I listen to a few different investing podcasts (Bigger Pockets, TIP, & Tim Ferris to name a few) and the hosts often ask their guests about influential books. One of the books that are mentioned quite frequently is The E-Myth by Michael Gerber about entrepreneurship. I finally bought the book and read it and found that the basic concepts were very helpful. Be aware there is a slight salesy undertone as he plugs his company and their consulting services periodically. Besides that point I found this book to be very impactful on how you think about your own business. Whether you currently own your own business, hope to one day, or want to find a great company The E-Myth can provide guidance.
The underlying theme is to create explicit systems and processes that anyone can follow that will allow you to hire others and ultimately focus on the strategic direction of the business. In doing so you create the ability to remove yourself from the business at some point. Architecting the structure so it will run the same no matter who is in charge. The first section of the book explains the importance by focusing on the high percentage of businesses that fail in the first few years of their existence. A key piece being they focus on the tactical work and essentially own their own job. This is a theme through many of the non-fiction business books you will read from Rich Dad Poor Dad to the 4-Hour Work Week.
The remaining sections of the book focus on highlighting the importance of detailed systems and processes built on data analysis in order to produce superb results regardless of who is running the show. These systems and processes become the lifeblood of the business and are what ensure consistent and quality results are delivered. Gerber utilizes the example of McDonald’s and the franchise model as the impetus for this thought. You have probably heard someone ask if they thought they could cook a better hamburger than McDonald’s to which you are likely to hear “yes.” Followed by can you consistently serve a better hamburger than McDonald’s at scale? The answer likely is “no” unless of course, you are a competitor. The central idea is that while there are plenty of better hamburgers on the market, no one is able to execute on a business system like McDonald’s at scale. This example is meant to highlight the importance of clearly defining and refining your business’s processes and procedures.
Once you have your systems created and clearly defined, then your goal is to hire good people to execute on the systems you have created. This way you are able to build a business that is not dependent on you as an individual, but rather the results and outcomes the processes you created to produce.
Having the processes defined and finding people to replace you is great, but in order to have the best opportunity to be successful as a business, you have to ensure you clearly define the WHY. Why does your company exist? What are you really selling? – (Nike sells a lifestyle – not apparel) Do your employees truly believe in what you are selling and what the why of your company means? Answering those questions and getting to yes is one of the last keys to ensuring you are set for success.
I enjoyed this book and found it to be a quick read. The story that the author utilizes to explain his view on entrepreneurship and the myth around “entrepreneurs’ who are aren’t truly failing is an interesting idea. I believe that there is an entrepreneur in all of us and if we wish to awaken it we are able to, we just have to make a conscious decision and understand that we must exercise and flex those muscles to grow.
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