"E-MYTH REVISITED (Why Most Small Businesses Don't Work and What To Do About It)" by Micheal E. Gerber 

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Additional thought of Graham White in highlights.

If you own a business and have not read this book, you are likely either experiencing significant challenges or producing far less profit than you otherwise could.  In my 10 years of business consulting, this is the single most effective resource I have come across for people who own their own business.

It is very easy to read, understand and implement.  I have chosen to significantly limit what I pull from this book as I would have to reproduce almost the entire book to convey all its content.

If you own a business - BUY THIS BOOK!

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"The basic difference between an ordinary man and a warrior is that a warrior takes everything as a challenge while an ordinary man takes everything as either a blessing or curse."

Don Juan

What do owners of extraordinary businesses know that the rest of us don't?

People who are exceptionally good in business aren't so because of what they know but because of their insatiable need to know more.

The problem with the owners of most failing business is that they spend their time and energy defending what they think they know.  Great businesspeople are determined to get it right, no matter what the cost.  And by getting it right, I'm not just talking about the business.

I mean there is something uplifting, some vision, some higher end in sight that "getting it right" would serve.  An ethical certainty, a moral principle, a universal truth.  They are extraordinarily grounded people; they are compulsive about detail, pragmatic, down-to-earth, in touch with the seamy reality of ordinary life - the stuff that goes on in every nook and cranny of the business, on the phone, between the customer and the salesperson, on the shipping dock, at the cash register.

It's All In The Details

There are thousands of ways to fail and only a very few ways to succeed.  It's not what you know that makes you successful - it's what you don't know that can ruin you.

 

What's The Problem?

The problem isn't your business; it never has been, the problem is you!  It has always been you and will always be you until you change it.  

Business is both an art and a science.  Questions to start with:

  • How can I get my business to work, but without me?

  • How can I get my people to work, but without my constant interference?

  • How can I systematize my business in such a way that it could be replicated 5000 times, so the 5000th unit would 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?

 

The only way to reach something higher is to focus attention on the multitude of seemingly insignificant, unimportant and boring things that make up every business (and that make up life, for that matter).

With no clear picture of how you wish your life to be, how on earth can you begin to live it?

  • How would you know what first step to take?

  • How would you measure your progress?

  • How would you know where you were?

  • How would you know how far you had gone?

  • How would you know how much farther you had yet to go?

Most people scramble about hungrily seeking distraction, in music, in television, in people, in drugs.  We seek things to fill the emptiness.  

Go to work on your life, don't just go to work.  Great people create their lives actively, everyone else is created by their lives.  The difference between the two is the difference between living fully and just existing (or the difference between being fully human and just another animal that reacts to its environment).

Great people have a vision of their lives that they practice emulating every day.  Mature companies, like great people are those who know how they got where they are and what they need to do to get where they're going.

What makes people work is an idea worth working for, along with a clear understanding of what needs to be done.

Live by your own rules, "walk your talk," live as you think.  If you won't follow the rules, why should anyone else?  They won't!

End points in the development of an extraordinary business are instantly replaced by new beginning points.  Great businesspeople have a genuine fascination for the truly astonishing impact little things done exactly right can have on the world.  

"To live through an impossible situation, you don't need the reflexes of a Grand Prix driver, the muscles of Hercules, or the mind of Einstein.  You simply need to know what to do."

Anthony Greenbank

 

A Business is ALWAYS a Reflection of It's Owner

The problem is not that the owners of small businesses don't work hard, it's that they're doing the wrong work.  As a result, most of their business ends up in chaos - unmanageable, unpredictable, and unrewarding.

If your thinking is sloppy, your business will be sloppy.  If you're sloppy at home, you'll be sloppy with your work.  If you're sloppy with your personal finances, you'll be sloppy with your business finances.

If you're disorganized, your business will be disorganized.

If you're greedy, your employees will be greedy, giving you less and less of themselves and always asking for more.

If your information about what needs to be done is limited, your business will reflect those limitations.

