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Book Review: The E-Myth Revisited by Michael E. Gerber

By Edited Dec 5, 2016 0 0

Book: The E-Myth Revisited

Author: Michael E. Gerber

ISBN: 0-88730-728-0

The E-Myth Revisited by Michael E. Gerber is a revised edition of the book The E-Myth. The E-Myth referred to in the book's title is the entrepreneurial myth - the myth of the Entrepreneur, and individual who the author says is in reality very rare and usually only exists for a short period of time; just long enough to start their own business.

This book is aimed at both the current and the potential owners of small businesses. These types of company are where a significant majority of the workforce are, but they are also where a huge percentage of the failures can be found. The number of small businesses that fail within the first five years is quoted as being 80% - the current number may well be higher. Many do not even last out the first year, and even those that survive past the five year mark fail to reach ten. Often, the original founder simply burns out from trying to do too much, rather than creating a system that does the work for them

The reason that many businesses fail so quickly is because of the conflict between the three described personalities; The Technician, The Manager and The Entrepreneur. The Technician is often very skilled at their job. They suffer from an "Entrepreneurial Seizure" and decide to work for themselves, rather than a boss. As a result in many cases they end up creating a job that they can never afford to leave, rather than a business.

Rich Dad's CASHFLOW Quadrant: Rich Dad's Guide to Financial Freedom
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Those familiar with Robert T. Kiyosaki's Rich Dad, Poor Dad series of books will have no doubt come across a fundamental principle in that series, the Cashflow Quadrant (TM), which describes four different types of income. Two of the quadrants are the "S" and the "B". The S quadrant, amongst other things, is the small business owner and the B is the big business owner.

Even though Michael Gerber may be talking about how to create a successful small business, what makes a small business a success rather than just a job is a system. This system is what allows a business to become a big business, and allows the successful small business (S) to be expanded into becoming a successful big business (B) which is useful if you are looking to build a B quadrant business.

The various principles needed to create a successful small business described in the book are illustrated by discussions between the author and Sarah, the founder of a small business, All About Pies, who, after three years is tired of her business and needs help. Sarah's story will be familiar to many small business owners who are suffering from physical and mental fatigue from trying to keep running their business without an adequate system. The E-Myth Revisited is divided into three main parts.

The E-Myth Revisited
Part 1: The E-Myth and American Small Business

This section covers how many small businesses are set up, in what the author describes as its Infancy stage. Some may then go on to become Adolescent. The best businesses are Mature businesses and, rather than being a definite stage a business evolves into, can, and should, be done right at the very beginning. Mature businesses have the necessary systems in place.

Part 2: The Turn-Key Revolution: A New View of Business

The Turn-Key Business is a business that can be successfully replicated by simply copying its original operation elsewhere. An example of this type of business can be found in franchising and McDonalds is cited as one of the most successful franchising businesses in the world. If you enter any McDonalds in the world you will likely know what to expect and you are unlikely to be truly surprised by anything. There may be regional "specialities" and differences depending on the country, but if you order a Big Mac in any of them, you are going to get exactly what you would expect because of the system McDonalds has for delivering them.

Gerber advises building your business from the start as if it was going to be duplicated in thousands of locations. Even if this never happens, this will mean that there will be a system in place that allows the business owner to take a holiday without worrying that everything will fall about, a common, and justified, worry of many small business owners.

Part 3: Building a Small Business That Works!

The final section covers how to build a business that works using the Business Development Process. This starts before the business is even set up by defining roles and creating an organisational chart. Even if your business has very few, or even only one, employee, creating a chart and filling it in helps define specific functions in the business that can be filled by other employees in the future. By first performing each role in the company, such as that of a salesperson, and then building handbooks for each role should the founder, or other original employee, move to a different role - which is the aim that every business builder should strive for unless they want to have to work in their business every day for longer hours than anyone else - a completely inexperienced new employee will have a thoroughly detailed manual explaining precisely how they do their job.

Every Would-Be Entrepreneur should Read The E-Myth Revisited

The E-Myth Revisited is recommended reading for anyone who currently does or plans to run their own small business, even if it's only a small, home based internet business and you are the employee filling in all the roles. In any business there are some tasks that would be better performed by someone else, such as bookkeeping, and by clearly defining the roles, the organisation and the duties it is much easier to outsource the work or hire someone to fill these jobs. By planning out a business as soon as possible - preferably from day one - long term headaches and the creation of an enterprise that is no better, and often worse, than a job can be avoided.

The E-Myth Revisted egdcltd 2013-07-17 5.0 0 5
5/5
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Bibliography

  1. Michael E. Gerber The E-Myth Revisited. New York: HarperBusiness, 2001.

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