Michael E. Gerbers ‘E-Myth – Why most businesses don’t work and what to do about it’ should be made compulsory reading for anyone commencing or buying a business.
Starting a business is a wonderful, fantastic and dare I say, rewarding, pursuit – but it is also a pursuit that a lot of people go into with their eyes firmly closed. It is for this reason that, starting or running a business is stressful, time-consuming, financially draining and the complete opposite of original expectations.
Gerber outlines a heck of a lot in the E-Myth; but one of the central themes is that nearly all small business owners need to fill three roles:
- The Entrepreneur/Owner
- The Manager
- The Technician (AKA the ‘doer’)
On top of this, Gerber proposes that a lot of small businesses are formed from an ‘entrepreneurial seizure’ – a temporary state that a lot of us experience but few act on. In this state, a person may find themselves sick of the oppression of working for a boss, limited in their job, looking for further financial reward, thinking they can simply ‘do it better’ or a combination of all of the above or more. From this state the decision to commence a new business is made and often there is a sense of relief and excitement for what is to come.
This is where the compulsory reading should come in – as if most people read this book before they commenced a business, they would
- Be much better informed and prepared for it.
- Or it may cause them to step out of their ‘seizure’ and reconsider.
Do not get me wrong – I am not saying that some of the above reasons are not valid reasons for starting the thought process of going into business, I am however saying that almost none of the above reasons should be relied upon solely as reason for jumping in feet first. Knowledge and preparation is key. Is that the accountant coming out in me? Unashamedly so.
One of my much wiser business partners often talks about a very similar topic to Gerber. When he talks to business owners and he uses Three Hats as props. He demonstrates the human propensity to jump between roles and to procrastinate and makes it very clear that all business owners have these three hats to wear. When we remind our clients of this or talk to new clients you can see the understanding flicking on in their eyes – just the knowledge alone makes an huge difference to their perspective and helps them makes sense of the world that they are operating in.
The reality is that most people fall into the same trap when they go into business – the belief that being a great Technician will build you a great business. This belief is not only false but also cruelly directs all focus to one ‘hat’. Gerber does an excellent job of pointing out why the above does not work and clearly explains why that is the case. It is so simple, but only in hindsight – like so many things!
This is why I think that the E-Myth should be compulsory reading for any budding business owners. The knowledge and context that it provides for business is invaluable. I think we would all be relatively familiar with the failure rate for small businesses in Australia. If you don’t, consider this: 60% of businesses don’t make it past three years. And the statistic only gets worse from there. One can only logically conclude that a certain amount of those failures is due to lack of knowledge in the infancy stages. Sure, cash flow, bad ideas, poor management and lack of capital are the reasons given but couldn’t all of these be largely avoided if the prospective business owner is armed with the knowledge of what they are about to get themselves into?
Let’s then take it a step further – wouldn’t it be great if all existing business owners made the time to read this book? The same wise business partner who talks about hats has worked with small businesses for 30 or so years and believes that most of them, even the ‘good’ ones, operate at 80% of what they are capable of. Of course this is anecdotal but imagine what might happen to the economy if we could get that number to 90% or above?
97% of businesses in Australia fall into the ‘small business’ category, what would a 10% or more uplift do to spending, jobs or productivity levels?
The knowledge and understanding that can come from books such as the E-Myth is incredibly powerful. With the plethora of options available for accessing this information in the form of e-books, YouTube video summaries and streaming services there should be absolutely no reason why business owners should make the time to fit this sort of development into their schedule – you can even still get the hard copy book if that fits best, I know I still prefer it!
In the meantime – I hope we do get a milliner as a client shortly, they should grasp this hat theory very quickly!