What is E-Myth?
The Entrepreneurial Myth (E-Myth) describes the romantic concept that entrepreneurs start small businesses. Yet, Michael, who has worked with SMBs for many years, disagrees.
Entrepreneurs did not start small businesses. They’re usually started by skilled technicians (such as carpenters, accountants, or hairdressers).
Their performance is so good. That they decide to go into business for themselves instead of working for a boss. E-Myth calls this “the entrepreneurial seizure,” and anyone can experience it.
Even though these people are excellent at what they do. That does not mean they haves the knowledge of how to run (let alone scale) a company. SMBs usually fail because of the “fatal assumption,” according to Gerber. Small business failures are associated with The E-Myth. But Michael comes up with a solution.
As he writes in The E-Myth Revisited. “Understanding the E-Myth is the key to creating and growing a successful small business.”
To put it, if you want your business to change, you must change it. Starting at the beginning is the only way to do this.
The entrepreneurial seizure
The entrepreneurial seizure is when you question why you’re working for someone else. And decide to go into business for yourself. There may additionally be no unique purpose for its occurrence. But as soon as it hits, you can’t shake the feeling of “I have to begin my business!”
What you do is great, and you realized it. There was no doubt in your mind that you could do it better than most people (including your boss). This, yet, is rarely enough.
This is exactly what I felt in my early stage of my economic life. I remember resigning from my job then, but not to start up a business of the same category. But to shift from employment to self employment.
The fatal assumption
It’s a fatal assumption to believe that if you’re good at technical work, you’ll also be good at running a business. But that’s not true.
There is no guarantee that a hairdresser knows how to operate a business because she opens a salon. Because the skills are different. A hairdresser cuts and colors. Salon owners keep the books, order supplies, and get customers.
And here’s why that’s a problem: technicians see a business as a place to come to work. In other words, when they own a business, what they own is a job. And a lot of that first job is stuff they don’t know how to do.
Because of this, the technician may not feel empowered by the business, but rather engulfed by it. There is too much on their plate, they feel stretched in every direction, and they don’t know what to do.
For many small business owners. This scenario leads to exhaustion, frustration, and closing their doors. You don’t have to live like that!
The 3 sides of every business owner
Now that you recognize why, groups begin. And (often) why they fail. This is what you want to recognize about. The technician grew to become a commercial enterprise owner.
Small business owners have three sides, according to Michael. And each possesses a specific personality trait. And plays a distinct role in the business. The entrepreneur, the manager, and the technician.
The entrepreneur
First, the entrepreneur. AKA the person with all the ideas. They are the business visionaries who plan how to achieve the goals of the business. They think about the future, so they know which levers to pull to achieve the vision.
The manager
The manager organizes the business. So that those ideas can be implemented. Their entrepreneurial spirit enables them to produce predictable results. They plan for the future based on what has happened in the past.
The technician
Third, the technician. AKA the person who makes those ideas a reality. They keep the business running by working on the tasks at hand. Thus, they live in the present and have little interest in the future.
If you want your business to succeed, you must balance all three sides. Your business suffers when one side wins out.
3 stages of business
Every business has three stages: infancy, adolescence, and maturity.
Each stage presents its own challenges. Most businesses will reach the first or second phase, but minimal will reach the third.
Infancy
During infancy (or the start-up phase), the business owner does all the work.
Moreover, while everything does get done their way, not everything gets done. That’s because it unfold the owner thin, extraordinary exhausted. And would not have enough time (or energy) to do it all.
Plus, the owner cannot take a day off. Because who will run the business? If the enterprise is going to work, the business owner has to be existing and working.
So, the business owner ends up doing anything it takes. Despite the non-public toll to preserve the business going. And when they burn out (roughly round that 1-year mark), a lot of SMBs shut their doors.
But, if the business builds enough momentum, the owner may see they can’t do it all on their own. They need to use help, and this brings the enterprise to the next stage: adolescence.
Adolescence
Marked through hiring. The company’s first employee, adolescence, is a growth stage for the business. That first employee hires more hands to take on more tasks (the ones that overwhelm the owner).
But, as the team grows, not everyone does things the owner’s way. So, quality drops because production can’t keep up. And most small commercial enterprise owners assume no one can do the job as as them.
So, more than not. The small commercial enterprise owner downsizes their crew. And reinserts themselves as the technician. This circles the enterprise returned to its infancy. Developing greater work for the owner. And usually, inside a few years, the commercial enterprise shut its doors.
If the enterprise pushes ahead without returning to infancy. Possibilities are true that it will develop too fast. And the crew might not be capable to matching the demand. Many of these businesses – despite remaining in adolescence – will shut down too.
As for the companies that survive, a handful evolve into the next stage – maturity.
Maturity
You can tell in a business’ infancy if they will ever meet maturity. That’s because these business owners have what The E-Myth calls the “Entrepreneurial Perspective.” Meaning, they have a clear vision for what the business is going to become. Starting from Day 1, they modeled the business after that vision.
So, to get there, the small business owner uses an “Entrepreneur’s Model.” That is, systems and processes that allow everything to reflect an entrepreneurial perspective.
This way, it does not depend who is doing the work. Because it’s finished. The equal way that the commercial enterprise owner would do it, each time.
Meaning, the enterprise owner is free. To the focal point of developing the enterprise. (or to lean into their internal entrepreneur). Rather than working in the business, they work on it. That’s where exponential growth happens.
Conclusion:
To run a profitable business, you can’t stay a technician. You can’t hire people to construct your enterprise for you. And hope they get it right. You need to focus on making the business everything you want it to become. You want to take the time to make it systems dependent so you aren’t relying on any one person, along with yourself.
Be equal parts technician, manager and entrepreneur