The Blueprint for a Fail-Proof Small Business: Insights from Michael E. Gerber

There's a scary reality about starting a small business: 50% of small businesses fail within their first year, and 75% of those that pass the first year fail in the next five years. How are you going to beat those odds? How can you create a business that doesn't fail, runs smoothly, and gives you the time and money to enjoy life? That was the question spinning around my head until I found an answer through Michael E. Gerber's book, The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It. If you're thinking about starting a business or if you have started one but feel stressed and busy all the time, then this article is for you. This is one of those books that I wish I had read before starting my business.

Part One: The Fatal Assumption

Imagine this is you: you work in a company for somebody else, and you're good at your job. In fact, you're one of the best employees. But things aren't going well for you. You might not feel appreciated or you don't feel like you are paid enough. One day, you're at work and, for some reason, you don't like your boss's behavior. Maybe he said something or did something; the reason doesn't matter much—you just didn't like it. Suddenly, a voice in your head says, "Why am I working for this idiot? I know the job better than he does. This business would collapse if I weren't working here. Why don't I start my own business and be my own boss?"

From that day on, you just couldn't stop thinking about creating your own business. The entrepreneur in you woke up and wasn't going back to sleep. The excitement of being your own boss and becoming independent was irresistible. You had to do it. So, you start your business. But here's the thing you didn't realize yet: you were about to go from hating the idiot boss to becoming the idiot boss yourself.

Before starting, you were doing some technical work for a company, and one day you decided to start your own business. But this is a recipe for failure because the person who starts a business this way makes a fatal assumption: the technical work of a business and a business that does the technical work are two totally different things. Just because you understand the technical work of a business doesn't mean that you understand a business that does that technical work. Just because you are a skilled video editor doesn't mean you know how to create and run a video editing business. Unfortunately, most people fail to see this. This happens to millions of technicians daily: a barber opens a barbershop, a hairdresser opens a beauty salon, and a musician opens a music store. The tragedy is that when the technician falls prey to this fatal assumption, the business that was supposed to free him enslaves him. He used to do one job when he was working for somebody else, but now, besides that job, he has to do ten other jobs that he has no idea how to do.

One day, you wake up and realize that you don't have a business; you have a job, and it is the worst kind of job. You were running away from your boss, but now your business is your boss, and it is the worst kind of boss. Soon, the job you used to love becomes the job you hate. The journey that started with excitement turns into terror, exhaustion, and failure.

Part Two: The Entrepreneur, Manager, and Technician

Everyone who goes into business is really three people in one: an entrepreneur, a manager, and a technician. The easiest way to understand this is if you've ever been on a diet. Everyone who has tried dieting knows there's a fat guy and a skinny guy inside them. The skinny guy knows what you have to do to get skinny: diet and exercise. All you have to do is chisel the skinny guy out of you like a marble statue. But the fat guy doesn't want to go on a run. The fat guy likes junk food. You can work out later, maybe tomorrow, or never. Anyone who has ever experienced the conflict between the fat guy and the skinny guy knows what I mean. You aren't just the skinny guy or the fat guy; you're both. When you're the skinny guy, you're always making promises for the fat guy to keep, and when you're the fat guy, you're always making promises for the skinny guy to keep. If you've ever felt like the fat guy and the skinny guy, you know that you can't be both. Someone has to lose, and they both know it.

Well, that's the kind of war going on inside the owner of every small business, but it's even worse because it's a three-way battle between the entrepreneur, the manager, and the technician. Unfortunately, it's a battle no one can win. Understanding the differences between them will quickly explain why.

First is the entrepreneur. The entrepreneur is the visionary, the dreamer. This is who was inside you daydreaming, looking at the clock, imagining a better life. They live in the future, never in the past, and hardly ever in the present. They are your innovators, always best at working with the unknown, engineering chaos into harmony. They have a strong need for control because they need the control of people and events in the present to make their vision or dreams come true. This causes a big problem: they live in a world made up of too many opportunities, and everyone around them is just slowing them down. This means they usually do whatever it takes to make their projects move forward, even if they have to bully, harass, or scream at their employees. To entrepreneurs, most people are problems that get in the way of their dreams.

