This business survival guide breaks down the common stumbling blocks small businesses face from conception to becoming a mature enterprise, so entrepreneurs can make a foolproof plan to achieve their goals throughout the life cycle of their business. It dispels common misconceptions and assumptions business owners have so an aspiring startup founder or seasoned entrepreneur can build a thriving business.
My key Takeaways from “The E-Myth Revisited - Why Most Small Businesses Don't Work and What to Do About It" by Michael E. Gerber
Takeaway #1 Don't Fall For The E-Myth and Become a Statistic
80% of businesses started in the U.S fail in the first 5 years with 40% of them failing in the 1st year. The entrepreneurial myth aka the E-myth means that people believe that having a technical skill that they excel in at their day job, a good idea, and the desire to work for themselves and not someone else is enough to create a successful business of their own. As you might have guessed, it's not. Having a specific skill doesn't automatically give you the knowledge to run a business unless you also know how to hire staff, manage payroll, and promote your business.
Takeaway #2 Raising a Business from Infancy Through to Adulthood
In the same way that parents raise kids from infants through adolescence into adulthood, with the tantrums of toddlers and teenagers all to be expected, entrepreneurs must also raise a business by going through the same growth patterns. However, whilst parents usually know that they're raising their kid to be independent, business owners rarely think about this which is why failure happens.
At the start of entrepreneurship, the owner and the business are one, it's a romantic time when the owner gets to do all the things she or he enjoys doing, using their skill all day every day. But as the business grows more successful, the owner suddenly finds that they are overwhelmed and must hire people to help, no longer able to control every small detail.
This means that right from the start you need to know where your business is heading and what it will need down the line – You need an organizational strategy. You need to know who your ideal customer is, how large and successful you want the business to be (how many hours you want to work, how many days off you want, and how much money you want to make). You also need to have a growth strategy, knowing how many staff will be required and what each person will do in the company. Whilst you're sitting at your kitchen table doing all of the work yourself this might seem like overkill but if you want your business to flourish, it's essential.
Takeaway #3 The Turn-Key Revolution
A turn-key business means that once running successfully, anyone could take over and move the business forward. An easier way of thinking of it is to imagine a franchise business – McDonald's and Domino's Pizza are great examples of this.
For your business to grow and not become one of the failure statistics from above, you need to work on your business, not in it. You should follow a business format franchise to ensure the processes and systems in your business are well-oiled and could be replicated by anyone who joins the team but also by anyone wishing to follow in your footsteps and become a franchise.
Before a business can be replicated, first the prototype has to be perfect, this is where you get to work both on and in your business, growing it from infancy upwards, creating value for customers whether that's in your products, your customer service, or your core values.
Next you take a step back, working on your business, documenting how your business works, how people can make X, and also how to train people to make X, you have manuals for every aspect of the business so that both service and results are predictable ensuring customers are satisfied whether you're dealing with them personally, they're being dealt with by one of your team, or one of your franchisee's.