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

by Michael E. Gerber

I think that maybe inside any business, there is someone slowly going crazy.

It is a belief that says small businesses in the United States simply do not work; the people who own them do.

As a result, most of their businesses end up in chaos—unmanageable, unpredictable, and unrewarding.

Businesses start and fail in the United States at an increasingly staggering rate. Every year, over a million people in this country start a business of some sort. Statistics tell us that by the end of the first year at least 40 percent of them will be out of business.1 Within five years, more than 80 percent of them—800,000—will have failed. And the rest of the bad news is, if you own a small business that has managed to survive for five years or more, don’t breathe a sigh of relief. Because more than 80 percent of the small businesses that survive the first five years fail in the second five.

IDEA #1

The real reasons people start businesses have little to do with entrepreneurship. In fact, this belief in the Entrepreneurial Myth is the most important factor in the devastating rate of small business failure today. Understanding the E-Myth, and applying that understanding to the creation and development of a small business, can be the secret to any business’s success.

IDEA #2

IDEA #3

this process into its every activity and uses it to control its destiny, that company stays young and thrives.

IDEA #4

This book, then, is about producing results—not simply “how to do it.” Because both of us know that books like that don’t work. People do.

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. So if your business is to change—as it must continuously to thrive—you must change first. If you are unwilling to change, your business will never be capable of giving you what you want. The first change that needs to take place has to do with your idea of what a business really is and what it takes to make one work. Once you fully understand the relationship every owner must have with his or her business if it is to work, I can assure you that your business and your life will take on new vitality and new meaning.

They intoxicate themselves with work so they won’t see how they really are.

Where was the entrepreneur who had started the business? The answer is simple: the entrepreneur had only existed for a moment.

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.

The Entrepreneurial Seizure

But whatever you were, you were doing technical work.

Entrepreneurial Seizure.

Once you were stricken with an Entrepreneurial Seizure, there was no relief. You couldn’t get rid of it. You had to start your own business.

The Fatal Assumption

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!

All of them believing that by understanding the technical work of the business they are immediately and eminently qualified to run a business that does that kind of work. And it’s simply not true!

apron,

The sun shone harshly through the spotless windows,

sprinkling of the flour,

The technician suffering from an Entrepreneurial Seizure takes the work he loves to do and turns it into a job. The work that was born out of love becomes a chore, among a welter of other less familiar and less pleasant chores. Rather than maintaining its specialness, representing the unique skill the technician possesses and upon which he started the business, the work becomes trivialized, something to get through in order to make room for everything else that must be done.

despair.

personages,

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

And the problem is compounded by the fact that while each of these personalities wants to be the boss, none of them wants to have a boss. So they start a business together in order to get rid of the boss. And the conflict begins.

mani...

sluggish

It has happened to us all. Somebody wakes up inside us with a totally different picture of who we should be and what we should be doing.

up at five, run three miles, cold shower at six, a breakfast of wheat toast, black coffee, and half a grapefruit; then, ride your bicycle to work, home by seven, run another two miles, to bed at ten—the world’s already a different place!

ounce.

Dejection

You begin to feel a slight twinge o...

It’s The Fat Guy! He’s back!

It happens to all of us, time and time again. Because we’ve been deluded into thinking we’re really one person.

And so when The Skinny Guy decides to change things we actually believe that it’s I who’s making that decision. And when The Fat Guy wakes up and changes it all back again, we think it’s I who’s making that decision too. But it isn’t I. It’s we. The Skinny Guy and The Fat Guy are two totally different personalities, with different needs, different interests, and different lifestyles.

Is it any wonder we have such a tough time keeping our commitments to ourselves?

Anyone who has ever experienced the conflict between The Fat Guy and The Skinny Guy (and haven’t we all?) knows what I mean. You can’t be both; one of them has to lose. And they both know it. Well, that’s the kind of war going on inside the owner of every small business.

The Entrepreneur

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.

The Entrepreneur lives in the future, never in the past, rarely in the present.

In business, The Entrepreneur is the innovator, the grand strategist, the creator of new methods for penetrating or creating new markets, the world-bending giant—like

creating probabilities out of possibilities,

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 Manager

impeccable order