1. The E-Myth Revisited: Why Most Small
Businesses Don’t Work and What to Do About
It
Author: Michael E. Gerber
Marcos Vega
ENTR 442-01
29 November 2016
2. Personal Evaluation of the E-Myth Revisited
What makes a small business successful is under the owners dream and control—this is
exactly what Michael Gerber talks about in his book The E-Myth. Gerber defines the E-Myth as a
tale that addresses whether or not the entrepreneur actually exist and if they exist for more than
just one exhilarating moment. I personally recommend this book as it provides great insight into
the necessary mindset and systems needed to have a successful business.
Mostly all businesses begin with an owner who was once a technician in the field that he
is now starting the business in; Gerber explains this is why they fail. Gerber talks about the three
mindsets (or personalities) needed to start a successful business: the entrepreneur or dreamer, the
manager or organizer, and the technician or the doer. All three of these people must work
together in an integrated system in order to have a successful company. This system must be
based on three key concepts: innovation, quantification, and orchestration. Innovation is the heart
of every business and is the constant question of asking what is the best way to do this,
quantification is the numbers attached to innovation, and orchestration sets the foundation for the
future. Utilizing these three concepts cohesively is what Gerber explains as the business
development program to an extraordinary business.
As the E-Myth goes on Gerber continues to explain the business development program,
which he bases on the formula developed by the late Ray Kroc, the man who is credited for the
extraordinary success of McDonalds. It is a step-by-step process in which you convert your
existing business, or the one about to create; into a perfectly organized model for thousands more
just like it. The program consists of seven steps: Your Primary Aim, Strategic Objective,
Organizational Strategy, Management Strategy, People Strategy, Marketing Strategy, and
Systems Strategy.
3. Executive Summary of The E-Myth Revisited
Introduction to the E-Myth and the Three Personalities:
In the competitive business society we live in every year 40% of all small businesses fail
within their first and 80% of those businesses will fail in five years. Why do all of these
businesses fail? They are started out in the wrong direction from the beginning of their existence.
Most new business are started by motivated people who are tired of working for someone when
they can do it better and finally decide that they want to be their own boss and create their own
business. In his book The E-Myth, Michael Gerber describes that this is exactly the wrong way to
start a business.
The E-Myth is what Gerber states as the myth of the entrepreneur and the question of if
there is such a thing. As Gerber explains further he introduces the idea of the mindset a
successful business owner must have and that it is made up of three different personalities. There
is the entrepreneur who is a visionary, dreamer, and one who looks to the future to establish his
present. Secondly there is the manager who has a pragmatic personality and lives in the past,
craves order, and sees problems instead of opportunities. Lastly the technician, who is the
frustrated employee who begins his or her own business in hopes to be its own boss but is a doer
and lives in the present. It is the integration of all three personalities that Gerber describes as the
ideal business owner, who displays vision, provides organization, and has a strong work ethic in
the field.
Three Life Stages of a Business:
As a newly founded business begins it sets out on a growth process that consists of three
stages infancy, adolescence, and maturity. Infancy is a time of great frustration as the business
owner and the business are one in the same. The business takes control of the owner’s life as
4. they spend countless hours slaving away trying to get their business off the ground and handle all
of the new responsibilities it didn’t see coming. With the decline of mental health and business
productivity as well the business transition into the adolescences stage where the owner seeks out
help. At this time things start to look up for the owner as the new found help relieves much of the
pressure once on their shoulders and after awhile the owner falls into a comfort zone and begins
to abdicate the responsibilities of being a manager. Once again business productivity is down and
help has left, the business now has two directions to go, return to infancy or die. All of this could
have been avoided if the proper planning was put in place prior to opening its doors and that is
how mature businesses start out, with an entrepreneurial mindset.
Turn-Key Revolution:
Gerber speaks of the Turn-Key Revolution era as a turning point for small businesses
around the world. The term “Turn-Key” comes from the idea that a business should be so well
created with systems in place that when replicated the new business owner should only have to
‘turn the key’ and be successful. Ray Kroc, creator of the Franchise Business Format, found that
through Innovation, Quantification, and Orchestration a business development program could be
built that would provide lasting positive results over and over again. Innovation being the “best
way skill” by constantly asking what is the best way to do a task the mindset creates the highest
level of efficiency and productivity. Quantification is paired with innovation being the numbers
associated with it, without the numbers you cant know where you are or where you are going.
Orchestration builds upon that which precedes it, becomes the foundation for that which is about
to follow, and in the process honors the past, present, and future. By using these three ideas
cohesively a business development program could be designed that would convert your business
into a perfectly organized model for thousands just like it.
5. Business Development Program:
Setting out on your journey to develop your own business development model consist of
seven steps that include finding your primary aim, strategic objective, organizational,
management, people, marketing, and systems strategies. As you begin, finding your primary aim
may be the most important step as it calls for visualizing the end of what you want your story to
be before you even start. Having a primary aim is the entrepreneurial vision necessary to bring
your business to life and your life to business.
As you continue to plan your business development program each step is integral to the
life of your business and should be taken as serious as possible. In one example Gerber provides
in his book is the story of a hotel experience and in that example one reason for enjoying
working there that employee gave was the type of seriousness his owner brought to the business
that was different than other places he had worked at before. If the owner is willing to provide an
idea behind the work that is more important than the work itself, than that is a successful
business.
Working on your Business, Not in it:
The most important points in the E-Myth are those that stress the importance of the
process of building a business that has structure, proper systems, and the idea of working on your
business not in it. Working in your business is not what a business owner goes into business for
it’s the idea of being free from work. In order to obtain that goal you must place yourself in
every role of your business and prepare the steps for that role to be most successful that way
when it comes time you can delegate that role and know it will be successful. What I think
Gerber wanted us to take away from his book was that the idea of a small business should be to
provide a place to bring humans and ideas together to grow and flourish.