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Debunking the Entrepreneurial Myth (E-Myth) to
Grow a Successful Business
In today's crowded marketplace, businesses need a competitive edge to be
successful. Yet thousands of small businesses fail each year. According
to Michael Gerber, Founder and Chairman of E-Myth Worldwide, much of
that failure is the result of letting commonplace assumptions get in the
way of running a business. Gerber, also the author of E-Myth Mastery:
The Seven Essential Disciplines for Building a World-Class Company
(2004) and other books, debunks the entrepreneurial myth and offers
sound advice for small business owners in this interview with HP's
Technology at Work (TAW).
(For more information on Gerber's books and other resources for small
businesses, visit
E-Myth Worldwide.)
TAW: What is the E-Myth, and why does it lead to the failure of
many small businesses?
Michael Gerber: The E-myth is the entrepreneurial myth, and it
essentially says that people who go into business for themselves are not
the entrepreneurs we've come to believe them to be, but what I have
ended up calling technicians suffering from an entrepreneurial seizure.
So the cook opens up a restaurant, the technology person a software
company, and so forth. Each of them believes that because they know how
to do the work of the business they understand how to build a business
that does that work. In fact, knowing how to do the technical work of
the business is the least important part of creating a truly
entrepreneurial enterprise. (The work of the technician is the tactical
work that's being done in any company, anywhere.)
TAW: You talk about the fact that a lot of high tech-tech
companies are particularly susceptible to common mistakes that
contribute to the failure of small businesses. Can you explain?
Michael Gerber: I founded my company, E-Myth Worldwide, in 1977.
Since that time we have worked with, coached, consulted and trained over
30,000 small business clients. Many of them come to us from the
technology arena. They become enormously consumed by the work they do;
they become their business. So the technician who services computers or
develops software or manages the network or is driven by the most
technical of questions, considerations and concerns—and most often is
incapable of seeing the whole picture.
The entrepreneur is a holistic thinker, a systems thinker. He or she is
the one who sees the whole instead of the parts. The technician is so
consumed by "doing it, doing it, doing it," that they often miss the
whole picture, and don't even know there is one. More than that, they
don't even care to hear it. They're very consumed with what they do, and
very uninterested in the relationship between what they do and everyone
else. So they're prone to exaggerate the importance of what they do and,
in the process, demean everyone else.
TAW: What kind of advice do you have for someone who sees
themselves in that person?
Michael Gerber: If you're going to create a business, your job is
to go to work on that business, not in it. So the direction to Sarah
(the woman I take through this process in E-Myth Mastery and E-Myth
Revisited who's the owner of a company called All About Pies) is to
stop. You immediately know something's wrong—everybody does. In the
process of stopping, remove yourself from everything for the moment—from
what you do, from solving problems, from the work of your business. Just
stop and get out of there, and begin the process of asking the very
seminal question in relation to this business you've created: "So what
do I want? And what do I want for my life that this business is going to
be asked—required— to give me?"
The minute somebody does that, something shifts. Typically, what they'll
discover is that they don't have the patience to do that. The
entrepreneur in them wants to do that, but the technician doesn't. All
the technician wants to do is get to work. So I'm saying to the
technician, 'Stop, sit back, create some room for the rest of you."
In E-Myth I talk about the three different personalities: the
technician, the manager and the entrepreneur. It's only through the
entrepreneur and the manager coupled with the technician that you will
ever be able to truly explore and discover this rich, extraordinary
opportunity that owning a business of your own can provide, that can
actually liberate you. You can own a company and be working a quarter as
hard as you're working today (of course, that's a generalization) and
get 50 times more. That's possible, but only if you're willing to stop
and start over again.
TAW: In "E-Myth Master", you write that the franchise
prototype can be a helpful model for small businesses. Can you explain?
Michael Gerber: A franchise prototype is the model for a
successful expansion. To build a successful franchise, one needs to work
through all of the intricacies of a business operating system. This
system is inclusive of the brand, the positioning, the "how we do it
here," so that one can organize that small company to such a degree that
it can be replicated faithfully. If you were to work on your business as
though you were going to franchise it (whether you're going to replicate
the business is irrelevant), you’d begin to see that, "This is how we
sell it here, this is how we deliver it here, this is how we manage the
cash flow here."
I go to work on this small business so I can replicate how to do
everything faithfully in the hands of other people. The system enables
us to develop a sense of integrity in the operation of this business.
It's that sense of integrity that's missing in so many businesses.
They've become "people-dependent" as opposed to "systems-dependent."
TAW: Do you have suggestions for the small-business person
about how to access information regarding potential customers that will
guide them in developing a marketing strategy?
Michael Gerber: First, you have to understand who your central
demographic model consumer is. That's achieved by asking questions of
every person who comes into and has come into your company. Those
questions take into consideration age, sex, marital status, education,
the kinds of products they buy, etc. Psychographics is about why they
buy. There's a rich treasure trove of stuff you can determine about how
people make decisions, and E-Myth Mastery provides that for anyone
interested in nailing it down. Once I know who buys and why they buy, I
can build a model of my customer.
Then I need to go to geographics. Every business has a trading zone, and
it's very easy to determine. Take a map of where you are and identify,
with a pin prick, each and every customer you can. You'll see a cluster
of dots; that's your trading zone. Draw a perimeter around that and see
all of the zip codes where your current customers come from. Then you
can get a list that matches your demographics and identify where the
people you haven't done business with are in that trading zone. Now you
can talk to people who match your model.
TAW: When people step back and get a broader perspective,
do you find that they're successful?
When somebody is internally motivated to change their life and they
engage in the process I've described—stop, look, listen, ask what it is
you really want before you ask what your business is going to do—it's
transformational. E-Myth is about seeing clearly and—HP says
"Invent"—opening up the channels to invent. When you're always working,
working, working, there is no one home to invent, there’s no room to
invent, there’s no opportunity to connect with the inventor. But when
you learn how to take on this new role with yourself and organize it
differently, invention happens on its own.
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