The franchise model

In the The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It Michael Gerber speaks of the franchise as a model for all small businesses. This does not mean that every small business owner should aspire to franchise his business. It does mean that the franchise can serve as a model to operate a more efficient and profitable small business.

The franchise model is based on systems–on performing tasks in a specific and consistent manner. When tasks are performed in a consistent manner, the results are also consistent.

Gerber uses McDonald’s as an example. No matter where in the world you go, your Big Mac will be the same. Consistent actions create consistent results. The same principle can be applied to any business, whether you are baking pies, or building widgets, or mowing yards.

Having systems and procedures in place becomes particularly important once you begin to hire employees. Systems provide a means for insuring consistent performance without micro-managing employees. So long as they follow the system, the results are the same no matter who performs the task.

Everyone benefits from systems. Employees have clear instructions on how to perform their job. The owner can focus on those aspects of the business that truly require his attention. And customers know what to expect.

While systems do not guarantee success, they certainly increase the odds. And anything that can help a small business owner overcome the challenges of entrepreneurism is worth considering.

Using systems to overcome small business bottlenecks

If you are like most small business owners, you frequently experience frustrations and/ or undesired results. Employees who do not always perform as you would like, deliveries that arrive late, payments that aren’t collected promptly, poor quality work, and a myriad of other problems can torment the owner of a small business.

Most problems in a small business result from 1 of 2 causes: a lack of systems and procedures, or the procedure was not properly followed.

Consistent actions lead to consistent results. If we know the results we desire, and the actions that will lead to that result, successful performance is simply a matter of following the proper course of action. In other words, if A causes B, and we want B, then we should do A. If cooking the burger for 4 minutes on each side cooks it perfectly, then we should always cook a patty for 4 minutes on each side.

This may seem like an over simplification, but the truth is, actions have consequences. And those consequences are usually predictable. Thus, our business can achieve consistent, desirable results if we consistently take the proper actions.

Undesired results are a signal that we have not taken the appropriate actions. When we experience a problem or frustration within our business, we should view it as an opportunity to correct or implement a system. If customers are complaining that their burgers are undercooked, it is very likely that we didn’t cook it for 4 minutes on each side.

By developing and implementing systems in our business, we will consistently take the actions that produce the results we desire. If we want to prepare the perfect burger, then we must cook the meat properly, toast the bun, and assemble the ingredients in the proper amounts and in the proper order. If we want to operate a successful business we must similarly assemble its “ingredients”. Systems provide the guidelines and the standards for doing so.

The technician and the businessman

Many small business owners believe that technical competency will translate to business success. While some level of technical competency is certainly necessary, it seldom ensures success.

A business owner may be good at fixing computers, baking pies, or recommending a travel itinerary. But there is much more to running a business than providing a product or service. A business involves accounting and finance, marketing and sales, production and delivery, management and administration, and much more. A business requires a broad skill set to function successfully.

Certainly these skills can be hired. An accountant can be hired to do the books. A graphics designer can be hired to design marketing materials. A salesman can be hired to generate revenues. An office manager can be hired to oversee administrative functions. But many, if not most, small business owners wear all of these hats and more.

Regardless, the owner must possess some level of knowledge regarding these areas. He is the final decision maker, and without a reasonable level of knowledge he will be unable to make competent decisions. In other words, his technical expertise will not help him when it comes to making decisions regarding finance or marketing.

The failure to obtain this skill set—whether through personal education or by hiring others—is the downfall of many small businesses.

To use a football analogy, the business owner is the head coach. The greatest head coach is not an expert in every aspect of his sport. His primary job is to hire experts, delegate responsibilities, and then organize the entire operation. He is responsible for the final decision making, but he does not need to micromanage every aspect of the team.

This is true even of those football coaches who were stellar players, that is, superb technicians. An all-star football player will not necessarily make a good coach—the two roles require vastly different skill sets.

The coach must be able to organize, teach, encourage, and lead. The same is true of a business owner.

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