So...if your business is to change (and it must always be changing), you must change first.  If you are unwilling to change, your business will never be capable of giving you what you want.

 

The Day You Decided To Open Your Own Business

Inside your mind it sounds something like this: "What am I doing this for?  Why am I working for this guy?  Hell, I know as much about this business as he does.  If it weren't for me, he wouldn't have a business.  Any dummy can run a business - I'm working for one!"

The moment you paid attention to what you were saying and really took it to heart, your fate was sealed.  The idea of being your own boss and doing your own thing became irresistible.

If all you want from a business of your own is the opportunity to do what you did before you started your business, get paid more for it, and have more freedom to come and go, your greed - I know that sounds harsh, but that's what it is - your self-indulgence will eventually consume both you and your business.

These are the businesses that fail.  These businesses were founded on the wrong principle, one of vindication and personal freedom.  The businesses that are founded on the idea that the person can provide something in a better, more valuable manner for a perceived need and are willing to look after all the details to make it happen are the ones to succeed right out of the starting blocks.

Your fatal assumption was that if you understood the technical work of a business, you would understand a business that does that type of technical work.  IT JUST ISN'T TRUE!

The technical work of a business and a business that does that technical work are two totally different things!

Almost everyone opens their business believing that by understanding the technical work of the business that they are immediately and eminently qualified to run a business that does that kind of work.  IT'S SIMPLY NOT TRUE!

In fact, rather than being their greatest single asset, knowing the technical work of their business becomes their greatest single liability.  They end up suffering Entrepreneurial Seizure.

Entrepreneurial Seizure

  1. The exhilaration of opening your own business.

  2. The terror that follows when you realize that although you have technical expertise, there are so many things you don't know about running a business.

  3. Exhaustion as you attempt to fill every need of your business yourself.

  4. Despair when you realize that you are going to lose the dream that was so golden when you began and the sense of personal purpose you had when you started.

 

A Business Requires More Than A Technician

You believed that a business was nothing more than a collection of the various types of work done in it, when in fact it is much more than that.  It requires three experts:

  • The Entrepreneur

  • The Manager

  • The Technician

All three positions are vital to the success of the business.  Most businesses are operated according to what the owner wants and is good at as opposed to what thebusiness needs.  If the owner is weak in an area and can't delegate those responsibilities effectively, the business is destined to fail.

If your business depends on you, you don't own a business - you have a job.  And it's the worst job in the world because you're working for a lunatic!

That's not the purpose of going into business.  The purpose of going into business is to get free of a job so you can create value and jobs for other people.  

The purpose of going into business is to expand beyond your horizons.  So you can invent something that satisfies a need in the marketplace that has never been satisfied before.  So you can live an expanded, stimulating new life.

 

Beginning Over Again

The true product of a business is not what it sells, but how it sells it.

Value is what people perceive it to be, and nothing more

Without a clear picture of the customer, no business can succeed.  The Entrepreneurial Model does not start with a picture of the business to be created but of the customer for whom the business is to be created.  

The Technician in you, on the other hand, looks inwardly, to define your skills and only looks outwardly after to ask, "How can I sell them?"

To the Technician, the product is what he feels he has to deliver to the customer.  To the Technician, the customer is always a problem because the customer never seems to want what the Technician has to offer at the price at which he offers it.

To the Entrepreneur, the business is a product.  To the Entrepreneur, the customer is always an opportunity because the Entrepreneur knows that within the customer is a continuing parade of changing wants begging to be satisfied.  All the Entrepreneur has to do is find out what those wants are and what they will be in the future.

 

Begin With The End In Mind (Selling Your Business)

Set about creating a foolproof, predictable business.  A systems-dependent business, not a people-dependent business.  When you create a business that must work well enough in order to sell it, you create a business that works once it is sold, no matter who buys it. 

The Entrepreneur's boundary is a function of how many managers he can engage in pursuit of his vision.

If your model depends on highly skilled people, it's going to be impossible to replicate.  Such people are at a premium in the marketplace.  They're also expensive, thus raising the price you will have to charge for your product or service.

