Book review: The E-Myth

Few books can be called revolutionary. The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It, by Michael Gerber, is one such book.

This best seller presents a compelling argument for entrepreneurs to look at their business differently. Gerber points out that many entrepreneurs start a business doing something that they love, believing that their days will be filled with an enjoyable activity. However, as the business grows, and new employees must be hired, the owner quickly discovers problems that previously did not exist.

These new employees don’t have the experience and motivation of the owner. They don’t have the same drive and desire as the owner. While the owner recognizes the need to train his employees, it is the nature of that training which often proves inadequate.

While sitting in a McDonald’s one morning, killing time between appointments, Gerber wondered why the Golden Arches were so successful. Most of the employees were teenagers possessing few job skills. Yet the quality of the service and the product was similar in every store.

Gerber realized that the company’s success derived from its approach to the business. Each step of the process was carefully analyzed, and then procedures and policies were developed. That is, a system was developed, and when followed, the system virtually assures success. Thus, a McDonald’s in Houston operates almost identically to one in London, and with very similar results.

Throughout the book, Gerber exhorts the reader to work on his job, not at it. In other words, develop a systematic approach to each job within the organization. In the process, the success of the business is less dependent upon any one individual. As with McDonald’s, the system becomes the key to success.

Of course, this is usually easier said than done. Within any business, hundreds, perhaps thousands, of tasks must be performed. Often, the owner has automatized these tasks, and performs them with little or no conscious thought. Yet, he must identify and then explain each of them clearly. Systems, and their documentation in an Operations Manual, is the key to becoming a true business owner, rather than the owner of a job.

By developing production procedures and policies, and then properly training production personnel, this transition can go smoothly. The owner can then spend his time working his business, rather than in it.

Bottlenecks and systems

Many small business owners believe that problems and frustrations are simply a part of owning a small business. But it doesn’t have to be that way. These bottlenecks–situations that create undesired results–can be eliminated, or greatly reduced, if we have a process for identifying and remedying them.

Problems and frustrations do not go away on their own. They require effort. And the key is to have a process–a method for systematically identifying and resolving these stresses.

1. Identify the bottleneck—Name the problem, frustration, or undesired result.

2. Identify the cause—This often requires probing. Don’t settle for the first answer that pops into your mind. The real cause may not be obvious.

3. Identify the actions that will eliminate or prevent the bottleneck—What actions will lead to the desired results? This will likely require change.

4. Write a detailed list of the steps involved—Make a step-by-step list of all of the actions involved in achieving the desired results.

5. Train and implement those steps—Train the appropriate employees in the procedure.

As an example, let us say that you own a service company. Your employees perform their work in homes and offices, and you frequently receive complaints that your employees are tracking dirt and debris into the customer’s facility. Rather than accept these complaints as inevitable, you can identify the cause and possible solutions, such as removing their shoes, placing a mat at the entrance to clean their shoes, or wear disposable booties.

This is a simple example, and certainly the solution to many bottlenecks is more complex. But if we identify the actions that will lead to desired results and make those actions a part of our company’s operating procedures, we can eliminate most bottlenecks. Different actions lead to different results.

Systems for your small business

Many, if not most, small business owners are insufficiently prepared for the challenges and opportunities that lie ahead when they start their business. Gripped by what Michael Gerber calls “entrepreneurial seizure” they decide, for whatever reason, that they should start their own business. And so they start their business, often with little planning and insufficient capital.

Many believe that expertise in their field is sufficient for success. But technical expertise is only a part of the equation. A successful business must do much more than simply produce widgets. A successful business must deal with marketing, accounting, hiring, training, and much more.

While a business owner can hire experts, outsource tasks, and delegate responsibilities, he must be aware of and possess some knowledge in each of these areas. As the owner he makes the final decisions and sets the strategy. More importantly, he must know the results that he desires and how he intends to achieve them.

There are often multiple ways to effectively to do this. But there is likely one way that is most efficient and effective. There is likely one way that will get the results that you desire with less effort. There is likely one way that you prefer.

As your business grows, you will face many challenges. Not the least of these is employees. And the more employees you hire, the greater your challenges. Maintaining quality and superior customer service become increasingly difficult as your business grows. But with the proper systems in place these challenges can become opportunities. With the proper systems in place, the dreams you have for your business can become a reality.

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