E-myth Revisited: Why Most Small Businesses Don't Work and What to Do About It [Paperback]

Essential Reading for anyone running a small business. The author owns a leading business consultancy that specialises in reengineering small businesses to make them work properly.

I've always avoided the idea of running my own business simply because of the pain I've seen almost everyone I know go through when they started one. Every time things get tough, they have only one solution: work harder and put in more hours. Many of those that survive do so only because the owners simply refuse to give up. As a result they, and their families suffer. So many people seem to get swallowed by their business, as if Jaws had come out of the sea and pulled them from their inflatible. Those of us standing at the edge of the water tut tut and think "no way I'm going in there". This book has changed my thinking about all that.

As Mr Gerber says, the problem is very few people have been properly trained in how to run a business. Most small business people start out as technicians who got hit by an entrepreneurial seizure. As a result of their technical background, they have a tragic tendancy to retreat back into the one thing they feel certain they know how to do well: the technical work. This is known as the comfort zone. To be a real business owner, you must move beyond your comfort zone and learn how to think strategically about your business rather than working in it.

The author poses the question: if you were to expand your business to 4 different locations, could you continue to run the 4 the way you do the one you have now? What if you expanded to 1000 locations? If you are doing the usual thing and running around performing every critical function in your business yourself then the answer is obvious: you can't. You should view the one business you have as a prototype for all the others you are going to create and run it accordingly.

The core message is that rather than doing all the work yourself, you should set up business systems. By which he means a documented procedure or checklist for every function that occurs in your business. Once you have a functioning system in place, you can then hire a relatively inexperienced person and meticulously train them to follow the system you have set up. The better the system, the better the employee performs and the better your business performs. Your manager's job is to manage the systems not the people (people are inherently unmanageable), refining and improving the systems. This leaves you free to do the real work of an owner: thinking about how to improve and grow your business.

Another good title for this book would have been "Zen and the Art of Business" since it draws so much on the authors personal philosophy of how a business should be run. He talks about business in an exciting, refreshing way I've never heard before. For example, comparing the prototype business to a martial arts dojo where you practice and practice and practice until you get it right.

You should have your business revolve around your personal life and personal goals rather than the usual scenario of being a slave to your business. The whole point of starting a business is to improve your quality of life, not suck it out of you. To that end he takes you through the steps you should go through when setting up a business to avoid those pitfalls:

- Define your primary aim based on your personal life goals
- Define the strategic objectives that your business has to ultimately do in order to achieve the primary aim
- Have an organisation chart from the very start, even if there's only 1 person in the business. This is so you can start working out what functions to replace with systems
- Realise that what you really need is a Management System, not a Manager
- Make sure your people understand the idea behind the work they do and that the idea is more important than the work itself. In order to generate motivation, encourage them to treat the systems as a game to be played.
- etc, etc.

If you are in any doubt, take a look at his web site. I think there is plenty there to convince you to buy this book. Its certainly been worth my time and I'm seriously considering starting my own business purely as a result of reading this book.

This book deserves 7 stars for pointing out the fallacies of how most entrepreneurs operate. The book deserves 1 star for proposing a standard that most people cannot hope to meet and then pushing to sell you consulting services. Pay attention to the former, and go light on the latter.

Gerber is correct that most entrepreneurs are limited by a comfort zone of wanting to remain in control as either strong technicians or managers, which limits the potential of the business. As soon as they exceed what they can handle, the business either fails in a break-out attempt or shrinks back to a simpler state. The new businesses that succeed the most are the ones that have a business model that is easy to replicate with ordinary people.

Where Gerber goes wrong is in suggesting that many people can develop such business models. I regularly study the top 100 CEOs in the country for stock-price growth, and few of them think they can develop a new business model. Why should someone starting up a new company be likely to do better than that? They won't. In fact, I have a friend who attempted to start a new business following Gerber's principles and almost failed before he adjusted to normal operating approaches. He spent so much time developing his business model that he never got around to operating it well.

Gerber's three favorite examples are McDonald's, Disney, and Fed Ex. Notice that two of the three got most of their ideas from someone else for the business model (Ray Kroc from the McDonald brothers in San Bernardino, California and Fred Smith from an Indian air freight operation).

I think there is another fallacy here: You can get ordinary people to do simple things (deliver packages, cook and deliver cheap hamburgers, and smile at people on automated rides). But in many businesses the demands of the market are extraordinary such as in many technological product businesses and services. Microsoft has a business model, but it is not one that Gerber would recognize.

Finally, he condemns people who want to operate their business as a job by being technically expert. Where would we be if people never did that? What if Peter Drucker spent all of his time developing business systems to make pizzas and tacos rather than writing business books about management? What if great musicians developed business models for teaching children to play the violin and piano rather than performing? In other words, there is room and a need for extraordinarily able one-person companies run by technicians.

Skip the pitch for the consulting services at the end. You'll like the book better if you do.

But don't let my quibbles keep you as an entrepreneur from failing to appreciate the excellent case Gerber makes for having a business model as soon as possible, and working systematically to improve it. If you can do that, you may well develop a true irresistible growth enterprise. If you can learn to create continually better business models, you will naturally prosper. That could provide the ultimate competitive advantage . . . something that few have.

This is probably the one book I would recommend for anyone with a failing business, anyone wanting to start a business, or anyone wanting to improve their business. Gerber's arguments are sound, practical and common-sense. It gives even the most hardened sceptics enough statistics to get their teeth into, but at the same time doesn't hesitate to give practical, how to advice and check lists on how to go about achieving the desired results. Gerber himself has been there, which is why this book is so profoundly convincing. The only thing I don't like is the moralistic story about the owner of a pie shop, in which he tells the tale of the practical lessons he gives. It works for many, but not for me. Having said that, this book is a real gem, and has the added advantage of not being too long, and not being full of jargon and spin type business terms that you won't understand. It's one of the only books I've found that also helps to concentrate the mind on the work/life balance issue which is a major issue in running a small business.