Michael Gerber, the E-Myth evangelist.
Michael Gerber’s name should sound familiar.
I recommend his bestseller,
The E-Myth Revisited, as the must-read classic on automation. It brief, it discusses how to create scalable businesses that are based on rules and not outstanding employees; and how to become an owner instead of constant micromanager.
Michael also had a enormous influence on me as a first-time writer. His words to me were simple during our first lunch:
“If you’re going to write a book, write a f*ing book.”
Don’t hedge and don’t think small. I didn’t hold back material for a sequel, I aimed for the top of the top, and I credit Michael’s advice as, in part, responsible for the subsequent success of the
4HWW. It was that recalibration of ambition that made it all possible.
His latest book,
Awakening the Entrepreneur Within, examines how to recalibrate the scale of objectives and other facets of the core entrepreneurial experience, which we recently sat down to discuss…
1. Michael, having counseled more than 50,000 post-corporate entrepreneurs caught in what you call the “entrepreneurial seizure,” can you explain this phenomenon and how to avoid it?
The “entrepreneurial seizure” lies at the heart of most failures in judgment when someone decides to leave his or her job to go out on their own.
The excitement of independence associated with getting rid of the boss is almost always fueled by a flawed understanding of what being on your own means. Most small businesses are started by technicians rather than by true entrepreneurs.
The technician believes in the fatal assumption that because he or she knows how to do the work — whether graphic design, engineering, cooking a great dinner, repairing an automobile, snow boarding, or otherwise — they can turn that capability into a business that frees them from the boss. The graphic designer creates a graphic design business. The technologist creates a technology-based business. The cook creates a restaurant. The mechanic creates an auto repair business. The snow boarder creates a snow boarding business.
But instead of freeing themselves from the boss, they have become their own boss, and they’re now — with absolutely no understanding about how it happened — working for a lunatic and doing what they know how to do but in greater volume than before.
True entrepreneurs make the transition from working for someone else to working on their own much differently. Entrepreneurs invent businesses that work without them. Technicians create businesses that work
because of them. The entrepreneur is liberated from what I call the “tyranny of routine,” and the technician becomes a slave to it. In the entrepreneur’s case, the business works. In the technician’s case, the technician works. And that’s why most of the 500,000 new businesses that are started every month in the U.S.A. will fail. According to a recent study done by the Kauffman Foundation, 81% of all businesses in the US employ no people besides the owner. They’re sole proprietorships. True entrepreneurs are never sole proprietors.
2. Much of the model you laid out in The E-Myth Revisited has to do with the importance of systems in building a scalable business. What is the shape of the process and the practical steps for business development in your model?
As I’ve said before, and as AT&T has been quoted: the system is the solution.
The system I’m talking about is the core operating system of your business. It comprises three essential functions that must work in a completely integrated way. These are lead generation, lead conversion and client fulfillment. Whether the business is McDonalds or Starbucks, FedEx or Dell Computer, these three systems are critical to the success of that company. Building these systems then is the process we teach at E-Myth. They are really arranged in a very simple three-step approach. Step one: intentional dreaming (the dream, the vision, the purpose and the mission). Step two: intentional organization (conceiving, building and perfecting the automated client fulfillment systems that comprise the operating reality of the company). Step three: intentional growth (conceiving, building and perfecting the lead generation and lead conversion operating systems of the company). Every business under the sun is conceived, built and perfected in identically the same way, using identically the same processes.
3. Has the Internet really fundamentally changed the game for small business?
The internet era has, of course, changed the game for small business, but not as dramatically as most would profess.
After all is said and done, the internet is simply a medium through which the business of business is transacted, a conduit through which one can communicate and deliver the results one has set out to deliver. As many or more companies fail on the internet as anywhere else, and many more businesses (especially sole proprietors) stumble along without every making an impact on anyone, and most without selling anything to anyone.
In short, if an internet business fails to follow the three-step development process I just outlined, it will fail just like any other business will. So, I must say frankly that I am not a great believer in the internet as the be all and end all of business opportunity that others see it to be. Maybe I’m simply too old, but I think not. In short, I think that, given my experience of internet entrepreneurs as being very much the same as any other types of entrepreneurs, if they are absent the entrepreneurial fundamentals that are absolutely essential for any new company to grow, the result will be the same: lack of direction, lack of intention, lack of execution, diminished results.
4. In your new book you write–very counter-intuitively to most–that the reason most small businesses fail is not that they dream too big, but that they dream too small to create a truly thriving enterprise. Can you elaborate?
By “dreaming big” I mean conceptualizing a result greater than anything you have ever experienced. When I started my first company, now
E-Myth Worldwide, I had absolutely no business experience. All I had was an idea bigger than life itself. My idea, my dream, was to transform small business worldwide.
That dream was the energizer for everything that was to follow. That dream for me was the realization of a picture I had formed in my mind of the typical small business I walked into every day, where the owner lived for sweat equity, worked 18-hour days, and had no idea that his or her life could be any different than the overwhelming life he experienced, and that all of his or her peers experienced in the day-to-day hell of doing it, doing it, and doing it some more. I just knew, don’t ask me how, it didn’t have to be that way.
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