The E Myth Book Review: Helpful advice for the sign professional

The E Myth is a very popular business book with huge success because the author, Michael Gerber, included so many great useful principles for running a business in today’s market.  It would be difficult to include them all in one blog posting, but I will include what I consider strategies that any sign shop owner can apply today. 

As Gerber explains it, the E Myth, or the Entrepreneurial Myth, is based basically on two parts: 

• The myth that most people who start a small business are entrepreneurs

• The myth that an individual who understands the technical work of a business can successfully run a business that does that particular technical work  

In other words, the myth is the idea that most people who start a small business are entrepreneurs, risking capital to make a profit.  This idea leads to two misconceptions:

• The Entrepreneurial Seizure, a misconception that lures people to start a business to gain freedom and independence from their existing jobs

• The Fatal Assumption, or when an individual who understands the technical work of a business can successfully run a business in that industry.  

The work which used to be love and joy for the technician will turn into forced chores, and eventually the business will be too much for the technician to handle.  While the principles in the book are many, today I will focus on three major factors that can help you in your business today.

I. Wearing three hats

In the book Gerber explains why so many small businesses fail to grow, and where they stumble when they try to grow.  Gerber says that to grow, you as the business owner need to have three characteristics or traits.  These are the characteristics of:

• Technician
• Manager
• Entrepreneur

The problem is that very few small business owners are capable of being all three.   The challenge is recognizing which of the three you are and bringing in the other two people to fill the other roles. 

When you understand your unique talents, knowledge, and skills, you can continue to develop them while you find others with the talents and skills that you currently lack.  This doesn’t mean that you cannot learn the other roles, it just suggests that instead of putting the time into trying to learn another function of the business, it is usually wiser to bring someone in that already has the natural abilities needed. 

For clarification, Gerber defines the roles of each characteristic:

• Entrepreneur is to supply the vision.  This person is more of the dreamer focusing on the future

• Manager is to bring order to the business by putting systems in place

• Technician lives in the present and is more hands-on supplying the output

All three are necessary for creating a productive and profitable business.  As Gerber says, “Suddenly the job he knew how to do so well becomes one job he knows how to do plus a dozen others he doesn’t know how to do at all.  He discovers he must become three people in one.”

Ø      Key Point: Know thyself.  Know your role in your business.

II. Understanding the why

In The E-Myth, Gerber uses the story of a fictional character named Sarah who sells pies.  Gerber tells Sarah that, “…the purpose of going into business is to get free of a job so you can create jobs for other people.”  It is a matter of first determining why you are in business.  Once you have the “why” firmly in your mind, you can then create a plan to follow for your business.  The reason shouldn’t be to be free of a boss, but rather to go further in your field and to create something great out of your life’s work that makes a difference, and which naturally requires more organization and resources.  

The key question is not how small Sarah’s business could be, but how big it could naturally become with the right systems and organization in place.  So, the first and most important thing to do is to crystallize firmly in your mind where you want to go with the business and then put this goal in writing.  Gerber says that “any plan is better than no plan.”  

Most great companies set out with a vision of where they want to go.  Tom Watson, founder of IBM is quoted as saying, “I realized that for IBM to become a great company, it had to act like a great company long before it ever became one.”  Watson had a template or vision and each day he tried to fashion the company after it, however farfetched it seemed.  He had a picture in his mind how the company would look.  You can do the same with your business. 

Ø      Key Point: Know why you are in business.  Crystallize your answer and put it in writing.

III. Taking care of business

Gerber states that, “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.” 

The key is to work on the business and not in the business by using systemization and business development. 

Gerber learned though his years of consulting that people in small businesses generally work far too hard for the return that they get.  He recommends:

§ Put systems in place that helps you to orchestrate your business.  You have to organize and standardize your business down to the smallest details, because the only certainty in your business is that the people that you hire will act unpredictably.  With proper standards, systems and accountability, you cut out that risk, and as a result the customer gets what they want all of the time.  

§ A business is like a machine that generates money.  The more you standardize and refine the machine, the clearer its value will be.  Gerber asks, “What does a master craftsman do when she has learned all there is to know?  She passes it on to others.  In fulfilling this duty, your skill can be multiplied many times.  Orchestration through a business system leverages what you know.” 

§ What are needed are idiot-proof systems and procedures that enable merely good people to do extraordinary things, or a way of operating that guarantees customer satisfaction, not by individual people, but by the system itself.  If you can build a great business around ordinary people, says Gerber, you don’t have to worry about finding extraordinary ones.

Ø      Key Point: Put systems in place so you can work on your business and not just in your business.

If you get a chance to pick up the book, please do.  Until then, strive to implement the three points outlined here.  Take your time working on them and try to remember the three personality types.  Remember that the Technician’s only model for his business is work, whereas for the Entrepreneur, the model is the business itself, and the work is secondary.  This is why Watson’s remark in the book is so timely today: “Every day at IBM was a day devoted to business development, not doing business.”