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

by Michael E. Gerber

Contrary to popular belief, my experience has shown me that the people who are exceptionally good in business aren’t so because of what they know but because of their insatiable need to know more.

Indeed, the problem is not that the owners of small businesses in this country don’t work; the problem is that they’re doing the wrong work.

your business is nothing more than a distinct reflection of who you are. If your thinking is sloppy, your business will be sloppy. If you are disorganized, your business will be disorganized. If you are 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 in your business is limited, your business will reflect that limitation.

And it finds its roots in this country in a romantic belief that small businesses are started by entrepreneurs, when, in fact, most are not. Then who does start small businesses in America? And why?

But one day, for apparently no reason, you were suddenly stricken with an Entrepreneurial Seizure. And from that day on your life was never to be the same. Inside your mind it sounded 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.”

That Fatal Assumption is: if you understand the technical work of a business, you understand a business that does that technical work. And the reason it’s fatal is that it just isn’t true. In fact, it’s the root cause of most small business failures!

In fact, rather than being their greatest single asset, knowing the technical work of their business becomes their greatest single liability.

The problem is that everybody who goes into business is actually three-people-in-one: The Entrepreneur, The Manager, and The Technician.

The Entrepreneur is the visionary in us. The dreamer. The energy behind every human activity. The imagination that sparks the fire of the future. The catalyst for change.

Every strong entrepreneurial personality has an extraordinary need for control. Living as he does in the visionary world of the future, he needs control of people and events in the present so that he can concentrate on his dreams.

The farther ahead he is, the greater the effort required to pull his cohorts along. This then becomes the entrepreneurial worldview: a world made up of both an overabundance of opportunities and dragging feet. The problem is, how can he pursue the opportunities without getting mired down by the feet? The way he usually chooses is to bully, harass, excoriate, flatter, cajole, scream, and finally, when all else fails, promise whatever he must to keep the project moving.

The managerial personality is pragmatic. Without The Manager there would be no planning, no order, no predictability.

If The Entrepreneur lives in the future, The Manager lives in the past. Where The Entrepreneur craves control, The Manager craves order. Where The Entrepreneur thrives on change, The Manager compulsively clings to the status quo. Where The Entrepreneur invariably sees the opportunity in events, The Manager invariably sees the problems.

If The Entrepreneur lives in the future and The Manager lives in the past, The Technician lives in the present. He loves the feel of things and the fact that things can get done. As long as The Technician is working, he is happy, but only on one thing at a time. He knows that two things can’t get done simultaneously; only a fool would try. So he works steadily and is happiest when he is in control of the work flow.

To The Technician, thinking is unproductive unless it’s thinking about the work that needs to be done. As a result, he is suspicious of lofty ideas or abstractions. Thinking isn’t work; it gets in the way of work.

Since most entrepreneurial ideas don’t work in the real world, The Technician’s usual experience is one of frustration and annoyance at being interrupted in the course of doing what needs to be done to try something new that probably doesn’t need to be done at all. The Manager is also a problem to The Technician because he is determined to impose order on The Technician’s work, to reduce him to a part of “the system.”

To The Technician, “the system” is dehumanizing, cold, antiseptic, and impersonal. It violates his individuality.

To The Manager, however, work is a system of results in which The Technician is but a component part. To The Manager, then, The Technician becomes a problem to be managed. To The Technician, The Manager becomes a meddler to be avoided.

our experience shows us that few people who go into business are blessed with such a balance. Instead, the typical small business owner is only 10 percent Entrepreneur, 20 percent Manager, and 70 percent Technician.

The Technician seizes the opportunity to go into business for himself.

To The Technician it’s a dream come true. The Boss is dead. But to the business it’s a disaster, because the wrong person is at the helm. The Technician is in charge!

“In your business, you would see how one part of you craves a sense of order, while another part of you dreams about the future. You would see how another part of you can’t stand being idle, and jumps in to bake, and to clean up, and to wait on customers, the part of you who feels guilty if she isn’t doing something all the time.

“An Entrepreneur does the work of envisioning the business as something apart from you, the owner. The work of asking all the right questions about why this business, as opposed to that business? Why a pie baking business rather than a body shop? If you are a baker of pies, it’s easy for you to decide to open up a pie-baking business. But that’s just the point. If you are a baker of pies and are determined to do entrepreneurial work, you would leave your pie-baking experience behind you and engage in the internal dialogue with which every truly entrepreneurial personality is wonderfully familiar.

Question the road I'm on.

Unfortunately, most businesses are not run according to this principle. Instead most businesses are operated according to what the owner wants as opposed to what the business needs. And what The Technician who runs the company wants is not growth or change but exactly the opposite. He wants a place to go to work, free to do what he wants, when he wants, free from the constraints of work

If you can believe what your customers are saying, there’s never been anyone like Joe, Tommy, and Mary. Joe, Tommy, and Mary are just like old friends. They work hard for their money. And they do good work. Joe is the best barber I ever went to. Tommy is the best printer I ever used. Mary makes the best corned beef sandwich I ever ate. Your customers are crazy about you. They keep coming, in droves. And you love it! But then it changes. Subtly at first, but gradually it becomes obvious. You’re falling behind. There’s more work to do than you can possibly get done. The customers are relentless. They want you; they need you. You’ve spoiled them for anyone else. You’re working at breakneck speed.