Next is the manager. The entrepreneur has the future vision for the business, but the manager within you keeps the business running smoothly in the present. They are practical. The manager wants to keep things organized and in order. It's their job to clean up the mess of the entrepreneur. If you're like me, you have a junk drawer in your house. It might be in your kitchen, in a desk, or in an office, but there's a drawer that's just full of random items. You don't know how it got there, but one day you woke up and it was full of junk: rubber bands, old mismatched keys, a broken watch, batteries that might be dead, and always some loose screws and nails waiting to poke you when you reach inside. This is what the manager sees when he sees an entrepreneur's business. They can't work in this mess. They see a junk drawer that needs to be cleaned and organized. Instead of everything being shoved into a drawer or tossed into piles, a manager would go to work with a label maker. Everything has a place, and everything should be put back in its place. Keys are on a key ring, screws and nails are in plastic bins labeled screws and nails, and batteries are tested and then either thrown out if they are out of power or put into clearly labeled bins by size. Managers treat people and tasks in a business the same way they handle junk drawers. They plan for problems to happen. Everyone has their place and their jobs to do, and they make sure it happens.

The technician. If you're watching this video and you want to quit your job, you are a technician. If you've ever thought to yourself, "If you want it done right, do it yourself," you are a technician. Technicians love the feeling of getting things done, having their hands on projects, and living in the present. They don't care about the future of the business or the problems of yesterday; they just want to get to work. They want to know how to do it, and they want everyone to get out of their way. Everyone gets in the technician's way. The entrepreneur creates new and interesting work for the technician, but they are always interrupting or distracting. The manager is also a problem because they want to make technicians part of their system. If it were up to the technician, they would go to work every day and never worry about the future. This is the worst mentality if a business is going to survive for many years.

In your life, you can probably see these three characters in action. You can see how one part of you craves a sense of order while another part of you dreams about the future. You can see how another part of you can't stand being idle and jumps into work and feels guilty if he isn't doing something all the time. So, to sum up this part, there are three people in you: the entrepreneur, the manager, and the technician. The entrepreneur dreams, the manager worries about everything, and the technician gets the job done.

Part Three: Three Phases of a Business

Businesses grow just like people. There are three stages that a business will grow through: infancy, adolescence, and maturity.

Infancy: The Technician’s Phase

This is how most businesses start: as a technician's business. You are finally free of the boss. It's an exciting start that's about to be exhausting. You are now going to be a master juggler. Every day from now on, you will be juggling balls in the air doing all of the work inside your business. One ball is managing the business's money, and the other ball is selling your products and services, all while juggling advertising, marketing, legal fees, and taxes.

In the infancy stage, all you do is work, work, and more work. Hours are long. You might work 12 to 14-hour days. You work every day, 7 days a week. Even at home, you're working. You are totally invested in your business. But there's a big problem: there's more work than you can handle. You work harder, you put in more time, but you can't juggle it all. Balls start to drop and hit the floor. You can only work so hard alone. Infancy ends when you realize that you can't keep doing this. You will either quit and close the business or decide to get some help.

Adolescence: Getting Some Help

You don't close the business. Instead, you hire someone to help you. This is when your business grows up a little. But adolescence is the most dangerous stage for your business. Most businesses die in infancy, but adolescence is where businesses grow rapidly but become disorganized. If you were a technician before, now you are a manager because you have people working for you. The big mistake most people make in this phase is hiring someone just like them. So, if you own a barbershop, you hire another barber. This gives you a false sense of relief because there's someone else to help you with the technical work. This is great for a little while, and then it's not. Soon you will find yourself with the same problem you had before: there's more work than you can handle.

The difference is that now, instead of doing all the technical work yourself, you are managing someone doing the technical work while you handle everything else. You thought you needed help, but you just ended up with a babysitter. You still have to juggle all the balls while your new hire watches you. You haven't escaped the work; you just shifted it around. The worst part is that when you hire more technicians like yourself, they will have their own way of doing things, which isn't always the best way. Your business will become chaotic, and the standards you set will not be met.

