The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It

by Michael E. Gerber

Fatal Assumption is: if you understand the technical work of a business, you understand a business that does that technical work.

an entrepreneurial business, without a Manager to give it order and without a Technician to put it to work, is doomed to suffer an early, and probably very dramatic, death. And that a Manager-driven business, without an Entrepreneur or a Technician to play their absolutely critical roles, will put things into little gray boxes over and over again, only to realize too late that there’s no reason for the things or the boxes she put them into! Such a business will die very neatly. “And that in a Technician-driven business, without The Entrepreneur to lead her and The Manager to supervise her, The Technician will work until she drops, only to wake up the next morning to go to work even harder, and the next, and the next. Only to discover, long after it’s too late, that while she was working someone moved a freeway through the store!”

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!

“The purpose of going into business is to get free of a job so you can create jobs for other people.

Every small business owner who survives seeks help.

He needs to know the result he’s accountable for and the standards against which his work is being evaluated. He also needs to know where the business is going and where his accountabilities fit into its overall strategy.

Luck and speed and brilliant technology have never been enough, because somebody is always luckier, faster, and technologically brighter. Unfortunately, once on a fast track, there’s precious little time to listen. The race is won by reflex, a stroke of genius, or a stroke of luck.

your job is to prepare yourself and your business for growth. “To educate yourself sufficiently

the key is to plan, envision, and articulate what you see in the future both for yourself and for your employees.

any plan is better than no plan.

in the process of defining the future, the plan begins to shape itself to reality, both the reality of the world out there and the reality you are able to create in here.

Mature company is founded on a broader perspective, an entrepreneurial perspective, a more intelligent point of view. About building a business that works not because of you but without you.

companies like McDonald’s, Federal Express, and Disney didn’t end up as Mature companies. They started out that way!

it’s not the commodity or the work itself that is important. What’s important is the business: how it looks, how it acts, how it does what it is intended to do.

most people who go into business don’t have a model of a business that works, but of work itself,

To The Entrepreneur, the present-day world is modeled after his vision. To The Technician, the future is modeled after the present-day world.

The Entrepreneurial Perspective adopts a wider, more expansive scale. It views the business as a network of seamlessly integrated components, each contributing to some larger pattern that comes together in such a way as to produce a specifically planned result, a systematic way of doing business.

“How will my business look to the customer?” The Entrepreneur asks. “How will my business stand out from all the rest?” Thus, 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.

without a clear picture of that customer, no business can succeed.

To The Entrepreneur, the business is the product. To The Technician, the product is what he delivers to the customer.

All The Entrepreneur has to do is find out what those wants are and what they will be in the future.

Most business founders believe that the success of a business resides in the success of the product it sells. To the trade name franchisor, the value of the franchise lies in the value of the brand name that it is licensing: Cadillac, Mercedes, Coca-Cola.

The true product of a business is the business itself.

Ray Kroc understood at McDonald’s was that the hamburger wasn’t his product. McDonald’s was.

systems-dependent business, not a people-dependent business.

1. The model will provide consistent value to your customers, employees, suppliers, and lenders, beyond what they expect. 2. The model will be operated by people with the lowest possible level of skill. 3. The model will stand out as a place of impeccable order. 4. All work in the model will be documented in Operations Manuals. 5. The model will provide a uniformly predictable service to the customer. 6. The model will utilize a uniform color, dress, and facilities code.

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 5,000 times, so the 5,000th 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?

nobody’s interested in the commodity. People buy feelings.