You see the work that has to get done, and because of the way you’re built, you immediately jump in to do it! You believe that a business is nothing more than an aggregate of the various types of work done in it, when in fact it is much more than that.

“If you want to work in a business, get a job in somebody else’s business! But don’t go to work in your own. Because while you’re working, while you’re answering the telephone, while you’re baking pies, while you’re cleaning the windows and the floors, while you’re doing it, doing it, doing it, there’s something much more important that isn’t getting done. And it’s the work you’re not doing, the strategic work, the entrepreneurial work, that will lead your business forward, that will give you the life you’ve not yet known.

“It’s only a problem when The Technician consumes all the other personalities. When The Technician fills your day with work. When The Technician avoids the challenge of learning how to grow a business. When The Technician shrinks from the entrepreneurial role so necessary to the lifeblood, the momentum, of a truly extraordinary small business, and from the managerial role so critical to the operational balance or grounding of a small business on a day-to-day basis. “To be a great Technician is simply insufficient to the task of building a great small business.

what your customers are buying is not your business’s ability to give them what they want but your ability to give them what they want. And that’s what’s wrong with it! “What if you don’t want to be there? What if you’d like to be someplace else? On a vacation? Or at home? Reading a book? Working in the garden? Or on a sabbatical, for God’s sake?

“And to play this new game, called building a small business that actually works, your Entrepreneur needs to be coaxed out, nourished, and given the room she needs to expand, and your Manager needs to be supported as well so she can develop her skill at creating order and translating the entrepreneurial vision into actions that can be efficiently manifested in the real world.

Adolescence begins at the point in the life of your business when you decide to get some help.

precipitated by a crisis in the Infancy stage.

What kind of help do you,

go out to get?

technical...

usually the work you don’t like to do. The sales-oriented owner goes out to find a production person. The production-oriented owner looks for a salesperson. And just about everybody tries to find someone to do the books!

At last you’re free. The Manager in you wakes up and The Technician temporarily goes to sleep.

It’s called Management by Abdication rather than by Delegation.

Harry comes to you occasionally to tell you what he needs, and you, busy as usual, simply tell him to handle it. How doesn’t matter as long as he doesn’t bother you with the details. You’ve got other fish to fry.

And then it unexpectedly happens. A customer calls to complain about the shabby treatment she received from one of your people. “Who was it?” you ask, privately steaming. She doesn’t know, but if you’re going to hire people like that she’ll take her business elsewhere.

Problems the employees cause when they aren't trained.

That no one has your judgment, or your ability, or your desire, or your interest. That if it’s going to get done right, you’re the one who’s going to have to do it. So you run back into your business to become the Master Juggler again. It’s the same old story. Walk into any Adolescent business anywhere in the world and you’ll find the owner of the business doing it, doing it, doing it, busy, busy, busy—doing everything that has to get done in his business—despite the fact that he now has people who are supposed to be doing it for him. People he’s paying to do it!

Temptation to jumping back into the business to do things. "No one has your judgment" -- Carson on hiring for intelligence.

It’s that you simply don’t know how to do it any other way. You’re hopelessly, helplessly at a loss. For you to behave differently you would need to awaken the personalities who have been asleep within you for a long time—The Entrepreneur and The Manager—and then help them to develop the skills only they can add to your business.

The Technician in you has got to keep busy. The Technician in you has just reached the limits of his Comfort Zone.

The Technician’s boundary is determined by how much he can do himself.

The Manager’s is defined by how many technicians he can supervise effectively or how many subordinate managers he can organize into a productive effort. The Entrepreneur’s boundary is a function of how many managers he can engage in pursuit of his vision.

Out of desperation, he does what he knows how to do rather than what he doesn’t, thereby abdicating his role as manager

Harry’s also a technician. He needs more direction than The Technician can give him. He needs to know why he’s doing what he’s doing. 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.

And all of a sudden you are struck with the reality of your condition. You realize something you’ve avoided all these years. You come face to face with the unavoidable truth: You don’t own a business—you own a job! What’s more, it’s the worst job in the world! You can’t close it when you want to, because if it’s closed you don’t get paid. You can’t leave it when you want to, because when you leave there’s nobody there to do the work. You can’t sell it when you want to, because who wants to buy a job?

Going for Broke

This section is meaningless

The most tragic possibility of all for an Adolescent business is that it actually survives! You’re an incredibly strong-willed, stubborn, single-minded individual who’s determined not to be beaten. You go into your business every morning with a vengeance, absolutely convinced that it’s a jungle out there, and fully committed to doing whatever’s necessary to survive. And you do survive. Kicking and scratching, beating up your people and your customers, ranting and raving at your family and friends—because, after all, you’ve got to keep the business going. And you know there’s only one way to do it: you’ve got to be there—all the time. In Adolescent Survival you’re consumed by the business and the possibility of losing it. And so you put everything you have into it. And, for whatever reason, you manage to keep it going.