For ordinary people to do extraordinary things, a system - a way of doing things - is absolutely essential in order to compensate for the disparity between the skills your people have and the skills your business needs if it is to produce consistent results.

The Need To Be Organized

The world is not in chaos; we are.  The world's apparent chaos is only a reflection of our own inner turmoil.  In a world of chaos, people crave order.  Understand that systematizing your business need not be a dehumanizing experience.  

If you are a business owner, it is your job to create that order for your business, your employees and your customers.  If you are either unable to do this or unwilling to delegate those tasks effectively, you will not own your business long.  (Myers - Briggs Personality Type: Perceivers- Better employees?)

A business that looks orderly says to your customer that your people know what they're doing.  A business that looks orderly says to your people that you know what you're doing.  A business that looks orderly says to your customers that they can trust in the result delivered and assures your people that they can trust in their future with you.

You CAN'T delegate accountabilities.  Delegating your accountabilities is abdicationYou EARN the right to delegate.  If you don't know how to manage, how are you going to choose a manager and how are you going to manage your managers?  They will manage by the standards they have been taught to manage by in somebody else's business, NOT by your standards.

Consistency

The business must also act orderly.  It must do things in a predictable, uniform way.  You must meet the expectations you created in the customers first visit in each subsequent visit with each subsequent one.  It is NOT good to "wow" the customer the first visit and then not follow up with the same experience.

Unless your customer gets everything they want every single time, they'll go someplace else.  The only time to change something, is when it no longer works.

Managing Your Business

There is no such thing as undesirable work, there are only people who see certain kinds of work as undesirable.  People who use every excuse in the world to justify why they have to do work they hate to do.  People who look upon their work as a punishment for who they are and where they stand in the world, rather than as an opportunity to see themselves as they really are.

Business is a place you go to practice being the best you can be.

Understanding Your Customer

There is a famous saying, "Find a need and fill it."  It should say, "Find a need your customer perceives they need, and fill it."  Buying decisions are made irrationally.  Each demographic buys for very specific psychographic reasons.  

Colors & Shapes

Believe it or not, the colors and shapes of your model can make or break your business!  There are colors that work and colors that don't.  The colors you show your customer must be scientifically determined and then used throughout your model - on the walls, the floors, the ceiling, the vehicles, the invoices, your people's clothes, the displays and the signs.

Marketing

Your business is far more fragile than a big business.  So if anything, you must take marketing more seriously than a big business does.  We have entered the "unforgiving age," and your time is running out.

It is an age in which your customer is deluged by so many products and promises that they have become swamped in confusion and indecision.

The challenge of our age is to learn our customer's language and then to speak that language clearly and well so that your voice can be heard above the din.  If your customer doesn't hear you, he'll pass you by.

No doubt you feel frustrated as you read this.  You ask yourself: "How do I do it?  How do I determine my customer's demographics, his psychographics?  What colors do I use?  What Shapes?  What words?

But if you're asking those questions, you're well on your way!  

  • Who are my customers specifically?

  • What do I need to give them in order to have them complete a survey for me?  (A free product or service)

  • What colors, shapes and words do they respond to?

  • What related products do they buy?

  • How large is my market?  Where do my customers come from?

  • How much do they tend to spend?

  • How often do they return?

  • How much do they spend when they return?

  • Do I have enough information on my customers to buy a list from a marketing firm that will contain details on potential customers (or do I just continue with hit and miss advertising?)

Most small business owners suffer from "willful disinformation".  They simply decide what they want to do without any information at all.  They have their stationery designed by the local printer with a logo thrown in, colors picked by their wives and signs designed by a sign painter with no experience in the psychology of shapes and colors.

You don't have to go over the scientific deep end, but you have to be sensitive to the science of marketing.  In fact, you have to be interested in everything your business needs.  You have to become a student of the art of business and the science of business.  That's what the BIG companies do so well.

As a small business you can't afford to spend the money they do, but you can afford to spend the time, the thought, the attention, on the same questions they ask.

Michael E. Gerber              

www.e-myth.com 

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