The book "The E-Myth: How to Turn a Small Independent Business into a Big Businessman" was written by Michael Gerber in 1995 and is still as relevant as ever. The book came to me by chance, and I probably wouldn't have bought it if I had seen it on the shelf, as the title seems like just another recipe book for success, which, as mentioned, doesn't exist. Nevertheless, since my son-in-law (Oren Hirschhorn) translated the book from English to Hebrew, and on this occasion, in addition to payment, received several copies for himself, I was fortunate to get a copy, and rightly so. In one sentence - I learned! Despite having a business for over 25 years, and although the book seems to be written for those who manage a business alone or with up to a handful of employees, the book stirred me to think. It helped me understand several behaviors regarding my company, including over 30 people, and, no less importantly, gave me ideas on how to move the company forward into the future.
Main Topics
The three entities that together make up any business
The three stages of business life development
A new look at business perception
A strategy for developing a small business that works and succeeds
The purpose of this summary is not to replace reading the book but to give you an appetite to read it, both for those who are considering whether it's right for them to open a business and are looking for decision-making tools and for those who are already own a business of any size, as a tool that can help them advance their business and grow it further.
The Three Entities That Together Make Up Any Business
A new business, even if opened by one person, includes within it three different entities that live in constant conflict with each other:
The Entrepreneur: The person of the future and vision, dreaming and developing ideas, opportunities, and wanting or even pulling the business forward.
The Manager: A practical person representing the past and trying to preserve what exists, organize, arrange, and fix the existing. Hates changes.
The Technician: Represents the present. They are the ones doing the work. They like to work at their own pace (and not according to the impossible pace sometimes dictated); they generally love and enjoy their work.
Every business needs all three. If one is missing, or the balance between them is not optimal, the company suffers, the person or people staffing it suffer, and in many cases, it collapses. You can't just be an excellent worker and hope the business will flourish; you must manage logistics, infrastructure, and bureaucracy. You can't stay in the present because the environment is changing; if we don't change, we won't be relevant. And you can continue to see how all the components are required and conflicting.
Unfortunately, based on the rate of small business closures and their lifespans, it's easy to see how miserable the state of small businesses worldwide is.
The Three Stages of Business Development
Every business can have three stages of growth and development:
Infancy: The business = the person who started it, and there is a complete identity between them. The business cannot function with this person. This stage reaches its peak and requires moving to the next stage when the business starts to succeed, and its owner can no longer meet all the needs and, therefore, begins to make mistakes.
Adolescence: The business owner hires additional people to fill some of the functions; the division of responsibilities is not always clear. The business owner tries to cover up things but fails to fix everything himself. This stage also reaches its peak and requires moving to the next stage when the business owner is already out of his comfort zone and can't supervise/influence/educate everyone under him. There are businesses that, at this stage, will downsize and return to the infancy stage. In contrast, others will grow uncontrollably until they crash and shatter those who initiated them. The right way is to allow natural growth and transition to maturity.
Maturity: The business owner knows how he got here, where he is, and how he intends to continue and progress. The product or the business owner is not at the center, but the business itself is.
Note - According to Gerber, an organization can start its life directly with a mature perception. In such a case, it will also go through infancy and adolescence, but with fewer crises and suffering, not as described above.
The optimal maturity stage is described in the following chapter.
A New Perspective on Business Perception
To succeed, a new perspective is required: You're not baking cakes but managing a cake-baking business; you're not a knowledge management consultant but managing a business that provides knowledge management consulting services; and so on. Ask yourself not how the work is done but how the business will operate.
The goal: Focus on your ability to grow and expand your business further (like in the franchise format!). What you're selling is the purchase from your business. The business is at the center, not the product.
Implications:
Separation between the business and the person who owns it.
Develop a model that describes how the business operates. This model provides a good and stable response, first and foremost, to customer needs, but also to employee and manager needs, as well as other stakeholders such as suppliers.
The idea of a well-organized model, documented in operation manuals and therefore easy to replicate, provides predictable and uniform service. Where relevant - it will also include uniform colors, dress code, and facility use instructions. The use of the model will be monitored so that performance can be tracked, learned from, and continuously improved.
Implementing the model in practice.
The model will be based on a strategy considering various components, as detailed in the following chapter.
Strategy for Developing a Successful Small Business
Gerber suggests implementing seven strategic components that should be planned in the following order to develop a successful small business:
Personal: Defining the entrepreneur's individual goal, which they want to achieve through the business. A success picture, how everything would look if the business indeed succeeded.
Objectives and Overall Concept: Defining long-term goals in terms of money, the opportunity being invested in, the type of business, and customers. Establishing the main operating principles will make the business what it is and lead to the desired success picture.
Organization: Formulating an organizational structure and roles, including sub-roles, and defining the performers. Naturally, in the beginning, the business owner can fill all roles, but it will be easier for him as the business develops to recruit while defining orderly roles and responsibilities and documenting how these roles are performed for the benefit of the model that will allow replication later.
Management: Choosing ways for the business to create feelings of excellence among customers. Usually, it's the small details that make the difference—not huge changes. Example: Remembering and documenting customer preferences and using this during repeat visits.
Employees: The issue of employees is not trivial. Gerber suggests an approach that engineers the work (creates a system in his terms) and leaves little room for the employee. Moreover, he talks about employees with minimum skills relative to each role (a because there's no need for more, according to him; b- because this way, the business owner can accustom them to work as he defined). The critical question, in any organization, and especially in an approach like the one presented by Gerber, is what will make employees want to come? What will make them want to continue? The organizing idea: People come for meaning. They come for the concept behind the work. Gerber implements this by defining a game and game rules, which employees want to play because they give them meaning. In my words, it gives them a horizon to succeed while fulfilling themselves through values and creating success.
Note: It should also allow them to express themselves, such as how to succeed through the rules, improve the rules, and more. (M.L.)
Marketing: Focusing the marketing strategy solely on the customers' desires. The method: Responding to the needs of customer prototypes based on their demographics and why they buy (psychographics). It's suggested that a few services/products be offered to existing customers for free in exchange for a short questionnaire. Of course, it's necessary to get to the root causes of the purchase and not necessarily be satisfied with what's said on the surface.
System: Combining all the above into a well-oiled machine, supported by three types of solutions:
Complex systems: Solutions based on something physical (a computer, Bristol board, clothing, etc.).
Soft systems: A sales mechanism based on scripts that create power for us as sellers (the power of attraction to make them buy): in the initial approach (to create a meeting); in the meeting (in conveying the message to the customer that the entrepreneur has something that addresses their real need); and in solutions (causing the customer to buy).
Information systems: (slightly different use from the common term - M.L.) Collecting and monitoring data regarding various modes of operation and their impact on purchases to refine and improve the system. It is a constant effort, not a one-time thing.
In conclusion, if the entrepreneur recognizes the three entities of entrepreneur, manager, and employee, steps out of the comfort zone, and operates in the way presented that focuses on the business and not the work, they have an excellent chance to succeed, and in a big way!
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