be followed if you want to be successful:
The business must provide consistent value to customers and employees beyond what is expected
What is value? Value is basically what people perceive it to be. For instance,it can be an unexpected gift in the mail to a customer, a word of recognition to an employee for doing a job well done, or a reasonable price of your product or service.
The business will be operated by people with the lowest possible level of skill
Mr. Gerber points out that when he says the term “lowest possible level of skill” he means that your business should be able to operate day to day with employees with the lowest possible skill level needed to perform the necessary duties for each job or task. If a business owner has to hire highly skilled people to run his/her business, then the business cannot be replicated. As a result, the business becomes people-dependent rather than system-dependent. The best example of this concept being utilized is McDonald’s. Who do you see working in a typical McDonald’s restaurant? Isn’t it mostly teenagers and/or young adults? Why is this so? It’s mainly because McDonald’s has a system in place that can teach just about anybody how to flip a burger or fry french fries. Of course the people change from restaurant to restaurant, but the system stays the same. That’s one key reason why McDonald’s has been successful for so long.
The business will stand out as a place of impeccable order
If your business looks orderly, it tells your customers and employees that you know what you are doing, and that your product or service can be trusted.
All work done in the business will be documented in Operation Manuals
If your day to day operations are documented in “how-to” manuals, it will give your employees (both new and old) a sense of clarity. The Operation Manual will tell employees the purpose of the work, the specific steps needed to do the work, and the expected results. According to Mr. Gerber, no prototype can exist without an Operation Manual.
The business will provide a uniform, predictable service to the customer
The business owner should provide a service or product the same way every time to a customer. This should be done regardless of the mood of the employees. If the way in which the service or product is provided is dependent on the mood of the employees on a particular day, this may result in customers going somewhere else because they don’t know what to expect. Customers like to receive a product or service the same way every time.
The business should use a uniform color, dress and facilities code
According to Mr. Gerber, marketing studies that have proven that different consumer groups respond differently to different colors and shapes. There is no logic to this fact, but it cannot be ignored. Some colors work, some don’t. Some shapes of a logo work, some don’t. If your business is to be successful with more sales and customers, you need to find out what colors and shapes work by doing your own research. Otherwise, it can have a significant negative impact on your business.
If you want really want to work on your business but not in it, you have to first think of your business as a business and not a job. Second, you should ask yourself the following questions:
- How can I get my business to work but work without me?
- How can I get my people to work without me constantly interfering?
- How can I systematize my business so that it can be replicated, for example 100 times so that the 100th unit will run as smoothly as the first?
- How can I own my business and still be free of it?
- How can I spend my time doing the work I love to do rather than the work I have to do?
According to Mr. Gerber, chances are you will not be able to answer these questions until you realize that the problem is not with your business but it is with YOU instead. Until you change your thoughts and perspectives about what a business is and how it works, your business will not change. If you are just starting out in a new business and you need help in learning the fundamentals, click here to find out how you can do so for free. If you have any questions or comments about what you’ve just read, feel free to post it below, and I will be happy to respond.
I hope you have enjoyed reading this post and also have picked up some valuable information. Stay tuned for the third and final part of my 3-part review of Mr. Gerber’s [easyazon_link identifier=”0887307280″ locale=”US” tag=”earweaforyouf-20″]E-Myth[/easyazon_link].