‘The work we do is a reflection of who we are. If we’re sloppy at it, it’s because we’re sloppy inside. If we’re late at it, it’s because we’re late inside. If we’re bored by it, it’s because we’re bored inside,

A scripted presentation communicating the Boss’s idea in a group meeting to all of the applicants at the same time. This presentation described not only the idea but also the business’s history and experience in successfully implementing that idea, and the attributes required of the successful candidate for the position in question. 2. Meeting with each applicant individually to discuss his reactions to and feelings about the idea, as well as his background and experience. At this meeting, each applicant was also asked why he felt he was superbly appropriate for the role the position was to play in implementing the Boss’s idea. 3. Notification of the successful candidate by telephone. Again, a scripted presentation. 4. Notification of the unsuccessful applicants, thanking each for his interest. A standard letter, signed by the interviewer. 5. First day of training to include the following activities for both the Boss and the new employee:

Summarizing the system through which the entire business brings the idea to reality • Taking the new employee on a tour of the facilities, highlighting people at work and systems at work to demonstrate the interdependence of the systems on people and the people on systems • Answering clearly and fully all the employee’s questions • Issuing the employee his uniform and his Operations Manual • Reviewing the Operations Manual, including the Strategic Objective, the Organizational Strategy, and the Position Contract of the employee’s position • Completing the employment papers

“The System produces the results; your people manage the system.

“This Hierarchy is composed of four distinct components: “The first is, How We Do It Here. “The second is, How We Recruit, Hire, and Train People to Do It Here. “The Third is, How We Manage It Here. “The Fourth is, How We Change It Here.

in the development of your Marketing Strategy, it is absolutely imperative that you forget about your dreams, forget about your visions, forget about your interests, forget about what you want—forget about everything but your customer!

When it comes to marketing, what you want is unimportant. It’s what your customer wants that matters.

what your customer wants is probably significantly different from wha...

In a television commercial, we’re told, the sale is made or lost in the first three or four seconds. In a print ad, tests have shown, 75 percent of the buying decisions are made at the headline alone. In a sales presentation, data have shown us, the sale is made or lost in the first three minutes.

If you know who your customer is—demographics—you can then determine why he buys—psychographics.

Reality only exists in someone’s perceptions, attitudes, beliefs, conclusions—whatever you wish to call those positions of the mind from which all expectations arise—and nowhere else.

“Find a perceived need and fill it.”

There are three kinds of systems in your business: Hard Systems, Soft Systems, and Information Systems.

Hard Systems are inanimate, unliving things. My computer is a Hard System, as are the colors in this office’s reception area. Soft Systems are either animate—living—or ideas. You are a Soft System; so is the script for Hamlet. Information Systems are those that provide us with information about the interaction between the other two.

The 20 percent are using a system, and the 80 percent aren’t.

Identification of the specific Benchmarks—or consumer decision points—in your selling process. 2. The literal scripting of the words that will get you to each one successfully (yes, written down like the script for a play!). 3. The creation of the various materials to be used with each script. 4. The memorization of each Benchmark’s script. 5. The delivery of each script by your salespeople in identical fashion. 6. Leaving your people to communicate more effectively, by articulating, watching, listening, hearing, acknowledging, understanding, and engaging each and every prospect as fully as he needs to be.

“Hi, Mr. Jackson. I’m Johnny Jones with Walter Mitty Company. Have you seen the remarkable new things that are being done to control money these days?”

The presentation tells Mr. Jackson that there are things going on in the world—“remarkable new things”—that he doesn’t know about (he’s out of control), but he can now become familiar with them (gain control!) by just spending a few moments with Johnny Jones.

establish your credibility in the prospect’s mind by communicating two things. First, your company’s expertise is such matters: “We are Money-Controlling Specialists” (we, at E-Myth Worldwide, call that a Positioning Statement). And second, your personal willingness to do whatever is necessary to utilize that expertise on his behalf:

Johnny Jones is communicating that he understands what frustrates Mr. Jackson, and that he has the expertise to alleviate those frustrations—not personally but systematically—through the use of the Walter Mitty Company’s Money-Controlling System.

The world’s not the problem; you and I are. The world’s not in chaos; we are. The world’s apparent chaos is only a reflection of our own inner turmoil.

the “dream” is rarely realized; most small businesses fail. And the reason is obvious. We bring our chaos with us. We don’t change. We try to change “out there.” We try to change the world by starting a small business—but we stay the same!