If you have a small business or want to start a new business, the E-Myth book summary is for you. It helps you understand why most small businesses do not work.
You will also learn how to find a solution to problems in your business and decide how to make it successful.
Michael E. Gerber explains this book by citing examples of well-known companies such as IBM, McDonald’s, Federal Express, and Disney.
It illustrates a belief created and supported by Michael’s experience working with thousands of people in small businesses.
The E-Myth And The American Small Business
- Do you know why small businesses are not working?
The problem is not that small business owners in this country don’t work. The difficulty is that they are doing the wrong work.
As a result, most of their business ends up in chaos –unmanageable, unpredictable, and unrewarding.
In the first year, at least 40 percent are out of business. More than 80 percent — will have failed within a five-year period. If the rest have survived for five years or more, then don’t breathe a sigh of relief.
It is important to understand e-myths and use them to create and develop a small, successful business.
First and most importantly, if you are sloppy, your business will be sloppy, and if you are organized, your work will be organized. If you are a greedy person, your employees will be greedy and always ask you for more.
So, if you want to change your business, you must first change yourself. If you are unwilling to change, your business will never be able to give you what you want.
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The Skills You Need to Grow Your Business
Many believe a successful business requires just three key figures: the entrepreneur with the vision, the manager to keep things running, and the technician who handles the nitty-gritty. However, this simplistic view often leads to downfall.
Michel Gerber, a business guru, argues that understanding the technical aspects of your business (the “what” you do) is fundamentally different from understanding how a business works (the “how” you run it). This distinction is crucial for small businesses.
Often, someone skilled in the technical aspects of a business, like a plumber or mechanic, assumes they can manage all facets of running that business. This leads to problems when the business tries to grow. The technical expertise isn’t enough to handle finances, marketing, or employee management. Eventually, the owner becomes overwhelmed, the business falters, and closure becomes a harsh reality.
Technical skill is an asset, but it’s not the sole pillar of a successful business.
- The Entrepreneur— is a visionary and a dreamer. The imagination that sparks the fire of the business future.
- The Manager— is pragmatic. Without the manager, there would be no planning, order, or predictability.
- The Technician — is the doer. The technician is a person who does technical work for the business by living in the present.
These three people are needed to run a successful business. The entrepreneur lives in the future, the manager lives in the past, and the technician lives in the present.
Typically, the small business owner is only 10 percent Entrepreneur, 20 percent Manager, and 70 percent Technician.
To create a brand image, you should balance all three qualities. So, if you know, some work perfectly. Then, it does not mean that you can do your business properly.
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The Entrepreneurial Perspective: Infancy, Adolescence, Maturity
The life cycle of the business can be divided into three stages.
- Infancy: This means business childhood, where the owner has to do every work, minor to major.
- Adolescence: This is the stage when the owner realizes that he requires help. Then, their business enters the second stage, called adolescence, Where it starts to grow.
- Maturity: This is the highest level of any business, and it continues even when the owner is not there.
Let us understand it by an example.
Jack used to make pizza in a restaurant. One day, he thought I didn’t get much after working hard at others work, so why not open my pizza restaurant?
I will sell cheap, better-quality pizza rather than this. Then, he left his job and took a loan to open a restaurant.
At that time, only a few people used to go to his restaurant. Jack then realized he would need to market his restaurant, so he began marketing. Due to good marketing and low-cost pizza, his restaurant is full of customers.
And Jack’s Business started making a profit. But when many people started coming to the restaurant. Jack was unable to do all the work on his own, like cleaning up the restaurant accounting and marketing.
He generally spends his time making pizza. But things got worse because the person he hired was lazy and not used to working properly. Due to this, complaints were raised.
Jack said that no one could do this work better than me, and Jack dismissed the worker and started handling all the work himself. However, after some time, he realized that he should hire an expert for the work. So, again, he hired a costly but good worker.
After months, he hired one more person because his business was bigger.
After paying the employee for the shop, paying back the loan, and spending money on furniture and decorations, he started losing money instead of making money.
In the end, he had to close the shop. This was a failure because Jack only thought about his technical skills—that he could make a tasty pizza—and then he could run the business easily, but it did not happen.
Michael Gerber says there are many differences between running a good business and being a technician.
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A New Way To Do Business Is The Turn-key Revolution
The Industrial Revolution, the Technological Revolution, and the Information explosion are all familiar phenomena in today’s world. There is no question of the impact each has had on our lives.
Most people would respond with blank stares if I talked about the Turn-Key Revolution, a way of doing things that can change any small business.
The Turn Key Revolution provides us with the elusive key to developing an extraordinary business: the ultimately balanced model of a business that works.
Turn-key business is the act of setting up your business so that you have systems and processes for a consistent, effective, and orderly way of doing business. Therefore, the business is systems-dependent and not people-dependent. The real product you’re selling is your business, not the product your business sells to consumers.
It can change any business, whether big or small, from chaotic to organized, exciting, and constantly growing.
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The Franchise Phenomenon: The Art of Turning The Key
The business lends its name to smaller enterprises and provides the franchisee with an entire system of doing business. The business Format Franchise is built on the belief that a business’s true product is not what it sells but how it sells it.
The Turn Key Revolution and the business Format Franchise were born out of a belief opposing the majority of business founders in this country.
Most business founders believe that the success of a business resides in the success of the product it sells.
The true product of a business is the business itself.
The success rate of Business Format Franchises is 95 percent, compared to the failure rate of new independently owned businesses.
Is it any wonder that McDonald’s calls itself “The Most Successful Small Business In The World!”
Let’s learn about McDonald’s uncommon success story and secret. The key to success is creating a system-dependent business, not a people-dependent one.
You will find the same taste if you eat McDonald’s burgers in any city or country. The reason is their system of making burgers.
Their burger-making process has been divided into many small steps, and each employee must follow those steps correctly. This makes sure that the burger tastes the same everywhere.
It’s an easy-to-follow process. The quality of the burgers is the same after they’re made at different places and with different employees.
If your business is people-dependent, you know people work according to their choices and moods. If those people leave and don’t work properly, your business will collapse.
So, your business should be system-dependent, not people-dependent.
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Establishing A Successful Small Business
Create your business development program. Your business program is how you can create a Franchise Prototype. You will experience personal and financial freedom.
- Your primary Aim
- Your strategic Objective
- Your Organizational Strategy
- Your management strategy
- Your People Strategy
- Your Marketing Strategy
- Your System Strategy
What is the Management System?
It is a system designed for your prototype to produce and market results.
Because the more automatic that system is, the more effective your Franchise will be.
The core principle of this book is that You should work on your business, not in business.
People often make the same mistake when they start a new business: They completely indulge in the work and become overloaded, unable to handle the other aspects of the business.
Mark Zuckerberg started coding in childhood, but if he used to code after making Facebook.
Facebook wouldn’t be as influential. So, he hired others for the technical work. And started working on a Facebook instead of working in facebook.
One way to achieve financial freedom from a business is to stay outside it. This means the work burden should not be on you.
It works without you with a system that has been created. If we will say in simple language that builds a business in which decisions and operations can be made without you. And there is no need to monitor each and everything.
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Takeaways
In this great book, Gerber says there should be a revolution in American small business. This revolution can change the working patterns in America and other countries worldwide. (Turn-Key Revolution)
People who perform very well in business do it because they always want to learn more.
Most businesses are operated according to the owner’s desires instead of the business’s needs.
Everyone who goes into business is three-people-in-one: the entrepreneur, the manager, and the technician.