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Best Reads for an Entrepreneur or Business Owner

By Edited Oct 25, 2016 0 0

Are you an entrepreneur? Do you own a small business? Do you have a passion to be your own boss? I will provide you with a summary of the best books available on the subject and the points you will want to carry forward with you in your business career. You will notice that the books I mention are not the books you typically associate with the authors mentioned. I have found in all of the three cases below that the authors' later work was more relevant and had better take away concepts then their more famous work.

E Myth Mastery

Michael Gerber- E-Myth Mastery

You may be familiar with the "E Myth Revisited" as it is toted as one of the "most influential books for small business" by many sources. Here, however, I am speaking of a later book by Michael Gerber. The “E-Myth Revisited” brings forward the concept of working on your business rather than in your business and why this is so important for business success. What I like better about the “E-Myth Mastery” is that it serves to greatly expand on the concepts that were introduced in the first book. Michael Gerber discusses in great deal more detail the seven aspects of a small business. These include the Enterprise Leader, Marketing Leader, Financial Leader, Management Leader, Lead Generation Leader, Lead Conversion Leader and Client Fulfillment Leader. Each of these aspects play a key role in the overall business. The important piece, he outlines, is that you need to ensure that each of these aspects of a business are the responsibility of someone whom is in charge of measurement and systemization of their respective business aspect.[1]

What is especially beneficial for entrepreneurs is that he builds in simple exercises that allow you to work on the "disciples" of each of the aspects of a successful business. The disciplines that I found the most beneficial personally help to develop the Enterprise Leader discipline. The first task was to repeat the phrase “I am a leader, I am called upon to do the work of leadership” three times per day. Repeating this phrase I found to help reinforce my confidence when having to make tough decisions. The other task of interest is to write down what you do in a day and note whether it is work related to being an entrepreneur (visionary), manager (putting vision into practice) or technician (hands on work). When you have evaluated how you spend your time plan your next day deliberately to balance the three types of work more evenly. I found completing this exercise eye opening. [1]

Cash Flow

Robert Kiyosaki- Cash Flow Quadrant

Robert Kiyosaki is well known for his book "Rich Dad, Poor Dad". This is a good read that introduces a lot of concepts that were new to the world of business when the book was published. The book I am referring to here, however, is "Cash Flow Quadrant". 

"Cash Flow Quadrant" goes into more practical detail. This read is important for entrepreneurs and small business owners as it explains what cash flow is and how it works. He outlines four "Quadrants" of cash flow. The "Quadrants" are the "E" (for employees or people who work for someone), "S" (those who work for them self), "B" (a business owner who does not need to be involved in their business on a daily basis) and "I" (an investor).[2]

The keys in this book for those looking to be an entrepreneur are twofold. Firstly, the distinction he makes between "S" and "B" or those who are self employed compared to business owners is critical. In conventional terms, self employed and business owner mean essentially the same thing. He makes the key distinction that a self-employed person is the center of their business and gets paid based on the hours that they work. He notes that self-employed people tend to work the most and become burnt out over time. The business owner, on the other hand, is someone who leverages the work of others and is not directly dependent on their own labour to make money. This is such a key distinction because as an entrepreneur we have to choose which we would like to end up as, self-employed or a business owner. Too often entrepreneurs end up stuck in the self employed quadrant and end up working a lot harder than they could be largely due to nothing more than their orientation.[2]

The second key for entrepreneurs, of what the author mentions, is that there are three basic ways to become a business owner. The first is to start a business, second to purchase a franchise and third to join a network marketing organization.[2] These three options all have their respective pros and cons and the option that will work best for you will depend on your goals. What I will add to this is that just because you buy a franchise it does not automatically mean that you are a business owner. If being a business owner is your goal you have to ensure that the business is scalable enough to allow you not to be part of the daily operations in the long term. Generally you will want to assume a 10% net profit. This means that after expenses, including all management salaries, you have 10% of sales left over. If you are looking for $100,000 salary you will need a business that makes at least $1,000,000 to pay yourself this salary while paying others to manage the business. Based on a three to five year pay back period of initial investment the business will cost $300 000 to $500 000 to purchase. Of this purchase amount you will typically be required to have at least one third of the cost of the business in cash. 

Great by Choice

Jim Collins- Great by Choice

Great by Choice is one of the books in the series by Jim Collins and his team. Like the previous two authors Jim Collins is more famous for another book,  titled "Good to Great". This book outlines many of the keys of what have made some of the best companies "great" rather than just "good". In this book he introduces a great deal of concepts that have influenced business thinking as a whole and, in the process, established his status as a repitable writer. 

This book I am discussing here is "Great by Choice". This book is more relevant for an entrepreneur or small business owner because it deals with concepts that are relevant to businesses that are growing and do not yet have an abundance of resources. There are three great concepts that have come out of this book.

The first concept is that of the "20 mile march". The Author explains that the most successful companies choose to grow incrementally in regular intervals. Less sucessful companies tend to grow rapidly which, inevitably, is followed by slower growth periods or downsizing. Next is the concept of the "bullets before cannonballs". Here he refers to the fact that successful companies try new ideas in such a way that they are investing very little resources initially until that idea has proven successful.[3]

The final concept is “leading above the death line”. The most important thing to remember as a small business is to leave enough resources in reserve to be able to last through difficult times. For most small businesses this means keeping a cash reserve that will allow for paying all expenses for three to six months. In a bad economy the business that does not have this reserve will often fail. The business that does have a reserve will typically survive and then thrive when the market recovers and there is less competition.[3]

How These Concepts Apply to Your Business Pursuits

Ideally you go and read these three books for their full benefit. If you are not able to read these at this time, work to incorporate the above concepts into your business pursuits. I personally have a few business pursuits on the go and these principles guide me on a daily basis. No matter what you do, ensure you have fun.

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Bibliography

  1. Michael Gerber E-Myth Mastery. New York: HarperBusiness, 2005.
  2. Robert Kiyosaki Cash Flow Quadrant. New York: Grand Central Publishing, 2001.
  3. Jim Collins Great by Choice. New York: Harper, 2011.

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