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

by Michael E. Gerber

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.

If your business depends on you, you don’t own a business—you have a job.

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

You don’t own a business—you own a job!

“So, in this context, a business that ‘gets small again’ is a business reduced to the level of its owner’s personal resistance to change, to its owner’s Comfort Zone, in which the

owner waits and works, works and waits, hoping for something positive to happen.

“Simply put, your job is to prepare yourself and your business for growth.

“To educate yourself sufficiently so that, as your business grows, the business’s foundation and structure can carry the additional weight.

“By asking the right questions, such as: Where do I wish to be? When do I wish to be there? How much capital will that take? How many people, doing what work, and how? What technology will be required? How large a space will be needed, at Benchmark One, at Benchmark Two, at Benchmark Three?

“But all the while, even while you’re guessing, the key is to plan, envision, and articulate what you see in the future both for yourself and for your employees.

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.

Entrepreneurial Perspective that says 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.

The Entrepreneurial Model looks at a business as if it were a product, sitting on a shelf and competing for the customer’s attention against a whole shelf of competing products (or businesses).

Entrepreneurial Model has less to do with what’s done in a business and more to do with how it’s done. The commodity isn’t what’s important—the way it’s delivered

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

Because the Business Format Franchise is built on the belief that the true product of a business is not what it sells but how it sells it.

How could the components of the prototype be constructed so that it could be assembled at a very low cost with totally interchangeable parts?

The system runs the business. The people run the system.

The system isn’t something you bring to the business. It’s something you derive from the process of building the business.

your business is not your life.

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.

value is what people perceive it to be, and nothing more.

So what could your Prototype do that would not only provide consistent value to your customers, employees, suppliers, and lenders but would provide it beyond their wildest expectations?

How can I create a business whose results are systems-dependent rather than people-dependent? Systems-dependent rather than expert-dependent.

It’s your job—more accurately, the job of your business—to develop those tools and to teach your people how to use them. It’s your people’s job to use the tools you’ve developed and to recommend improvements based on their experience with them.

You will be forced to find a system that leverages your ordinary people to the point where they can produce extraordinary results over and over

A business that looks orderly says that the structure is in place.

Without documentation, all routinized work turns into exceptions.

It designates the purpose of the work, specifies the steps needed to be taken while doing that work, and summarizes the standards associated with both the process and the result.

What you do in your model is not nearly as important as doing what you do the same way, each and every time.

Go to work on your business as if it were the pre-production prototype of a mass-produceable product.

Think of your business as something apart from yourself,

Think of your business as anything but a job!

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?

“Creativity thinks up new things. Innovation does new things.”

Where the business is the product, how the business interacts with the consumer is more important than what it sells.

What is standing in the way of my customer getting what he wants from my business?

“What is the best way to do this?”

Innovation is the signature of a bold, imaginative hand.

Orchestration is the elimination of discretion, or choice, at the operating level of your business.

If, by a franchise, you understand that I’m talking about a proprietary way of doing business that differentiates your business from everyone else’s.

In short, Innovation, Quantification, and Orchestration are the backbone of every extraordinary business. They are the essence of your Business Development Process.

“And that, I believe, is the heart of the process: not efficiency, not effectiveness, not more money, not to ‘downsize’ or ‘get lean,’ but to simply and finally create more life for everyone who comes into contact with the business, but most of all, for you, the person who owns it.

“Quality is just a word, and an empty word at that, if it doesn’t include harmony, balance, passion, intention, attention.

Now you understand the task ahead: to think of your business as though it were the prototype for 5,000 more just like it.

Great people have a vision of their lives that they practice emulating each and every day.

I believe it’s true that the difference between great people and everyone else is that great people create their lives actively, while everyone else is created by their lives, passively waiting to see where life takes them next.

Keep the curtain up at all cost.