Book Review: The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It

Michael Gerber writes that most small business owners fail to understand why they got into the business in the first place, but that if they take the time to work on their business, not in it, they can rise above the tyranny of work to find freedom and joy.

by Alex Goldman ISP-Planet Managing Editor [January 30, 2006]

The company Michael Gerber founded, Santa Rosa, Calif.-based E-Myth Worldwide, has served over half a million small businesses. The E-Myth system gives business leaders a template, teaching people how to design their business so that it can be run by anyone.

Gerber describes the company's purpose and system in his book, The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It. It was recently listed tenth in a list of best selling ten business books (softcover). This review covers the book "The E-Myth Revisited." Small business owners who choose to implement Gerber's system also buy E-Myth Mastery: The Seven Essential Disciplines for Building a World Class Company, which we have not read.

Gerber says that business administration is not a problem if due attention has been paid to business design, and America has a perfect example of this truth: a franchise. It could be a fast food place on the street corner or a hotel taking up the whole block, but the odds are, there are many franchises in your neighborhood.

Gerber points out that while small businesses fail at a spectacular rate, franchises tend to succeed. The reason franchises succeed while small businesses fail, he writes, is that franchises have a system.

Gerber himself has designed E-Myth worldwide according to the system that E-Myth Worldwide teaches. "I started the company in 1977 with the express purpose of creating a consulting system to hand off to any relatively inexperienced person to fulfill the objective and mission of the company."

His system works. "I haven't consulted with a client since 1979."

We ask him how he knew he could do it. "I didn't know I could do that," he says. "I just believed it. Nobody else had done it. There was no reason to believe I could do it other than that I could imagine it and it was very, very exciting."

He began simply by talking to executives, and the conversations gave him confidence he had something valuable to offer. "Every time I opened them up enough, I found a body of pain."

The people in charge knew there were problems and often didn't even know how to talk about what the problems were. Gerber offers both concepts and a system.

The system
In order for a system to succeed, the people working at the small business have to believe in it and to want to follow the system. Hiring the right people is important, as is designing a good system.

Hiring people is about personality and life goals, not about skills. "We attract a number of inquiries regularly," says Gerber. "We select those most compatible with our model of who makes a great coach. We then invite them into the company to a recruitment seminar. The seminar tells everybody what work here is like, how results will effect them, and asks them if they would be passionate about doing this. Then we go into personal interviews with people at E-Myth. And there are several more steps to the process."

Focusing on small business
Gerber says that the company was built to serve small business, which he defines as having between 1 and 20 employees, although some clients are larger.

Gerber's key insight is that many small business owners—especially successful small business owners—are unhappy.

Gerber says that small business owners are under the illusion, when they found the company, that they are setting themselves free from having a boss, whereas in fact, they now have the toughest boss of all: themselves.

Gerber says that the myth of the entrepreneur, the myth that gives his business its name, represents a fundamental misunderstanding about who starts a small business and why, "a misunderstanding that has cost us dearly in this country—more than we can possibly imagine—in lost resources, lost opportunities, and wasted lives." (p. 10)

Most people who start a small business believe they are capable of running the business because they understand the technical work involved, but it's actually more complicated than that.

If you're working alone, perhaps you don't need a system. You can do everything yourself. But what happens when you hire someone? Are you capable of explaining to that person how you run your business? You can if you have described every element of the job your hiring for, if you've created a manual.

But most people don't write a manual. They do what Gerber calls "abdication, not delegation." They fail to train the people they hire.

 

1. The system

>2. Your core values, your self

3. The future