This is when the owner will typically get rid of the help and go back to doing everything themselves or attempt to push through the chaos.

Maturity: The Turnkey Revolution

What if I told you that you could have a business where you never have to worry about working yourself to exhaustion? What if I told you that you could create a business where everything runs smoothly, and you don't have to worry about chaos, and you can finally enjoy some peace of mind? This is where maturity comes in. This is where the real money is made, and this is how you can create a business that will give you the freedom you crave. You don't need to be the best technician; you need to be the best system builder. You need to create a business that can work without you. That's the secret. You need to build a franchise prototype. You need to create a business system where every detail is handled so that when you hire someone, they know exactly what to do and how to do it.

When you create a franchise prototype, your business becomes a product in itself. You can replicate it and sell it. You can hire someone to run the business for you while you enjoy the profits and free time. This is the only way to achieve true freedom. To build a franchise prototype, you need to document every aspect of your business, create standard operating procedures, and build systems that can operate without your constant input. You need to train your employees to follow these systems and ensure they understand the importance of consistency and quality.

Part Four: Working On Your Business, Not In It

Most business owners get stuck working in their business, doing the technical work, managing employees, and putting out fires. But the key to success is working on your business, not in it. You need to step back and take a big-picture view of your business. You need to focus on building systems, creating processes, and improving your business model. This is how you will achieve growth and scalability.

Here are some steps to help you work on your business:

Create a Vision: Define the vision for your business. What do you want to achieve? What are your long-term goals? This will give you a clear direction and purpose.

Develop Systems: Identify the key processes in your business and develop systems for each one. Document these processes and create standard operating procedures.

Delegate and Automate: Delegate tasks to your employees and use technology to automate repetitive tasks. This will free up your time to focus on strategic planning and growth.

Measure and Improve: Continuously measure the performance of your systems and processes. Identify areas for improvement and make necessary adjustments.

Focus on Customer Experience: Ensure that your systems and processes are designed to provide a consistent and excellent customer experience. Happy customers are the key to a successful business.

Build a Strong Team: Hire the right people and invest in their training and development. A strong team will help you achieve your business goals.

By working on your business, you will create a sustainable and profitable enterprise that can operate without your constant involvement. This will give you the freedom to focus on what truly matters to you, whether it's spending time with your family, pursuing hobbies, or starting new ventures.

Part Five: The Power of Innovation

Innovation is the lifeblood of any successful business. It's what sets you apart from your competitors and keeps your customers coming back. Innovation doesn't mean you have to invent something entirely new. It can be as simple as improving an existing product, creating a better customer experience, or finding a more efficient way to deliver your services.

Here are some tips to foster innovation in your business:

Encourage Creativity: Create an environment where your employees feel comfortable sharing their ideas. Encourage them to think outside the box and reward innovative thinking.

Stay Informed: Keep up with industry trends and developments. Attend conferences, read industry publications, and network with other business owners.

Listen to Your Customers: Pay attention to customer feedback and use it to improve your products and services. Your customers are a valuable source of insights and ideas.

Experiment and Take Risks: Don't be afraid to try new things. Experiment with different approaches and be willing to take calculated risks. Not every innovation will be a success, but the ones that are can have a significant impact on your business.

Invest in Technology: Use technology to streamline your operations and improve your products and services. Technology can help you stay competitive and meet the changing needs of your customers.

Innovation is a continuous process. By fostering a culture of innovation in your business, you will stay ahead of the competition and keep your business thriving.

Conclusion

Starting a small business that doesn't fail and makes you financially free is not easy, but it is possible. By understanding the different roles of the entrepreneur, manager, and technician, navigating the phases of business growth, building systems, and fostering innovation, you can create a successful and sustainable business. Michael E. Gerber's insights from The E-Myth Revisited provide a roadmap for achieving this success. Remember, the key is to work on your business, not just in it. Build a franchise prototype, focus on systems and processes, and continuously innovate. With the right approach, you can achieve financial freedom and enjoy the journey of entrepreneurship.

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