- Getting the inspiration for your business
This is a detailed review of the bestselling book ‘The E-Myth Revisited’ by Michael Gerber. This book was inspirational in setting up my business development consultancy business.
Gerber says that ‘the entrepreneur’ only exists for a moment in time – by this he means the initial inspiration for starting the business. This quickly gets submerged in the day to day reality of running a business.
He says there are 3 essential business personalities – the Entrepreneur, the Manager and the Technician:
- The Entrepreneur is the visionary in us and turns the most trivial condition into an exceptional opportunity.
- The Managers personality is pragmatic – without the Manager, there would be no planning, no order and no predictability.
- The Technician is the doer – ‘if you want it done right, do it yourself’ is the Technicians credo.
Gerber identifies four stages in a businesses life:
- Infancy where the owner and the business are one and the same thing.
- Adolescence where the busines starts to get some help. At this stage it is management by abdication rather than delegation.
- Beyond the Comfort Zone – this is where the business is either getting small again, is going for broke or is surviving because the owner is there all the time.
- Maturity
Gerber talks about ‘the entrepreneurial perspective’ i.e. how must the business work?
He sees the business as a system for producing results for the customer, resulting in profits.
It all starts with a picture of a well-defined future before winding back to the present with the intention of changing it to match the vision. He envisions the business in its entirety and from this is derived its parts. The present-day world is modelled after the entrepreneurs vision.
The true product of the business is the business itself i.e. try to create a franchise prototype whether you intend to franchise or not. This means that it will work without you and is therefore saleable. In other words you need to create a systems dependant business, not a people dependant business.
Gerber goes on to discuss the Business Format Franchise. He says that it is a proprietary way of doing business
- Your business is the prototype for 5,000 more!
that successfully and preferentially differentiates an extraordinary business from every one of its competitors.
Gerber explains that ‘Your business is not your life. Your business and your life are two separate things.’ He says that your business will live or die according to how well it performs its sole purpose of finding and keeping customers.
The primary purpose of your business is to serve your life so you will need to work on your business rather than in it. To do this you need to pretend that the business you own (or want to own) is the prototype for 5,000 more just like it.
These are the rules to follow if you want to win the franchise game:
- The model provides consistent value to your customers, employees, suppliers and lenders – beyond what they expect.
- The model will be operated by people with the lowest possible level of skill.
- The model will stand out as a place of impeccable order.
- All work in the model will be documented in Operations Manuals.
- The model will provide a uniformly predictable service to the customer.
- The model will utilise a uniform colour, dress and facilities code i.e. branded.
In order to go to work on your business, rather than in it, you need to ask the following questions:
- How can I get my business to work without me?
- How can I get my people to work without my constant interference?
- How can I systemise my business in such a way that it could be replicated 5,000 times so the 5,000th unit would run as smoothly as the first?
- How can I own my business and still be free of it?
- How can I spend my time doing the work I love to do rather than the work I have to do?
- How must my business-as-a-product work in order for it to successfully attract not only customers but also employees who want to work here?
Gerber describes the Business Development process as being one of ‘innovation, quantification and orchestration‘:
- Innovation is doing new things. Where the business is the product, how the business interacts with the consumer is more important than what it sells.
- Quantification begins by quantifying everything related to how you do business.
- Orchestration is the elimination of discretion or choice at the operating lvel of your business. If you haven’t orchestrated it, you don’t own it!
The definition of a franchise is simply ‘Your unique way of doing business.’
Michael Gerber then sets out a Business Development Programme:
- Exploding your growth
- Your primary aim
- Your strategic objective
- Your organisational strategy
- Your management strategy
- Your people strategy
- Your marketing strategy
- Your systems strategy.
Your Primary Aim
What do you value most? What kind of life do you want? What do you want your life to look like and feel like? Who do you wish to be?
Imagine yourself at your own funeral – what would you like to say about your life? That’s your primary aim. Your primary aim is the vision necessary to bring your business to life and your life to your business.
Your Strategic Objective
This is a very clear statement of what your business has to ultimately do for you to achieve your primary aim. It is the vision of the finished product that is, and will be, your business.
You need to set standards:
- for money
- is this an opportunity worth pursuing i.e. what kind of business are you in? Who is your customer?
- When will your prototype business be finished?
- Where will you do business?
- How are you going to be in business?
- What other standards will you set?
Your Organisational Strategy
You need to create an organisational chart to deliver your Strategic Objective. Write a ‘position contract’ for each position on the organisational chart. You need to prototype each position and then replace yourself with a system. Start at the bottom of the organisation and use the ‘Innovation, Quantification and Orchestration’ idea to complete your strategy.
Your Management Strategy
You need a management system designed into the prototype of your business to produce a marketing result. This means an Operations Manual and checklists to get a predictable result. This sets out the standards surrounding your primary aim.
- Train your team to operate the system but don’t disempower them!
Your People Strategy
Once you have created the rules, you need to invent the way to manage them. The system produces the results and your people manage the system.
There is a hierarchy of systems:
- How we do it here
- How we recruit, hire and train people to do it here
- How we manage it here
- How we change it here
The ‘it’ is the stated purpose of your business.
Your Marketing Strategy
Focus on what the customer wants. There are two pillars of a successful marketing strategy:
- Know who your customer is ( – demographics)
- Determine why he buys (- psychographics)
Keep asking the question ‘what must our business be in the minds of our customers in order for them to choose us over everyone else?’
You will need lead generation (marketing), lead conversion (sales) and client fulfilment (operations) to deliver the promise no-one else in your industry dares to make.
Your Systems Strategy
Gerber says the purpose of a system is to free you to do the things you want to do.
There are three types of systems:
- hard systems – inanimate things such as a computer
- soft systems – animate or ideas such as a selling system.
- information systems that provide us with information on the interaction of the other two e.g. management information systems.
To Conclude
This is a book that every business owner (or potential business owner) needs to read so that you have the big picture of what the ultimate game plan is when you start your business.
You will need to operate outside your comfort zone to run your own business. Gerber says that a small business is a source of self-enlightenment - I can vouch for that! The dream is ‘to create a world of our own’.
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